Article date: 1 June 2001
More than 70 per cent of companies recognise the benefits ofincome protection yet still do not buy it, according to newresearch by Norwich Union Healthcare which launches a new GroupIncome Protection product on Monday (4 June).
The report from the insurer indicates that the biggest barrierto developing the group income protection market is companies' lackof awareness and understanding of the product.
The research also shows that fewer than half of employers seekexpert advice on the provision of employee benefits.
Smaller firms are least likely to involve external consultantsin financial decisions relating to employee benefits - the largerthe company the more likely they are to use independent financialadvisers.
Other findings from the research, which involved 200 companiesin the manufacturing and construction, retail and leisure, andservice sectors across the UK, were:
- Most of the 70 per cent of firms who are not consideringoffering group IP say they don't need it or it's too expensive -but mostrecognise the business benefits it can bring eg staffrecruitment/retention and reducing financial risk
- 59 per cent of firms had no idea how much income protectionwould cost and one in four thought it would cost at least 2 percent of payroll (in fact it is around 1%)
- More than half of companies had no system for counting thecost to their company of long-term sickness absence
Nick Homer of Norwich Union Healthcare said: "When incomeprotection is explained to employers they can immediately see thatit safeguards both their own and their employees' interests.
"The trouble is that because many companies know little aboutthe product, and think it would cost more than it actually does,there is still a reluctance to buy it.
"Income protection helps relieve employers from the burden ofcovering sick pay. This frees up money to fund absence cover sothat other employees don't have to take the strain of their absentcolleague's workload, and possibly risk going off sick with stressthemselves, making the problem worse.
"Our new Group Income Protection product can help employers copewith sickness absence, and because we place a high priority onsupporting employers with the rehabilitation of their employees itcan help get valued and skilled staff back to work morequickly."
Norwich Union Healthcare's new Group Income Protection product,which replaces the existing Company SafeGuard policy, covers anynumber of employees from three upwards.
It offers unit-rated premiums for schemes with 30 lives or morefor simplified administration.
And a non-selection limit may be applied to schemes with 10lives or more, creating a benefit level below which medicalevidence will not usually be required.
The research also shows that:
- During the last two years nearly two thirds of firms have hadan average of three employees off work for three months or more asa result of or injury
- Stress is the most common cause of sickness absence (36 percent) followed by accidents/broken bones (34 per cent)
- Stress-related absence levels are highest in London and thesouth-east, in the service sector, and in companies with 200+employees
Intermediaries wanting more information should contact theirusual Norwich Union Healthcare consultant or call the HealthcareSales Bureau on 0845 300 0649.
Norwich Union Press Office, 08703 666860
A picture of Nick Homer is available via ISDN.
Notes to editors:
- Telephone interviews were carried out with 200 UK companies byH2B on behalf of Norwich Union Healthcare between 17 and 27 April2001, with the incentive of a £10 donation to charity which raised£2000.
- Norwich Union Healthcare was founded in 1990 as the healthcarearm of Norwich Union and now provides a range of income protectionand private medical insurance products to around 650,000customers. It is one of the largest providers of income protectionand private medical insurance in the UK.
- CGU and Norwich Union merged on 30 May 2000 to create CGNU,the UK's largest insurance group and one of the top-five insurersin Europe with substantial positions in other markets around theworld, making it the world's sixth largest insurer based on grossworldwide premiums.
- CGNU's principal business activities are long-term savings,fund management and general insurance, with worldwide premiumincome and retail investment sales from ongoing business of over£27 billion and assets under management of more than £210billion.
- From October 2000, the combined life and pensions, generalinsurance and retail fund management businesses in the UK operateunder the Norwich Union brand, while the institutional investmentbusiness operates under the Morley Fund Management brand.
- Norwich Union's news releases are available on thiswebsite.