The state of welfare
We can deliver better outcomes to people, by stimulating greater ownership of protection and savings products.
We believe that people need to take more responsibility for their own provision. In this way, affordable pensions and life insurance could benefit society.
We could benefit from modernising the welfare state
William Beveridge’s original framework for the welfare state was one of the 20th century’s greatest social reforms
At the heart of these reforms laid down by the post-war Labour government, were contributory benefits set at a basic level through the collection of National Insurance, to tackle the five giants of: want, disease, ignorance, idleness and squalor. These five ‘wants’ are still relevant in the 21st century. However, affording comprehensive benefits can be difficult given that the UK’s deficit is almost £100 billion, close to 6% of GDP. That’s twice the 3% of GDP limit that applies to Eurozone member states.
Providing affordable security to help society
The government hasn’t been able to reduce spending on education and health and debt interest payments are hardly falling, so the government has sought cuts from welfare. Yet the cost of welfare will rise rapidly in the future, largely as a result of age related costs. Our ‘deadline to the breadline’ research shows us that the average working age household has just the equivalent of 14 days’ savings if earnings dry up. Affordable private insurance can help supplement welfare and redundancy payments.
Our protection expertise
We’re the UK’s biggest provider of life insurance, being the clear market leader in the individual market and a major player in the corporate market. In the corporate market, we not only provide employees’ dependants with vital cover, but we also help employers to provide an income in the event of sickness or disability.
Growing retail protection
We grew our share of the individual protection market in 2014 to just below 25% by the end of the third quarter, making us larger than the next two companies combined. New business grew by 11% to £165m. Reasons for our success are simple. Our scale means that unit costs can be lower, to the benefit of our customers. Our expertise in underwriting means that 80% of applications in 2014 were accepted automatically. And our distribution strength means we have arrangements with UK building societies covering 85% of their members, as well as a longstanding relationship with Barclays and new partnerships with Direct Line and TSB. Our service continues to be excellent, with 96% of our customers making a life or critical illness claim scoring us more than eight out of ten for ‘customer ease’. We’ve also received industry awards for service from key industry bodies such as Moneyfacts and Lifesearch.
Understanding stress in the workplace
Industry research has shown that managing mental health is the top health issue for 32% of employees and a TUC survey found that stress is the UK’s No.1 safety concern.
We work together with mental health charities such as ReThink and Business in the Community to increase understanding.
Because mental illness is the cause of almost 30% of our group income protection claims, we’ve developed a personalised, comprehensive and effective programme of support for people with mental illness. In 2014, we invested £4.6 million in rehabilitation treatment. The result was that 78.5% of the mental health related absences notified to us resulted in people returning to work within the deferred period.
UK households with no strategy in place to cope with financial hardship.
What would you say to your younger self?
Our multimedia advertising campaign aimed to inspire people to take action to protect their families, with life insurance. The success of the campaign goes way beyond the large number of new customers we acquired. We were able to reach out to younger people, inspiring them to think about the importance of life insurance, while making them aware of the our brand. By engaging people and building awareness of our brand, we’re positioning ourselves to grow our future digital and direct businesses.
What would you say to your younger self?
Inspiring people to protect their lives
In 2014, we asked the nation: “What would you say to your younger self?” We ran two campaigns using billboards, radio, press, direct mail and online advertising and backed this up with activity on Twitter and Facebook. The response was overwhelming and touched a chord with people across the country. Two poignant social media posts were:
We were delighted that our Facebook posts reached over 800,000 people and that we generated 4,000 tweets. But we were even more pleased that at the time of the campaign we saw an increase in new customers taking out protection policies. In 2014, we completed around 458,000 protection policies through all distribution channels, with total new premiums up 11% to £165 million.
Inspiring people to buy life insurance
Growth in direct protection completions in 2014 compared to 2013
We aim to use our scale in insurance and workplace pensions to deliver benefits to customers.”
Making auto-enrolment even more successful
Auto-enrolment is on track to be a huge success for the UK, with up to 11 million employees due to save for retirement for the first time.
2014 was a successful year for our workplace pensions business. We’ve seen a 36% increase in our member numbers and have exceeded £11 billion in assets under administration. Two of the reasons for our success are our scale, where our unit costs have fallen by 60% over the last three years, and our ability to offer employers online documentation. We’ve developed online propositions for small and medium sized businesses. This has helped us maintain momentum despite most larger companies setting up schemes in 2012 and 2013. Employers value the ability to manage governance through our well regarded master trust and we’re benefiting from employers who want investment only platforms.
MANAGING THE RISKS
Writing protection business means we have to make assumptions about how long people will live, how healthy they will be and events that could give a higher rate of claims than we’d normally expect. We call these mortality, morbidity and catastrophe risks. We price our protection products to take account of these risks using reinsurance to manage significant exposures.
Synergies in corporate
We now have a 20% market share of new auto-enrolled members. Auto-enrolment has had major spin-offs for our group protection business. We now have 650,000 people who are in both a workplace savings and group protection scheme, a 13% increase over 2013. This means that we are now providing pensions or protection for 54% of FTSE 100 companies.