Driving to work recently, Ilistened with interest to Radio Four's Today
programmetaking Health Secretary Alan Milburn to task about theGovernment's
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's website at www.doh.gov.uk.
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's 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
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
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's 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
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
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's 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.