The report, published today, by the group co-chaired by Chancellor Alistair Darling and Aviva chief executive Andrew Moss looks at ways for the insurance sector to take a greater role in managing the risks facing the population such as unemployment, ill-health, retirement income and the cost of long-term care, in order to lift some of the burden which the Government currently shoulders.
It says that currently 64 per cent of these risks are underwritten by the Government, but that if this were to shift so that the private sector took on a five percentage point greater share of these risks, it could save the public purse £17bn.
The report says: “Over time the challenge of funding these costs will rise, due to a decline in the relative size of the working age population and rising costs in areas such as healthcare.
“This raises the question of where the optimal balance between private and state provision should lie in the future and how much emphasis should be placed on personal responsibility.
“If, for example, the private sector increased its share of the addressable risk market by five percentage points, the corresponding saving for public sector risk management could be almost £17bn per year.”
The Association of British Insurers director general Stephen Haddrill says: “The recommendations represent a solid set of ideas for both insurers and policymakers about how best to build on the strength of the sector, improve its competitiveness and support UK plc.
“Achieving the best results will depend on all the report’s recommendations, which the ABI wholly support, being implemented in full. Doing so will create the virtuous circle referred to in the report
“We will be working with our members to achieve this, and we urge the Government and FSA to do the same.”