THE BIG QUESTION

The question - Will the government’s Welfare Reform Bill create new opportunities for the group risk industry?

The Answers

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Jack McGarry, chief executive, Unum UKLong term sick leave cost the UK economy £3.7bn in 2009

The Government’s Welfare Reform Bill will seek to reduce this cost by tightening the gateway to benefits for those people unable to work due to sickness or injury. Each year, up to 1 million people in the UK become disabled. The reforms mean that working people will be able to rely even less on state benefits to maintain the standard of living they were used to prior to their illness.

Today only 1 in 10 people in the UK have insurance to protect their income if they fall ill and yet people are three times more likely to be unable to work for more than a year than they are to die during their working life. ESA pays from just £4,901 per year, whereas income protection insurance can provide up to 75 per cent of your salary through to retirement.

With these reforms in motion, people need to understand the potential risk and find alternative ways to ensure that they and their families are protected against any eventualities. Therefore, it is more important than ever for employers to support their entire workforce by making financial protection more accessible.

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Katharine Moxham, spokesperson for Group Risk Development

Replacing the UK’s current complex working age benefits and tax credits structure with an integrated payment to ensure that work always pays makes consummate sense. Other advantages are greater flexibility and speed of reaction for changing personal situations.

This is an enormously bold move which could have huge positive impact for British business in the long term. Making it work will mean changes for both employees and businesses. We advise businesses to consider what this means for them since they will increasingly be expected to accommodate people back into the workplace. The group risk market is already extremely well placed to support employers with this. A GIP scheme provides a continuing income for employees when illness or injury prevents them from working for a prolonged period of time. It can also replace lost income where an employee has to take a part-time or lower-paid position because of illness or injury. Guy

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Roberts, client relationship director, Portus Consulting

Yes, the effect will be positive, but not massive. It will help, but don’t thing it is going to create a new dawn for group income protection. Will the individual go out and buy more income protection as a result? Probably not.

Will employers be that interested in the Welfare Reform Bill and understand the changes it will bring to the benefits system? Probably not. Yes we in the industry can talk about it, and it will give providers and Grid something to to wrap some messages around, which will reinforce the value of the products, which is obviously a good thing. And yes, people will eventually realise that they will not be able to get as much benefits in future if they go off sick. But will people rush out and start buying their own policies? I doubt it very much.