John Gillman

Group Income ProtectionNumber of Lives Covered

Flexible benefit schemes accounted for 7.1% of premium income in 2010, up from 6.7% in 2009

Schemes with limited payment periods accounted for 10.1% of in-force schemes, up from 7.1% in 2009

Source: Swiss Re Group Watch 2011

Concern %Cost increasing over time 91

The potential length of benefit payments and the fact that the individual remains on the payroll 71

The potential for litigious claims against the employer as policyholder 38

The fact that an incapacitated employee will have an expectation to return to their pre-disability occupation in the future 32

Source: Watson Wyatt (Towers Watson) Risk Benefit Survey Report 2007

Interviews conducted with nine professional services companies

Accountancy (two interviews)

Lawyers (one interview)

Management Consulting (one interview)

Insurers (two interviews)

Retail high street bank (one interview)

Inter-broker dealers (two interviews)

  Between them they have 50,000 plus employees

Smallest: 2,600 Largest: 10,000+

In the last ten years:

Four have moved to flexible benefitsOne has extended the deferred period from 26 to 52 weeksOne has moved from payment to NRA to a two year limited term

Continued

One has put more restrictions on eligibility Two fully intend to move to limited term

payments (one year and five years respectively) as soon as they can get management agreement

One has substantially reduced benefits for new entrants

Limited term (possibly with lump sum payments)

Pay direct arrangements

Flexible benefits and flexible approaches to benefit design

Even greater emphasis on returning employees to the workplace

www.prioryhouseconsulting.co.uk

12