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Take your partners for a model role

Driving to work recently, Ilistened with interest to Radio Four&#39s Today

programmetaking Health Secretary Alan Milburn to task about theGovernment&#39s

most recentconsultation on the National Health Service.

The Government has issued a consultation document entitled, The National

Plan for the New NHS – The Need for Change. The Prime Minister sets out

five challenges that face the NHS:

Partnership – working together across the NHS to ensure the best possible care.

Performance – taking action to review and deliver high standards in the NHS.

Professions and the wider NHS workforce – getting the right people to

deliver the right services for patients.

Patient care – speed of access and empowerment.

Prevention – promoting healthy living across all sections of society.

Part of this consultation process includes the wide distribution of

leaflets so that people are given the opportunity to have their say about

the future of the NHS. Responses are also being encouraged via the

Department of Health&#39s website at

While any move to modernise the NHS must surely be welcomed – it seems

that not a day goes past without some type of gripe or grumble about the

state of the nation&#39s health and healthcare – will it go far enough? It

seems inevitable that the private sector, in a variety of forms, will have

a bigger role to play in the health of the nation. It just remains to be

seen what that role will be.

At a recent Swiss Life dinner and just a day after the Chancellor of the

Exchequer had announced a 6 per cent increase in annual NHS spending,

health minister Gisela Stuart revealed her thoughts. She said: “There is a

virtuous circle where I think the private providers and private insurance

industry can play a part. We are not ideologically opposed in any way. At

this stage, I am just not entirely sure whether the product and the models

are out there in terms of healthcare that would actually be a sample of

real partnership.”

In this, the Government was issuing a challenge to our industry to come up

with partnership models that meet their objectives. It must surely be

recognised that one of those objectives is to contain cost.

How then can group risk insurance providers gear themselves up to become

one of those partners? Group risk insurance, such as income and

critical-illness protection, have traditionally been reactive contracts

that pay out an income in ill health and a cheque when a critical illness

is diagnosed.

This has met a very real need within the realm of employee benefits.

Employers are able to offer safety net benefits and employees are relieved

of one of the very real consequences of ill health – financial insecurity.

However, going back to the minister&#39s challenge, does this meet the remit

of a “partnership model”?

The answer is both yesand no.

Yes, in that those insured through income and critical-illness protection

may offer relief to the spiralling burden of incapacity benefits that

contributes to a Welfare State bill now representing a third of all

government spending.

No, in that there is little overt Government encouragement for employers

and employees to take up the sort of protections that our industry finds so

common sense.

If we believe that the Government is seeking to shift the responsibility

of welfare provision on to the employer and employee/individual then there

have been no pragmatic gestures – for example, tax incentives, awareness

campaigns – to encourage this climate of self-provision.

Also no, in that the Government just is not that keen on the type of

insurance products that are on offer.

During the debate, Stuart also said: “The assumption is that you cannot

define the financial services industry&#39s responsibilities unless anduntil

we have defined oursand try to find a third way through this.”

It could be argued some insurance providers are already moving towards a

partnership model and a third way by examining the very nature of their

propositions – trying to offer the type of insurance products that the

Government could become keen on.

As already stated, the financial security that protection products offer

is a tangible benefit. However, it is by looking at the product surround

that we can begin to come up with the sort of provision that Stuart was


It is by looking at wider employment issues that insurers can begin to

stretch products towards something that is more than a cheque.

This is well illustrated by a combination of income protection and

healthcare intervention at the point (but ideally way before) of a claim.

Work offers the individual not only an income but also the dignity,

respect and opportunity that is gained from being part of a working


If we also acknowledge that employers do not really want their employees

to go sick in the first place, then by developing products and services

that intervene in the sickness absence process and encourage a return to

work, we are beginning to work towards something that is more thana cheque.

As yet, there are only 1.45 million people in the UK covered by group

income protection and 33,194 covered by group critical-illness cover.

With a working populationof 27 million, these figures hardly suggest an

adequately insured population unless you believe the state alternative of

£67.50 long-term incapacity benefit is adequate.

This illustrates an opportunity for the industry to make insurance more

inclusive by developing offerings that can be sold on an affinity-type

basis. Trade unions and membership bodies for example can play a very real

role in partnership with insurers, advisers and with some encouragement

from Government in offering protection for a wider market.

Whatever the right combination is, it is clear there is a huge and

untapped market not covered by group risk protection. To engage the

Government, insurers and advisers need to come up with partnership


To engage consumers, whether traditional or new, providers need to come up

with solutions to the wider health and welfare needs. Just as important,

providers need to communicate on a different scale than they are used to.


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