Earlier this year the ABI published a think-piece called ‘Identifying the Challenges of a Changing World’, deliberately designed to provoke discussion about the issues we will all face in the years ahead and the role insurers can play in tackling them.
Today’s Autumn Statement, while undoubtedly crafted by a political mind, further emphasises a number of areas where Government and Industry will need to continue to work together to address the looming societal challenges ahead.
In macro-economic terms, I’m sure we are all encouraged by the downward trend of the deficit and better than predicted growth. Clearly businesses of all sizes will welcome the reassurances given today around areas such as corporation tax and business rates, and consumers too can take some comfort from measures such as the freeze in petrol duty and a smaller than predicted rise in rail fares.
Today’s political knockabout confirmed the General Election in 2015 as the ‘Cost of living’ election (isn’t every General Election about the Cost of Living?), but the debate will not just be around the price of a pint of milk. What about the longer term? The much longer term? There are some signposts in today’s Statement which indicate both where the political debate will be in 2015 but emphasise also the challenges and opportunities ahead for insurers.
The challenges of an ageing society – and come 2040 it looks like I’ll still be typing – are writ large in today’s Statement: further increases to the State Pension age and encouragement to working pensioners to make voluntary national insurance contributions.
Long-term investment
As part of the Government insurance growth action plan, yesterday a number of insurers publically confirmed their commitment to the Country’s long-term interest: pledging £25 billion of savers’ funds into the UK’s infrastructure and creating a virtuous circle to help to provide for future generations.
More broadly (and far be it from me to speculate on the political motivation here), the envisaged legislative cap on welfare spending has the potential to force a step-change in the balance between state and private provision of individual financial resilience.
There are other signs of the future ahead – a signalled farewell to the familiar paper tax disc (replaced by an electronic system), increased investment in science, technology and engineering and more investment in quantum technology: the ferocious pace of technological change will ultimately lead to ever higher standards of expectation by consumers and the regulators will undoubtedly expect financial service providers to keep pace.
Insurance has social good at its heart and the products it provides mirror the needs of society – many of these challenges require Government and industry to work together. The progress we are seeing in tackling challenges as diverse as the increased threat of flooding, civil justice reform and infrastructure investment are testament to what can be achieved, other areas such as a stable pensions and welfare framework require an equal spirit of collaboration.
The Chancellor’s Autumn Statement was not a pre-election giveaway – we still have the March budget to come – but it does underline the scale of longer term challenges. Government will not be able to meet these alone and genuine partnership with insurers will be key to success.
Seth Williams is Assistant Director, Head of Public Affairs & Events at the Association of British Insurers.