Dedicated DB small scheme insurance services take off

With more small pension schemes able to afford to insure their benefits, insurers are increasingly looking at ways to increase their capacity to meet this rise in demand says Hymans Robertson.

A number of insurers have launched dedicated streamlined propositions, to meet the needs of smaller DB pensions schemes and increase their capacity to provide quotations, transact and onboard more small schemes. In its latest Risk Transfer Spotlight report: Insurers step to the plate: The new era of small scheme risk transfer, Hymans Robertson provides a comparison of each insurer’s small scheme proposition, and the key considerations for schemes considering these offerings.

Commenting on the changes to the DB market and how insurers are responding, Iain Church, Head of Core Transactions, Hymans Robertson says:

“The use of streamlined propositions by many insurers is now the norm for smaller schemes seeking quotations. This is a welcome development for both small DB schemes and insurers, as streamlined services which make the process of insuring more efficient, and quicker, can only be a welcome change.

“At our recent webinar aimed at pension schemes under £200m, 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. For instance, in the last month alone, we completed streamline transactions under £20m 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.

“Whilst streamlining the process is a positive step, Trustees should remain mindful about the lack of flexibility that may arise from such offerings and must be aware of any restrictions that these offerings bring. Working with a well-established risk transfer adviser is therefore crucial to ensure transactions best meet scheme’s objectives. We look forward to seeing the bulk annuity market develop and grow as more insurers look to follow this trend.”