More than 70 per cent of companies recognise the benefits of income protection yet still do not buy it, according to new research by Norwich Union Healthcare which launches a new Group Income Protection product on Monday (4 June).
More than 70 per cent of companies recognise the benefits of income protection yet still do not buy it, according to new research by Norwich Union Healthcare which launches a new Group Income Protection product on Monday (4 June).
The report from the insurer indicates that the biggest barrier to developing the group income protection market is companies' lack of awareness and understanding of the product.
The research also shows that fewer than half of employers seek expert advice on the provision of employee benefits.
Smaller firms are least likely to involve external consultants in financial decisions relating to employee benefits - the larger the company the more likely they are to use independent financial advisers.
Other findings from the research, which involved 200 companies in the manufacturing and construction, retail and leisure, and service sectors across the UK, were:
- Most of the 70 per cent of firms who are not considering offering group IP say they don't need it or it's too expensive - but mostrecognise the business benefits it can bring eg staff recruitment/retention and reducing financial risk
- 59 per cent of firms had no idea how much income protection would cost and one in four thought it would cost at least 2 per cent of payroll (in fact it is around 1%)
- More than half of companies had no system for counting the cost to their company of long-term sickness absence
Nick Homer of Norwich Union Healthcare said: "When income protection is explained to employers they can immediately see that it safeguards both their own and their employees' interests.
"The trouble is that because many companies know little about the 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 of covering sick pay. This frees up money to fund absence cover so that other employees don't have to take the strain of their absent colleague's workload, and possibly risk going off sick with stress themselves, making the problem worse.
"Our new Group Income Protection product can help employers cope with sickness absence, and because we place a high priority on supporting employers with the rehabilitation of their employees it can help get valued and skilled staff back to work more quickly."
Norwich Union Healthcare's new Group Income Protection product, which replaces the existing Company SafeGuard policy, covers any number of employees from three upwards.
It offers unit-rated premiums for schemes with 30 lives or more for simplified administration.
And a non-selection limit may be applied to schemes with 10 lives or more, creating a benefit level below which medical evidence will not usually be required.
The research also shows that:
- During the last two years nearly two thirds of firms have had an average of three employees off work for three months or more as a result of or injury
- Stress is the most common cause of sickness absence (36 per cent) followed by accidents/broken bones (34 per cent)
- Stress-related absence levels are highest in London and the south-east, in the service sector, and in companies with 200+ employees
Intermediaries wanting more information should contact their usual Norwich Union Healthcare consultant or call the Healthcare Sales Bureau on 0845 300 0649.
Ends
Media contact:
Louise Zucchi,
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 by H2B on behalf of Norwich Union Healthcare between 17 and 27 April 2001, with the incentive of a Ł10 donation to charity which raised Ł2000.
- Norwich Union Healthcare was founded in 1990 as the healthcare arm of Norwich Union and now provides a range of income protection and private medical insurance products to around 650,000 customers. It is one of the largest providers of income protection and 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 insurers in Europe with substantial positions in other markets around the world, making it the world's sixth largest insurer based on gross worldwide premiums.
- CGNU's principal business activities are long-term savings, fund management and general insurance, with worldwide premium income and retail investment sales from ongoing business of over Ł27 billion and assets under management of more than Ł210 billion.
- From October 2000, the combined life and pensions, general insurance and retail fund management businesses in the UK operate under the Norwich Union brand, while the institutional investment business operates under the Morley Fund Management brand.
- Norwich Union's news releases are available on this website.