The use of streamlined propositions by many insurers is “now the norm” for smaller pension schemes seeking quotations, Hymans Robertson head of core transactions, Iain Church, has said.
Hymans Robertson found, with more small pension schemes able to afford to insure their benefits, insurers are looking at ways to increase capacity to meet this rise in demand.
As a result, a number of insurers have launched dedicated streamlined propositions, to meet the needs of smaller defined benefit pensions schemes and increase their capacity to provide quotations, transact and onboard more small schemes.
Church described this new normal as a “welcome development” for both small DB schemes and insurers.
“Streamlined services which make the process of insuring more efficient, and quicker, can only be a welcome change,” he said.
Church added, at Hymans Robertson’s recent webinar aimed at pension schemes under £200mn, almost half of those attending said they see generating sufficient insurer engagement as the biggest challenge to insuring their schemes.
“These streamlined propositions make it easier for insurers to provide quotation and therefore remedy the engagement challenge that many trustees are facing,” he explained.
“For instance, in the last month alone, we completed streamline transactions under £20mn with each of Aviva, Just, and Legal & General, evidencing the choices available and competitiveness from insurers at the smallest end of the bulk annuity market.”
Church acknowledged, while streamlining the process is a positive step, he cautioned trustees to “remain mindful” about the lack of flexibility that may arise from such offerings and be aware of any restrictions they bring.
“Working with a well-established risk transfer adviser is, therefore, crucial to ensure transactions best meet scheme’s objectives,” Church added.
“We look forward to seeing the bulk annuity market develop and grow as more insurers look to follow this trend,” he concluded.
This all follows Hymans Robertson’s latest Risk Transfer Spotlight report which provided a comparison of each insurer’s small scheme proposition, and the key considerations for scheme considering these offerings.
tom.dunstan@ft.com
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