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Zurich chief Gary Shaughnessy: Time for protection tax breaks

Gary Shaughnessy 480

Zurich chief executive for UK life Gary Shaughnessy wants the Government to investigate introducing tax breaks for protection to encourage people to take responsibility for their financial security.

In his first interview since joining the provider from Fidelity in June, Shaughnessy says policymakers should consider extending the tax incentives offered to pension and Isa savers to people who want to buy protection products.

He says: “There is a protection gap emerging alongside the savings gap and we have to solve both of those problems because they are inherently linked.

“The Government is saying it is a good thing to save by putting automatic enrolment in place but there is not the same positive reinforcement in place for protection.

“There are all sorts of ways the Government could introduce that. Just as there are tax breaks for saving in a pension or an Isa, you could consider introducing more tax advantages for protecting yourself and your family.”

Shaughnessy says providing incentives for people to buy protection products would result in fewer people falling back on the state.

“If the tax system can be used to encourage people to protect themselves then that is something which should be looked at,” he says.

“It is a difficult time to talk about tax incentives but if it reduces the costs the state has in terms of healthcare and so on, that must be a good thing.”

One of Shaughnessy’s first tasks at Zurich has been to reduce costs. Earlier this month, the provider announced 200 jobs will be cut as part of a restructure of its UK business.

He says: “I did not join Zurich with the intention of cutting jobs but the reality is we have to be fit for purpose to take advantage of the growth opportunities that exist in the market.

“There is a lot of change going on – whether it is RDR, Solvency II, auto-enrolment or the gender directive – and we have had to look at where we focus the business.

“We are clear about what we want to do, which is build our protection business and focus on the corporate savings and retail platform markets.”

Zurich soft-launched its retail platform with 16 adviser firms earlier this month and expects to roll it out to the wider market at the end of November. Shaughnessy admits he would have preferred the platform to have gone live sooner.

He says: “Would I prefer to have £40bn on the platform already? Absolutely, but the timing in a sense is very good because a lot of advisers are reviewing their existing platform proposition or are choosing a platform for the first time.

“Advisers will test us and if it does work they will move existing clients to us and if it doesn’t, they won’t.

“I am not going to give you a target for assets under management. My target is to see advisers who use the platform turn into advocates, because if that happens the assets will flow.”

While Zurich has invested heavily in its corporate and retail propositions to ensure it is ready for 2013, Shaughnessy is convinced regulatory change will continue once the RDR has been implemented.

“The FSA has basically thrown the whole market up and lots of things are happening at the same time,” he says.

“The chances that all of the cards will land in exactly the way the regulator intended are low. Some things will work and will have a positive long-term effect but others will not have the impact anticipated at all.

“I cannot believe at that point the regulator will not do something. Whether that is regulatory change or guidance or enforcement, I do not know, but it is not realistic to think the RDR will happen and then everything in the market will be sorted.”

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