Group Risk & the Broader Landscape Katharine Moxham Spokesperson, GRiD Protect Association Meeting 20 November 2015

2 WHAT IS GROUP RISK? Umbrella name for 3 Employer sponsored benefits - Group Life Assurance - Group Income Protection - Group Critical Illness Often insured Gives employees access to financial protection Fewer medical details & “Once and Done” underwriting Highly valued but relatively inexpensive Free or reduced cost to end user Can cease at 65/SPA Usually compulsory but can also facilitate access to protection cover through voluntary, flex and affinity schemes

FINANCIAL LIFE LINE 3 Provides a benefit on employee’s death - tax free lump sum up to LTA/taxable dependants’ pension Benefits in excess of LTA through “excepted” route GL Provides a continuing income during employee’s illness or injury – paid through payroll in normal way Used to cover employer’s promise of long term sick pay GIP Pays a tax free lump sum to employee on diagnosis of one of a defined list of serious medical conditions or on undergoing one of a defined list of surgical procedures GCI

BACK TO BASICS WHAT ARE EMPLOYERS TRYING TO ACHIEVE THROUGH THEIR PACKAGE? 4

EMPLOYER HIERARCHY OF NEEDS Business Continuity Risk Management Attract and Retain Productivity Staff Morale

WHAT’S IN IT FOR EMPLOYERS? 6 Low cost paternalism Hygiene factor No IHT or probate – can deliver quickly to family GL Low cost paternalism Risk management tool Known costs for budgeting Third party assessments Vocational rehabilitation Focus shift to health & wellbeing GIP Low cost paternalism Well perceived flex benefit Can supplement sick pay Can supplement PMI – say for cancer drugs GCI

7 WHAT ELSE CAN COME WITH IT? Employee Assistance Programme HR/legal advice Second medical opinion Fast access to CBT & physiotherapy Absence/case management, occupational rehabilitation Bereavement counselling/ probate advice GP helpline/online health assessments And more...

THESE SERVICES CAN BE USED DAILY EVEN IF A CLAIM IS NEVER MADE 8

£97,936 £22,940 pa £61,005 Cancer The main cause of claim under all three group risk products last year (GRiD) £1.26bn Worth of claims paid in 2014 (GRiD) £3.45 million a day! 11,204,852 People insured under group risk arrangements in 2014 (Swiss Re) Average group life, group income protection and group critical illness claim values last year (GRiD) 9

1,529 70% Of employers think group life costs more than it does (GRiD 2015 Employer Research) Only 15% Of employers are prepared to pay for treatments recommended by new Fit for Work Service (GRiD 2015 Employer Research) 50% Of employers say they use added value group risk services (GRiD 2015 Employer Research) People helped back to work last year with some sort of active early intervention support from an insurer during deferred period (GRiD) 10

THE BROADER LANDSCAPE 11

12 EMPLOYER SPONSORED GROUP RISK PROTECTION Deficit Reduction Increased Productivity 7 Day NHS Ageing Workforce Welfare Reform Reduced Economic Wastage Health & Wellbeing Mental health crisis Fit for Work Service Simple Financial Products DoH Responsibility Deal/Workplace Wellbeing Charter Potential for public/private partnership?

13 KEY INFLUENCER ACTIONS ABI (supported by CESI Research) Dame Carol Black’s independent review Drug and alcohol addiction, and obesity: effects on employment outcomes Treasury/ABI/GRiD Simple Financial Products The Work Foundation Health at Work Policy Unit Investing in a workforce fit for the future Challenges for the UK government Money Advice Service/ABI #LiveLifeProtectIt campaign

WHAT MIGHT BE NEXT? 14

NUDGE Lifetime Allowance parallels with IHT? Bring Group Life out of pensions legislative framework? Taking out income protection should always pay – in the same way that “work should always pay” Delink Group Income Protection from State Benefits? Un-stall Simple Income Replacement? Privatised sick pay? Government interest in the role of Income Protection through the workplace How can Government incentivise employers to engage with the workforce health agenda? 15