Zurich calls for greater debate over IP coverage

The insurer will be working with Kyla Malcolm to look into where increased private disability coverage can deliver the biggest savings to taxpayers.

It will also assess which segments of the working population stand most to gain from improved coverage. 

The research, set for publication in early 2014, will also recommend which policy instruments are best suited to reaching the groups within the working population facing the greatest challenges in providing for themselves.

Zurich said while the government has taken a series of measures to encourage retirement savings in the UK, the private provision of disability insurance has "lagged behind - even though the risk of under-provision for disability can be even greater than the risk of not saving for retirement."

The insurer highlighted 75 million working days per year are lost through long term sickness and an uptake in people taking out IP, for example, would bring benefits for consumers, tax payers and the state.

Around 9% of the UK currently has income protection, compared to around 30% in the US .

In terms of annual savings, it is estimated that if the amount of people in the UK who have IP reached the levels of the US, the benefit to the taxpayer would be £1.2 billion a year and individuals as whole would gain an income advantage of £0.5 to £1 billion.

Gary Shaughnessy, CEO of Zurich UK Life said: "Across the UK we remain hugely under insured and we are more likely to insure our pet than our ability to provide financial support to our families in the event of illness.

"We need a greater public debate about how we can encourage wider coverage and we hope the research we are announcing today will kick start this. The cost to business, the cost to those people whose lives are turned upside down by illness, and the cost to the state, including an ever-increasing pressure on an already overburdened NHS, mean the current state of affairs is unsustainable".