Insurers to pay benefits?

The Insurance Industry Working Group (IIWG), co chaired by chancellor Alistair Darling and Aviva boss Andrew Moss, has called for cooperation between insurers and government.

The report recommends:

• Improving financial education and considering further steps to improve transparency, simplicity and access for consumers.
• Government and industry should consider sharing data and research findings that can help efforts to reduce the likely impact of different risks, such as flood risk and crime.
• The insurance industry to have a greater industry role in traditional benefit areas, such as helping people with the need for a retirement income and with long term care.
• Encouraging capital flows into the UK insurance industry by ensuring its competitive position in the global marketplace is maintained and enhanced.

Highlights from the papers:

• Guardian: the creation of a financial educational commissioner, or tsar (like in New Zealand) to alert the public about the need to save for their retirement, and insure against illness or unemployment – “the commissioner should work with the whole financial services industry to improve all aspects of financial education and literacy, including in the context of the national curriculum, and develop a trusted financial education and information service".
• Telegraph: Insurers to start paying about £17bn in benefits such as unemployment and sickness to "help reduce pressures" on the public purse. It is estimated that the capital needed to support the £17bn in claims could reach £9.7bn, equivalent to creating a company the size of Prudential or Aviva.

Group chairmen

Alistair Darling said: “The insurance industry is a vital part of the UK economy, employing around a third of all people who work in financial services and managing almost £1.5 trillion in assets. While the industry has fared well relative to other financial sectors in the face of the global financial crisis, it is facing the challenge of an increasingly competitive global market.

“I welcome the industry’s commitment to work in partnership with Government to improve confidence in insurance products, enhance financial capability and further build the competitiveness of this key British industry."

Andrew Moss said: “The insurance industry makes a great contribution to the UK economy. Taking forward the recommendations in this report will create a stronger partnership between Government and the industry, which is essential to help people manage the risks of everyday life.

“There is a real desire for better customer engagement through greater financial education and awareness, improved accessibility and transparency of products and a need to attract capital to the UK insurance industry. Taking steps now will build customer confidence and deliver our vision to become the world’s leading insurance centre.”

Insurance Industry Working Group

The Insurance Industry Working Group was set up in October 2008 to look at the challenges and opportunities facing the UK Insurance Industry. It includes leading figures from across the insurance sector. Its findings will be reported to the Chancellor's High-Level Group on City Competitiveness, which will meet later this year.