Sally-Anne Etienne says consumers must be encouraged to engage in their own personal welfare
Insurance companies have a responsibility to our shareholders/members to transact economically viable business. Yet do they have a social responsibility? I believe they do, and we should be very proud of what we do. Sometimes it is easy to forget that our industry was called into existence to fulfil a social responsibility, namely to provide financial protection against perils beyond our control.
In the UK, recent data for the group and individual protection markets is encouraging. In 2012, employee death benefit premiums topped the £1bn mark for the first time, according to Swiss Re Group Watch 2013. In the same year, new sums assured for death benefit cover rose by almost 6% and for critical illness cover by 13%. New long-term disability income benefits in-force increased by 10%. Furthermore, the number of people enjoying peace of mind under group risk arrangements increased by 300,000. This is fantastic news at a time when the economic outlook is still a big concern.
Almost 8.4 million lives are insured under group death benefit arrangements and there are almost 2 million long-term disability income schemes. A further 339,000 people have critical illness cover under schemes facilitated or purchased by their employer.
On an insured basis alone, there are more than 10 million policies as well as a number of arrangements self-funded by employers.
More people are also taking up flexible voluntary arrangements. This highlights the fact that simple, well-presented propositions for 'people like me' engage staff and may influence peers to 'join the club'.
Trust in employers is relatively high and opportunities will continue to open up as technology offers more cost-effective propositions. In the insurance industry, we are well placed to embrace this flexibility to offer choices that match individual life stages.
The future could range from simple signposting, providing access to products, to flexible benefits, limited-term payment income protection cover and/or sharing the cost of cover with employees.
This flexibility might suit many business models, better reflecting a workplace where it is common to move from employer to employer and helping individuals to purchase some 'entry level' or portable cover.
Auto-enrolment might also grow the group life market, where entitlement to benefits is linked to pension scheme membership. We could see around half a million people enrolled into death benefit arrangements for the first time.
Considering the individual protection market, the balance between how much responsibility should be shared between the state and the individual has been one of the hot topics in the UK. Personal responsibility is not straightforward. For example, if we look at the issue of obesity, almost all of us are aware that as a nation we are getting fatter. We are also well aware of the need to lead healthier lives. But this does not necessarily translate into exercising more or eating less. Neither does it mean that we are behaving irresponsibly. It might simply mean that the motivation and incentive to actively do something is just not strong enough.
The individual protection market has not yet seen a large benefit from the greater awareness of personal responsibility - but it has not suffered drastically either. Swiss Re's Term & Health Watch 2013 report highlights that new market sales of individual policies have generally remained stable year on year - although in the early part of this century new sales peaked at around 50% higher than now. In 2012, income protection sales increased by 9% over 2011, driven by a move towards limited benefit payment policies, which accounted for 25% of new sales. This was a welcome, if modest, increase, reversing the negative trend of the past four years. But we can do much more to engage consumers - and what better time than now? As an industry, we have two options. We can continue to focus inwardly on the challenges and problems we face, such as meeting the demands of new regulators - there will always be regulatory requirements. Alternatively, we can generate interest and opportunity by emotionally engaging people, promoting the benefits of protection and what it means for 'someone like me'.
Respondents to our market surveys recognise the need to communicate more effectively with consumers, particularly those who are not engaging with the market through an adviser. Better-informed consumers can only be a good thing. Does our social responsibility extend that far? Small steps.
Sally-Anne Etienne is market head for Swiss Re's life and health business for UK and Ireland and her responsibilities include Swiss Re's annual Term & Health Watch and Group Watch