UK – Insurance companies are currently looking at their minimum aggregate exposure levels to group life insurance with a view to setting it at £100m (€161m) per event or geographical location, according to Mercer Human Resource Consulting.

Mercer believes this could have far-reaching implications for pension funds and corporate risk management, which use group life policies to provide death benefits.

Although £100m is a significant amount, Mercer says that in the context of a company that offers death-in-service benefits to both employee and spouse, this figure would be reached from a payroll as small as £8m.

Pension fund trustees may need to be informed that the fund will have to insure part of the group risk itself, Mercer suggests, particularly where scheme members work in high-density locations. Some pension funds may find that they can’t even get cover of £100m if an insurance company covers other schemes are nearby or in the same building.

Mercer claims the review is in response to the September 11 terrorist attacks in New York as insurance companies seek to protect themselves against “catastrophic loss”, an event that causes a major loss of life from within one company or area. The restriction effectively caps the amount they would have to pay-out in claims.