The Vision for the Insurance Industry in 2020 report by the group, co-chaired by Chancellor Alistair Darling and Aviva chief executive Andrew Moss, looks at how the insurance sector could take a greater role in areas such as unemployment, ill health, retirement income and the cost of long-term care.
The report says 64 per cent of these risks are underwritten by the Government through unemployment benefit, statutory sick pay and other social insurance. It suggests if the private sector took on a five percentage points’ greater share of the risks, it could save the welfare state £17bn a year although the insurance sector would require £9.7bn in extra capital.
The paper says: “Any shift of the balance from the public to the private sector requires two things to occur – greater consumer uptake of cover provided by the private sector and increased capital must be attracted to the industry to fund this growth.”
Munich Re head of marketing Andy Milburn says: “I am pretty sure that most reinsurers would welcome the opportunity to have a look at this idea and see how we could help insurers in the UK to pursue any opportunity this brings.”
But Highclere Financial Services partner Alan Lakey says: “Given the economic climate, with very little capital around, I am struggling to imagine why insurers would want to do this.”