Gen Re backs state community rated IP product

clock • 2 min read

Gen Re has backed a community rated income protection (IP) product to compliment state benefits and called on the industry to add its support to the proposal.

It also urged protection providers and fellow re-insurers to see the bigger picture in the initiative's long-term potential after warning there could be costs in the short-term.

Speaking at its Disability Dynamics conference, Robert Kerr, senior account executive at Gen Re UK and Ireland, confirmed it is a viable opportunity.

"Its early days but there is a huge opportunity," he said.

"Its never going to be put into the National Employment Savings Trust (NEST) because they've got enough problems delivering that now without actually putting something else in, but if there was something else I don't see why it wouldn't work."

"We've had lots of experience doing similar sorts of things both in the UK and overseas so I don't see any reason why we wouldn't fully participate in doing something like that," he added.

The possibility of a top-up IP product to state welfare benefits was first voiced publicly at the protection review in July and now seems to be collecting growing support.

Kerr also expanded on what the scheme could potentially look like and how this could reassure some firms that maybe reluctant to commit early.

"I can understand why some insurers may not want to do it and the risk is some might not want to enter in on day one but come in later down the line, so you wonder if there needs to be a slight incentive to start and encourage them to join in," he said.

"Clearly there are some issues around if people have the option because those healthier lives might go for an individual product, leaving the older lives in the community rated one, but the way it works in a lot of other countries is community rated isn't a choice, everyone has to go that way.

"I see no problem if it was a scheme that everyone was involved in," he added.

Kerr explained that there are some short-term risks related to this possibility but these should be outweighed by the likely long-term gains.

"We've been involved in a lot of projects where we took a bigger picture view accepting we might lose some money in the short-term, but it's the right thing and the profitable thing to do in the long-term," he said.

 

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