It is often said in sport that a decision is right when you pull it off and wrong when you do not. Does the same principle apply to protection insurance? If an individual suffers severe illness or injury, leaving them unable to work, and then makes a claim, we would all agree they made the right decision in taking out that policy. But what of the individual who takes out the cover and never needs to claim? Have they made a bad decision to get cover?
A decision to buy protection is not right or wrong based just on whether it is used and taxes to provide welfare are not right or wrong depending on the result. The key for both of these is in the execution of the delivery. When done well, we can praise the good results. But when it is not we should scrutinise how the delivery can be improved, rather than criticising the decision to provide it in the first place.
For too long, the state has provided a system of welfare that has seen individuals leaving work due to sickness or injury falling into long term dependency, often when there is a desire to return to work but the means not to. In August, Department for Work and Pensions secretary
Iain Duncan Smith announced a review of Employment Support Allowance, arguing the current system was “too binary”, with individuals deemed either fit or unfit for work, and nothing in between. He suggested that we need to focus on what the person is capable of and the support they need to continue working, not solely on what they cannot do. Insurers already do this.
Income protection helps people at every point when they need to leave work due to an illness or injury. It can provide them with a better replacement income than the state when they are not working, and rehabilitation and support services can help them recover faster and return to work.
Work adjustments manage long-term impacts on work capacity and sickness absence management systems can act as early warning signs to prevent people leaving the workforce in the first place. Insurers are able to provide more than the Government currently does and is likely to ever be able to.
The Government wants to talk about better ways of providing welfare and tackling sickness absence. Insurers can see this opportunity and are joining the conversation, showing how the solutions can be successfully delivered. We need to keep demonstrating how individuals are better supported when covered by protection and why there is a compelling case for insurers to partner with the Government in a better execution of welfare provision.
The state, having made the decision to review how it provides welfare, needs to look at how to better execute the delivery. Insurers can show them how.
Charlie Campbell is policy adviser at the Association of British Insurers