It is abundantly clear that HM Treasury continues to believe the life assurance industry has a significant part to play when it comes to protection and savings as part of funding social care.
Indeed it is a drum, particularly in respect of protection, that they have been banging for some time – certainly since Dilnot 1.0 (the Care Act 2014) and now again since the most recent social care reforms, or should I say Dilnot 2.0.
The problem for the Treasury is the solution is not in their gift.
It is entirely within the gift of the politicians they serve who either do not understand the solution or more likely it is unpalatable to them.
Worse than this however is the Association of British Insurers (ABI) which has warned that care products would be inconsistent with Consumer Duty anyway and would not be purchased by clients because insurance payments are not excluded from local authority financial assessments.
Such observations are so wide of the mark they are laughable.
Understand the liability
So I will make this really easy for politicians and the ABI.
Protection should and can easily be part of the solution to funding social care.
However the solution has to start, and this doesn’t just apply to protection, by addressing the demand side.
Clients are not going to buy long-term care policies, or any savings product, unless they understand that they will have a liability to fund their own care costs.
The majority of us will have to meet all or most of our own care costs.
This country, in common with most countries around the world, cannot afford to meet the care costs of its citizens beyond, broadly, those with the greatest need and the least ability to pay.
But the basics remain, if you don’t know you have a problem you are not going to buy a solution. It really isn’t rocket science.
Honesty about consequences
Unfortunately, the government has made it that much harder for themselves.
They should be applauded for their attempts to try and tackle this major social issue, but in their attempt to make their proposals palatable have belittled its true consequence; “The most you will have to pay is £86,000”.
At the risk of sounding like I am at a pantomime, oh no it isn’t.
The problem is that I can hardly see the government turning round and saying: “We said it was £86,000 – well actually that’s not true.”
This is what the ABI should be telling the government. This and the fact that their members will not develop new products without a viable audience.
So either be honest with the public or stop wasting our time. Do I think they will?……probably not.
