Employee benefit market trends 2023 

• Private hospitals are reporting a substantial increase in self-paid treatment, as NHS waiting lists are expected to continue to increase.
• More employers are adding dependants to private medical schemes and expanding cover to previously ineligible groups of employees. 

• For schemes of more than 200 lives there could be increases of 30% to 40% in proposed 2024 renewal terms. 
• Future claim projections vary from provider to provider based on underwriting optimism.

• All providers have seen increases in demand since the beginning of 2023, with some reporting an increase of more than 25% in claims activity.   
• Calls to member helplines are often covering more than one condition, driving longer, more complex calls. Providers are struggling to recruit and retain employees in a competitive labour market.   
• More people are seeking help and making claims for mental health conditions.  
• Easy to access services and primary care through virtual GPs are driving up diagnosis and associated treatment.   
• Employers can mitigate these challenges by promoting claims portals and suggesting that helplines are best avoided at the busiest times.  

• Master trust: More clients are choosing master trust with the benefit of outsourced governance. However, there may be limitations such as eligibility related restrictions that must be taken into account.  
• Standalone trust: Most large schemes still operate through standalone trusts, giving more autonomy and ability to tailor provision to specific needs. Increases in high-cost claims mean trusts are reviewing their provisions such as specific and aggregate stop loss levels.  
• Captives: We see challenges for captives in balancing market competitive pricing and premium volumes at a level that can still drive profit. 

• Total market premiums for group protection now exceed £3 billion. The number of policies increased by 3.6% in 2022.  
• Administration remains a challenge for providers. Issues include slow claims handling and delays in producing renewal accounts.  
• Added-value services have become a key focus, with some providers offering as many as 30 different elements, but pathways must be clear and avoid overlaps.  
• Continued provision of cover for employees based overseas is a common issue and there have been changes in the regulations for UK based providers.  
• Changes to the Lifetime Allowance, announced as part of the Spring Budget, have created uncertainty over the tax treatment of benefits.  
• Many new Group Income Protection schemes are designed with a limited payment term, rather than payment to State Pension Age.  More employers are extending cover to under-represented groups.  

Group Life Assurance and Group Critical Illness claims have increased in 2022 compared to 2021, but Group Income Protection claims have fallen. 

• Main causes of claims in 2022: cancer, heart disease, stroke and respiratory.  COVID-19 drove less than 4% of all claims  
• Average value of all claims: £120,000  
• Average age of a claimant in 2022: 54 (source: Aviva)
• Increase in claims caused by accidents, as consumers move back towards pre-pandemic travel patterns. 

• Main causes of claims in 2022: cancer, heart attack, stroke and multiple sclerosis.  
• Increase of c.22% in claims paid between 2021 and 2022.  
• Average age of a claimant in 2022:  47 (source: Aviva).
• 78% of all claims were paid.  

• Main causes of claims in 2022: cancer, mental health, musculoskeletal and neurological 
• Average age of a new claimant in 2022: 49 (source: Aviva)
• Just under 40% of all referral cases returned to work before the end of the deferred period.  
• Work related factors continue to be a significant contributor to declined Group Income Protection claims. 

• Bupa is closing/consolidating around 80 dental practices  
• Cigna is exiting the UK dental market. 
• Less than 1 in 10 dental practices now take on NHS patients.  
• NHS banding costs within England increased by 8.5% in April 2023.  

• Cash plan provisions often do not cover the full cost of treatment.  
• Lower levels of cover provided through some private dental arrangements may only meet around 50% of treatment costs.   

• The pensions master trust market continues to consolidate with two acquisitions announced in July 2023. 
• Pension scheme members are changing the way they take benefits through retirement and providers are reconsidering their default investment strategies as a result.  
• Providers are developing more sophisticated member portals and apps to attract new clients.  

• Despite the cost of living crisis, data from leading pension providers show no significant rise in members opting out or stopping contributions.   
• Employers are supporting members with financial wellbeing tools and considering re-designing pension contribution rules. 

• Employers are starting to review cash alternative policies for employees, as proposals to abolish the Lifetime Allowance charges from 2024/25 were announced in the Spring Budget.  
• Fewer members will be impacted by the Tapered Annual Allowance (TAA) in future. Employers are updating associated policies and flexible benefits systems.