But it’s just not practical to ask questions about the health of every employee before providing cover. So one of the ways insurers can ensure fair prices is by making sure cover is only provided to employees who are fit and healthy – and at work. These employees are known as ‘actively at work’ (AAW).

Traditionally, group protection insurers apply an AAW restriction when starting a new policy i.e. they'll only cover employees who are AAW on a given date. But we believe it’s also important to make sure we’re not declining to quote or excluding an individual from cover when they may be absent for a minor illness or injury. So when it comes to group life policies, AIG takes a slightly different approach.

Limitations with AAW and group life products

AAW is getting complicated. Hybrid working is now the norm and people are working in different locations. Or working flexible hours or days. It’s key employers know how to confirm whether or not an employee meets the AAW criteria. And this isn't always as straightforward as it seems.

The traditional blanket AAW requirement could lead to an insurer declining to quote for a policy, or excluding an individual from cover where an employee is absent for a minor ailment, e.g. a broken leg. The risk of this absentee becoming a group life claim is pretty low. However the AAW rules would exclude cover for this employee until they were able to meet the AAW requirements.

The AIG approach – fit for a modern workforce

We don’t think a blanket AAW requirement is fit for 21st century working lives. In addition to excluding employees off sick with minor ailments, it needs the employer to make an assessment on how the AAW applies to employees working flexibly. So we don’t apply AAW. Instead we ask for details of absent employees. We need to know of any employee who is, and has been, absent from work due to ill health for:

• One week or longer (for schemes with up to 50 members)
• Four consecutive weeks or longer (for schemes with between 51 and 500 members
• 12 consecutive weeks or longer (for schemes with 501 or more members)

We use the absentee information given at quote stage to decide whether or not to quote for the scheme and calculate the premium. The client has the reassurance of knowing that if we quote, all absentees disclosed will be covered.

Having details of absentees remains a key part in managing risk and providing group protection insurance efficiently. And more importantly, at a fair price. We think the traditional AAW method for group life policies is outdated for modern working. Our approach provides more certainty for both us and employers.

Get in touch

If you’d like to talk to one of our team about how we do things, get in touch groupquotes@aiglife.co.uk or 0330 303 9978.