The number of in-force group risk policies rose by 3.3% in 2018 to 76,906, with nearly 13 million people now insured, Swiss Re's 2019 Group Watch figures reveal.
The report found the number of members of long-term disability income policies increased by 2.2%, the number of members of lump sum death-in service policies increased by 4.7%, the number of members of critical illness policies increased by 4.8% but noted the number of members of dependents' death in service policies fell by 29.7%.
In-force premiums totalled £2.3bn in 2018, an increase of 5.7%.
Total market premiums by product line at the end of 2018 were:
- Long-term disability income premiums: £761m up 5.1%.
- Lump sum death-in-service premiums: £1.3bn, up 8.7%
- Dependants' death-in-service premiums £140m, down 17.1%
- Critical illness premiums; £113m, up 10.8%
Swiss Re technical manager Ron Wheatcroft said the results were "solid" but noted uncertainty had hit the market to some extent.
He said: "Respondents to the market survey among providers and intermediaries referred to the very uncertain business environment in which many of their clients were operating. This has seen a number of decisions deferred and a reluctance to take on new commitments until the business environment becomes clearer."
Once again, the market reported strong growth in the number of members of excepted group life policies (EGLPs). In 2014, 391,438 people were EGLP members and between 2017 and 2018, the number of members increased by 27.2% to 995,203 people.
The number of in-force EGLPs increased by 21.8% from 7,130 at the end of 2017 to 8,686 at the end of last year. Meanwhile, the number of dependants' death-in-service pension policies (DISPs) fell by 10.6%.
Although registered death-in-service policies still provide lump sum death benefit cover for most employees, EGLPs have now become an established way of providing death benefit cover through workplace arrangements.
Wheatcroft commented: "Two trends are apparent this year. Firstly, the decline in DISPs. While this business line has been in decline for many years, 2018 saw that decline accelerate as larger policies closed and were replaced by lump-sum death benefits. While the number of members fell by 29.7%, the number of policies fell by 10.6%.
"2018 also saw further growth in EGLPs as the market seeks alternatives to DISP arrangements and to pension-related death benefits. This reinforces the need to continue working with government to obtain an exemption for such arrangements from periodic, entry and exit charges on the discretionary trusts holding such policies."
Wheatcroft added: "In responding to HMRC's consultation on the taxation of trusts earlier this year, we reiterated our recommendation for an exemption, suggesting this be granted for all discretionary trusts where the asset is one or more life policies which can only pay out on death or disability.
"This would remove a burden from employers using EGLPs who are simply trying to do the right thing for their workforce by arranging life cover to protect their families and dependants and where the potential tax charge is both random and arbitrary."
Commenting on the report, Group Risk Development (GRiD) spokeswoman Katharine Moxham said: "We're very pleased to see that 408,500 more employees are now enjoying the financial peace of mind that group risk protection benefits bring.
"As supporting the health and wellbeing of staff, and, in particular, mental wellbeing, moves up the workplace agenda, employers are increasingly looking for help in how to do this, and a lot of the answers can be found in group risk protection products. The inherent support services that come with them significantly extend the reach of the help employers can give to their people.
"It is disappointing, however, that employers say that uncertainty around Brexit is holding them back from implementing group risk protection products. Workers still need a means of protecting their household's financial position against unexpected death, disability, injury or illness, regardless of politics. We would urge employers to look at what's going on alongside Brexit negotiations, where increasingly, government is looking to employers to help meet its ambitions for a healthy and inclusive workforce, and those employers that utilise the benefits within group risk are in a much better position to meet Government's expectations around ‘good work', especially for mental health."
