Protection has come under increasing scrutiny over recent months as industry figures have called for the government to take more responsibility in the protection space, with the aim of helping to increase sales of the product.
In May last year, Paul Avis, marketing director for Canada Life, called on politicians of all parties to put protection on the agenda by encouraging a form of auto-enrolment for group income protection.
Earlier this year, Mr Avis reiterated this position in an email newsletter to members, saying that some for of auto-enrolment for protection could help alleviate the welfare state burden.
According to statistics from Group Risk Development, overall only 50 per cent of employers understood what group life was in November 2014, and 56 per cent of what the research described as the ‘target group’ did not have any cover, compared to 24 per cent who did for all staff.
In February this year, the Association of British Insurers told FTAdviser that it is lobbying for legislative changes to the way welfare is delivered to boost the provision of income protection through the workplace.
At that time, Helen White, head of protection at the ABI said that in general the trade body was looking for “some kind of legislative action from the next government... [that] will make greater use of income protection insurance through the workplace part of that solution”.
FTAdviser has spoken to a number of key industry figures to see what measures they would like to see implemented to help boost protection.
Helen White, ABI
Revisiting the ABI to ascertain the full spectrum of organisation’s focus, part of the message from Ms White was that the government is under a great deal of pressure to justify and reduce welfare spending, particularly for those who might one day be able to work again.
“The state and insurers can partner to reform the welfare state in a way that costs less and delivers more. The majority of UK households are unaware of the level of support they would be entitled to form their employer or from the state should they be forced to stop work due to illness or injury. In most cases they overestimate the state safety net.”
She adds that research undertaken by the Centre for Economic and Social Inclusion has shown that if up to 60 per cent of working families were covered by income protection insurance through their employer or individually, this would save the government £660m and provide households with a far better replacement rate of income.
“As well as the better replacement income that income protection insurance provides, it helps individuals to recover faster than they otherwise would with state support through rehabilitation and supporting them when they return to work. This would benefit not only the individual and their family, but the employer, the exchequer and the economy.”
Ms White also says that the ABI believes the next government should introduce measures to promote the use of income protection insurance through the workplace, ideally by the end of next parliament.