The FSCP claims there has been a lack of innovation in this area over the past three decades. Its latest discussion paper calls on insurers, regulators and other stakeholders to address this “protection gap”.
It also says there has been too much focus on encouraging savings as a means of building financial resilience, at the cost of innovative insurance products.
Panel chair Sue Lewis challenged the industry to design products that meet the needs of today’s work force.
Swiss Re welcomed this paper, commenting that both the life assurance protection gap and the disability income protection gap had grown over the past 15 years – when it first starting collating data on this issue.
However, Swiss Re’s technical manager Ron Wheatcroft (pictured above) says there has been an upward trend in new sales and a more positive market more recently. He adds: “While this is good news, the FCA’s Financial Lives data shows the scale of the challenge if we are to make society more resilient to financial shocks, with 65 per cent of adults having no protection insurance at all.”
He adds: “We should not forget the support that employers are providing to workforces with almost 12.5m people insured under employer-sponsored arrangements.”
He adds that he agrees with the FSCP’s recommendation that the government examines the case for allowing a full disregard for all capital and income payouts in the assessment for Universal Credit and other means-tested benefits.