Group risk providers have been urged to formulate a clear strategy for income protection after a senior DWP figure called on it to demonstrate the case for including the benefit within auto-enrolment.
A senior DWP figure speaking at last month’s Conservative Party conference is reported to have opened the door to introducing auto-enrolment for income protection by calling on the industry to make its case to Government.
Some insurers have been calling on the Government to nudge employees towards IP in a similar way to pensions auto-enrolment.
The senior DWP source is reported to have said: “Income protection is a puzzle with only 7 per cent covered, which is a very low figure. It is the kind of level which makes it a minority sport but it doesn’t mean we can’t say; let’s adjust all our systems to account for an increase.
“If we are to see movement on Government involvement then we want to see evidence on it beginning to grow substantially. Why don’t employers want it? Insurance firms and employers need to come up with a coherent story to get us to do it. It’s just not a majority game right now and there is some resistance, I don’t know why but there is.”
Group Risk Development spokesperson Katharine Moxham says: “This is a positive call from the DWP for more evidence of why it should support income protection. The industry now needs to consider how it can rise to the challenge and provide evidence of demand for income protection.
“It is fair to say there is not the same level of lobbying in the world of group risk as there is, say, in pensions. Providers do not have the same resources as pension providers, but that is not to say everyone in the group risk industry, including Grid, couldn’t do a bit more to push their case to Government.”
Canada Life Group Insurance sales and marketing director Paul Avis says: “Compulsion would be a great area to explore, and I hope the trade bodies Grid and the ABI look to take this agenda forward with the Department for Work and Pensions.”