Legal & General has applauded the "laudable ambitions" of today's 21st Century Welfare consultation paper and believes the protection industry is the perfect partner to assist the Government in welfare reform.
It also noted that a transfer of less than 1% of risk from the public to the private sector would be enough to achieve the savings Iain Duncan Smith needs to deliver the reforms proposed in today's consultation paper.
Responding to the consultation, Tim Breedon, group chief executive at L&G, suggests that insurers and the government are in the same business, so a better partnership between the industry and government to reduce the cost to tax-payers of Britain's insurance bill makes perfect sense.
"The proposal of a universal credit offers a simplification of the benefit system, while the prospect of slower benefit withdrawal will remove disincentives for unemployed people who wish to re-enter the workplace. Both are laudable ambitions," he says.
However, Breedon, who is also chairman of the Association of British Insurers, raises the point that according to the Centre for Social Justice, there is an estimated £3bn initial cost of slowing down the rate of benefit withdrawal to achieve these aims, which will be hard to fund in the current spending environment.
"We can help," he says.
"The modern insurance industry is already helping individuals and families of all backgrounds against the financial consequences of bereavement, illness or unemployment. There is an opportunity to transfer some of this risk from the public to the private sector by, for example, encouraging the take-up of group protection cover.
"This would save the taxpayer money which can be better spent on those who need state welfare the most," he adds.
