An Australian import

After spending almost 4 years heading up Swiss Re's Australia and New Zealand business, Russell Higginbotham has recently returned to his native UK as CEO. Having gained a thorough understanding of the methods "down under", he believes that the UK could import some ideas from the Australian life and health market.

With the UK's National Employment Savings Trust (NEST) – a compulsory default employer pension scheme – due to be launched from 2012 – Higginbotham questions why the net shouldn't be spread wider than just retirement products.

He explains: "Although there is a healthy group risk market in the UK, it is discretionary. Around 40% of employees enjoy some form of life cover and 7.5% income protection benefits.

"But protection products are an integral part of Australia's superannuation market," he continues, "Since 2008, it's been mandatory for all funds to offer a minimum level of life cover. This means that 100% of the working population has some level of protection."

Promoting innovation

Higginbotham suggests that the more competitive Australian approach promotes innovation with potential improvement in benefits for employees. Insurance is now used by superannuation funds to differentiate themselves, with cover a key part of members and their dependants' financial security.

"Through their purchasing power, these schemes can provide death and disability cover at competitive prices," he says. "Thanks to these products being used as employee incentives, 30% of all Australian employers have set up a default income protection plan through superannuation, with a further 20% offering this on a standalone basis.

"What's more, Swiss Re's research tells us that 54% of people in the UK and 47% in wider Europe, with children under the age of 18, would consider buying insurance through their employer*. At a time when state benefits look like falling in value, is the UK missing a chance to close our protection gaps by not making group protection more accessible to employees?"

Adapting good ideas

While it's unwise to copy another country's model literally, Australia's superannuation approach has many merits. "We needn't shy away from taking a fundamentally good idea and adapting it to the UK market," Higginbotham concludes. "After all, the old way of doing things isn't always the best."

*Swiss Re UK Insurance Report 2009 and Swiss Re European Insurance Report 2010

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