‘Win-win’ tax incentive for protection market could save the Exchequer £220m
The Association of British Insurers (ABI) has called on the Government to introduce a tax incentive for employers purchasing Group Income Protection (GIP) which could extend coverage to a further 1.5 million employees in the UK.
ABI analysis shows a tax incentive, as part of a larger package of measures, could mean coverage increases from its current levels at 7% to reach 12% after five years. According to Landman Economics modelling, this increased coverage could also save the Exchequer more than £220m over five years.
Responding to the Government’s Green Paper on Work, Health and Disability, the ABI said its proposed package of measures would increase financial resilience for individuals, households, business and society.
The ABI also called for the Government to encourage employers to issue an annual ‘protection statement’ to their employees in order to make them aware of their combined sick pay and benefit entitlement in the event of an absence from work due to health reasons.
The package of measures proposed by the ABI also includes:
- Building the population’s awareness and understanding of their protection needs through initiatives such as the Financial Advice Market Review (FAMR) and the Single Financial Guidance Body (SFGB)
- Removing the disincentives created by the introduction of Universal Credit to employees and the self-employed taking out their own Individual Income Protection (IIP) policy
- Creating an index of employers ranking them based on how they support staff with disabilities and health conditions
- Encouraging companies to consider how to best promote disability inclusion; some companies may find it useful to appoint ‘Board champions’ to promote disability diversity in the workplace
- Considering how sickness certification can be improved in order to ensure that individuals absent from work for health reasons receive the right support quickly
ABI Assistant Director, Head of Health and Protection, Raluca Boroianu-Omura said:
“Households in the UK are among the most financially exposed in the developed world. Serious illness and death often lay bare the fragility of households in the face of economic shocks. Our suggested measures are a win-win, with more consumers being protected while saving the Government money.
“If implemented, the ABI’s proposals for change set out in the response to Improving Lives: The Work, Health and Disability Green Paper could help to provide security and peace of mind to millions more households in the UK, bringing a whole range of social and economic benefits.”
The Minister for Disability, Work, and Health Penny Mordant MP will be attending an ABI event on 23 March to speak to leading industry figures about the challenges of closing the disability employment gap, and the role that insurers can play.
A copy of the ABI’s response to Improving Lives: The Work, Health and Disability Green Paper can be found here.
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Notes for Editors
1. Enquiries to:
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1. The Association of British Insurers is the leading trade association for insurers and providers of long term savings. Our 250 members include most household names and specialist providers who contribute £12bn in taxes and manage investments of £1.6 trillion.
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3. More news and information from the ABI is available on our web site, www.abi.org.uk.