Greater collaboration between group and individual protection advisers is the way forward

by Protection Review 19/03/21

Tom Conner, Director at Drewberry, takes us through their recent Employee Benefits and Workplace Satisfaction Survey 2021Drewberry recently asked 2,000 SME workers about their thoughts and feelings on various topics to do with the world of work.

When we asked about employee benefits, we found many workers were keen on insurance. The most sought-after such benefits were:

However, these desires aren’t necessarily being met by employers. Less than half (47.4%) of SMEs introduced new employee benefits for their workers in 2020.

Even where companies had introduced benefits, the top two were remote working (39.7%) and flexible hours (29.4%). While these are great to have, they don’t necessarily offer what employees seem to want the most — protection.

After the year we’ve just had, it’s not surprising that more employees want protection from their employers. The pandemic really brought home the risk of illness and sadly even death. Wanting protection is a natural reaction.

However, it’s precisely because of the year we’ve just had that employers may struggle to provide it. Many face precarious finances after 12 months of lockdowns, enforced closures and a spluttering economy. While I have seen a rise in clients seeking advice on group protection due to the pandemic, partly in response to employee demand and partly because they simply want to be a good boss that protects their employees, many businesses are struggling financially.

Enter individual advisers to fill the protection gap

If employers aren’t meeting the high demand for protection, the next viable option for consumers is the individual market.

Private Health Insurance, Life Insurance, Critical Illness Insurance, Income Protection and Health Cash Plans are all available for individuals to buy from their own pockets. However, persuading them to do so rather than hoping their employer rolls out a workplace scheme can prove tricky.

It’s great when employers provide insurance benefits. Yet by their very nature, they are a broad protection tool and don’t provide the fine, tailored detail of an individual policy.

For example, a Death in Scheme paying three times salary if you pass away is a good start, but for many, this would only offer base-level protection. Will it be enough to repay your mortgage and ensure your family’s financial security? Probably not.

Or take Group Income Protection. While providing protection if you fall ill, many of the new workplace policies being taken out are on two-year payment terms. There’s also no way to adjust the percentage of your wages you receive.

Finally, employee benefits are tied to your employer, so you face losing them if you move to a new role elsewhere or your company goes bust. This isn’t trying to diminish the importance of employee benefits and the part they play in protecting UK workers. However, individual policies often provide more tailored protection. It’s up to us as advisers to make the case that this alone is worth paying for.

Why closer relationships between group and individual advisers matters

At Drewberry, we’re very lucky that our group and individual teams work side by side. Knowledge and expertise flows between these two areas of the business and we feel that means better client outcomes.

For example, if a group adviser cannot advise on Group Income Protection or Group Life Insurance because the scheme won’t have enough employees, they refer them to an individual adviser. They can potentially arrange Executive Income Protection or Relevant Life Cover instead with a similar end result. It is also often the case that the directors of the business would rather have their own plans tailored to their individual circumstances than be covered under the wider group scheme.

It’s important for firms that only advise on group cover to collaborate with firms that provide individual advice so any protection gaps can be filled. Alternatively, those covered under group schemes could be signposted to the BIBA Find Insurance Service so they can find a suitable adviser to plug any gaps in their protection.

As an industry, we should work towards a common goal: A better outcome for our clients. Working closer with our colleagues in other areas of the protection market, such as group protection, and collaborating to signpost clients so they know where to get cover will help massively with meeting this goal.

Ron Wheatcroft, Technical Manager at Swiss Re said: “Drewberry's research shows the importance employees place on non-salary benefits from their employer. Providing benefits through the workplace need not be expensive, with the average lump sum life assurance benefit and the annual cost per worker across the whole market in 2019 being £133,380 and £149 (£12.50 per month) respectively.  

“Group solutions won't always suit. Good intermediaries will always consider other ways to meet the needs of individuals and, in particular, business owners, I see huge potential for growth for advisers able to make businesses, their owners and their workforces more resilient to the risks they have always faced but are now more aware of than ever before.”

Sue Helmont, Marketing Director at AIG Life said: “What the industry ultimately wants is to see every customer protected if something happens, whether that is through an employer or if they’re buying it for themselves. We’re not there yet.

“I’d encourage people to think of their group life cover as the safety net rather than the main way they’re protecting themselves. It is a benefit many employers provide but it’s no substitute for financial advice from a protection specialist who understands the financial setup that every individual and family has.”

The Drewberry Employee Benefits & Workplace Satisfaction Survey 2021 asked 2,000 workers at the UK’s SMEs a series of questions to gauge their thoughts and opinions on a wide range of topics, from employee benefits to workplace satisfaction and the future of work in a post-pandemic world.

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