The health insurance and protection market covered
Grid: Protection should be incentivised - not compulsory
Grid has argued that incentivisation is the best way for the protection market to expand - not compulsion.
The trade body for the group risk industry was responding to PruProtect's call earlier this week for protection to be made compulsory.
Speaking at a media briefing to publish its half year results, Deepak Jobanputra, actuarial and product director at PruProtect, said simple term assurance was not sufficient and that people were not realising the risks they were leaving themselves exposed to.
He said: "Everyone needs critical illness not just life cover. Protection insurance should be compulsory."
Herschel Mayers, CEO of the provider, added: "I think we should lobby for that."
Katharine Moxham, spokesperson for Grid, acknowledged that while a form of compulsion in the group risk sector (similar to that being implemented for pensions) could save the government around £3.5bn a year, this would be a bridge too far a present.
"Our own research amongst employers found that almost half (49%) of those who do not already offer group risk protection benefits said they would consider implementing a group life scheme alongside pensions auto-enrolment dependent on various conditions - potentially making major inroads into the country's growing life assurance protection gap.
"This shows that the appetite is there as long as employers are incentivised and don't feel put at a disadvantage by reforms.
"On balance, incentivisation or "soft" compulsion is far more likely to be the route of choice for protection since people's needs vary so greatly in this space," she concluded.
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Nest
Compulsion would not help us. Look at NEST pensions. The govt would insist that commission was reduced or scrapped. Where would that leave thousands of brokers who use protection commission as a useful addition to turnover. No thank you
Posted by: Peter Baker | Sep 13 2011
oooh interesting
Incentives yes, but the government have already said no tax breaks on PMI so I would feel the same would be true for Income Protection , CIC etc. TALA didnt exactly set the world alight did it? It would be a much needed shot in the arm for financial services AND reduce the benefits burden if the government could come up with some kind of plan.
Posted by: Rob | Sep 12 2011
NO
Compulsion, whilst well-meaning, is not the way forward. It is a statist view which assumes we all have to fit a certain shape. Even if it was made compulsory for frims to provide death/CI/IP benefits for their employees it still leaves the self-employed, home-makers, etc as a loose end. Add to this the fact that everybody deserves the right to make a prat of himself. Education, persuasion and even bribery (tax incentives) is the way forward.
Posted by: Alan Lakey | Sep 09 2011
About time!!!
These sorts of conversations should have started to take place ages ago, instead of us focusing on micro issues like TPD. I was lucky enough to see the Australian system up close last year. I like what they do with compulsory protection, and Income Protection has lots of incentives attached to it too. What's stopping us being greedynand doing BOTH???
Posted by: Andy Milburn | Sep 09 2011
Definitely not Compulsion
I don't like the idea of compulsion. Everybody has different protection needs so you would need to make it compulsory to have different things at different stages of your life so that inappropriate cover wasn’t being pushed on people. Forcing a single person with no dependents to take out life cover would be a bit like forcing someone who walks to work to buy car insurance because one day they may need it. The public would see it as another tax as well. Incentives would be a much better idea - but what form would they take?
Posted by: Roger Edwards | Sep 09 2011
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