Consumer insurance for long-term care (LTC) will not solve the problems of social care funding in England and Wales and a hybrid public-private partnership model should be explored instead, according to a new report.
The Gone for Good? Pre-funded insurance for long-term care report from think-tank Strategic Society Centre observed that although the UK has one of the most successful insurance industries in the world, no provider offered pre-funded long-term care insurance.
It argued that no country in the world has an effective or functioning market in this type of product, and the UK confronts impossible demand barriers, including the free personal care system in Scotland that confused many in England and Wales.
"Even if the UK were to achieve take-up rates for pre-funded long-term care insurance of 15% (equivalent to the current international leader, France) this would still result in a social care system that was under-funded, means-tested, excessively rationed, and with many households confronting catastrophic bills for paid care," it said.
It concluded that there were many other roles the financial services industry could take in LTC funding reform, particularly around delivering and servicing a state-sponsored insurance scheme.
Operations in Singapore and the Netherlands were noted as providing a high level of coverage that had gone a long way to solving funding problems.
These, it added, had also enabled governments to introduce working-age contributions, reducing the scope of the kind of retirement means-testing in social care that had done so much to undermine the pensions industry in the UK.
The report was backed by Bupa Care Services, and the provider suggested that insurance would need to be made compulsory if people were to accept it.
Oliver Thomas, director of UK care homes at the insurer, said: "The only sustainable option is a partnership between the individual and the state where risk is pooled.
"Insurance is an option but, as the report suggested, we don't think a voluntary system would work. We know from our own previous experience in LTCI that people don't buy it if they don't think they'll need it.
"If the Dilnot Commission thinks insurance is part of the solution, an element of compulsion will be crucial."
The Dilnot Commission on Funding Care and Support is due to report in July, with a White Paper from the coalition government promised before the end of the year.
