UK - Pension funds may be forced to meet member insurance costs, as an increasing number of insurance companies look to cap group policies following the September 11 terrorist attacks, according to Mercer Human Resource Consulting.
Some insurers have decided to impose a maximum exposure limit of £100m per event or even for the geographical location, particularly densely populated areas.
At the present time, this limit has only been imposed on a few occasions, but this type of catastrophe limit is likely to become more common as rate reviews fall due, said Mercer.
In cases where members work in a single location or nearby locations, for example, in the City of London, Canary Wharf or even a business park, it may be that part of the group life risk will be uninsurable, or the amount of risk over £100m.
Although £100m may seem a sizeable sum, if both lump sum and spouses’ death-in-service benefits are insured with the same insurer, the sum can be reached with a payroll of £8m to £10m, Mercer added.
By Madhu Kalia
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