Swifter underwriting, better free cover limits and greater insurer flexibility – could the group risk market really be listening to customers’ needs at last? Angela Faherty finds out
However, for many small firms, managing the risk posed to the business through illness, injury or death is crucial. Should a member of staff suddenly fall ill and be unable to work, the cost to the business in terms of lost hours and profit can be significant.
While many small business owners know that protecting the firm and its staff from the very real threat of illness and injury is crucial to its continued success, many simply do not know how to go about getting insured. And with so many options available, many simply cannot afford to spend too much time away from the office to get cover in place.
For a small-sized firm with less manpower, time is money, so a scheme that provides the best level of cover with the least demands on management’s time is exactly what they are looking for. And for advisers looking to expand their portfolio, the small firms group risk market offers plenty of untapped potential, says Dave Kay, commercial product manager at Unum, the disability insurer.
He says: “There are lots of small businesses out there and this market offers huge potential, it is a highly untapped market. Penetration levels for small group income protection (IP) are very low – under 5%; there is a lack of awareness about this market. Brokers can help to get the message across.”
For brokers looking to advise small firms on group risk solutions, it is important to remember that time is of the essence. Previously, group risk products have long been criticised for the length of time it can take to get staff on risk. Then there is the medical underwriting that requires a visit to the doctor and time out of the office. For a small firm, such demands on time are not ideal.
However, there have been a number of developments in the group risk market that aim to speed up the underwriting process. This should lead to greater ease for firms looking to get on risk more quickly, while still getting covered.
For small firms looking to implement a group risk scheme the first thing to do is to establish why they want to take out cover. The next is to establish how much they are willing to pay and how to best place the risk. Obviously intermediaries can help in this regard by identifying the key areas of cover needed as well as those firms that can place the risk with minimum disruption to the everyday running of the firm.
There are a number of factors that remain crucial to a small firm’s decision to take out cover. The ease of administration is vital for time poor small firms, while the underwriting process and the level of detail required obviously play a factor. The number of lives to be covered will also play a key role in any cover taken out and the flexibility in terms of changes to the number of insured, for instance when people join or leave the company, is also crucial as firms will not want the hassle of constantly making changes to a scheme.