City to start managing benefits?
Updated on 27 July 2009
Chancellor Alistair Darling has been talking to leading insurers about outsourcing unemployment and pension payments. Samira Ahmed reports.
Could insurance companies be paying your unemployment benefits, state pension and long-term care in the future?
That is one radical proposal put forward by a working group of Britain's biggest insurers.
The group co-chaired by the chancellor, Alistair Darling, has called for a greater role in providing the safety net which was once the preserve of the welfare state.
It sees a possible £17bn worth of benefits provision being shifted to the private sector.
Samira Ahmed talked to Stephen Haddrill, director general of the Association of British Insurers.
He said: "There is a huge amount of money spent on welfare at the moment. People need the support that provides.
"But we feel people could take on more responsibility for when things go wrong.
"So the plan really is to improve people's understanding of what insurance can offer and work with the government in partnership to make sure the insurance industry can offer the kind of products and services that will make sense to people if they are facing unemployment or facing health problems or they need long-term care in old age.
Mr Haddrill continued: "If you look at what happens now on flooding and climate change, in most countries all the cost of the flood is met by the taxpayer and the state and that's not the case in this country.
"We have an agreement in this country whereby they protect us from flooding and we provide insurance to householders so that they can protect themselves and meet the costs of a flood.
He concluded: "I don't think we're talking about taking on the whole welfare state.
"But for the individuals who are going to take this on financial education is very important and they probably need some sort of financial incentive and they want the assurance that they haven't quite had in recent years that those tax breaks are going to be there for the long term.
"There have been problems with critical illness cover but we've sorted those out in the last year and it's on the basis of sorting that out that the government has actually said to us let's have a discussion about how we can work together to make sure you're doing some of the job that we do for those people who can afford it and understand what they'd be getting into."
