Care needs: financial services industry to develop products to help people plan
Government and Association of British Insurers (ABI) have committed to working together to help people plan for their future care costs.
Care and Support Minister, Norman Lamb, and the Director General of the ABI, Otto Thoresen, have signed a joint ‘statement of intent’ committing to work together to:
- help people get the information they need to plan and make decisions about how to pay for their long term care
- create the right conditions for a larger market of financial products that will give people more choice
Norman Lamb said:
"The current care and support system doesn’t work and is hugely unfair. People face losing almost everything they’ve worked hard for or being forced to sell their family home in a time of crisis to pay for the care they need.
"Our reforms will not only stop this from happening but will provide the financial services industry with the certainty it needs to develop products that can help people plan for the future. I welcome this commitment from the industry and am excited to see how this new market could transform the way we pay for our care."
Otto Thoresen said:
"The insurance industry can play an important role in developing solutions to help people fund their long-term care needs. We have supported the introduction of a new care funding model, and believe the Care Bill provides a sustainable framework for both industry and consumers.
"The statement of intent sets out our commitment to working with the government to create the conditions for the development of an insurance market that offers a range of products to help people meet their long term care needs."
A number of companies have stated a commitment to developing this financial market and have indicated the sorts of products that could emerge. These include Aegon, Aviva, Legal & General and Swiss Re.
"We stand behind the statement of intent as a great summary of how government and the industry can work together in the best interests of consumers. We are committed to the long term care market and making sure people of an older age have the peace of mind that being adequately planned and prepared for older age brings."
Legal & General said:
"Legal & General is committed to helping government by developing workable financial products to help individuals finance long-term care. Likely solutions will involve a mix of products reflecting different individual and family circumstances."
The government is introducing the biggest reforms to the way care people pay for their care in more than 60 years. These reforms will include a cap on the cost of care to protect people from unlimited bills. They will also give people the option of deferring payments so they aren’t forced to sell their homes to pay for the care they need.
These reforms aim to provide greater certainty about what people will be expected to pay and therefore provide greater opportunity for a new market of care products to emerge. In March 2013 the government asked the financial services industry to lead a review of the market, to identify opportunities for new products and barriers to them being realised.
The findings of this industry-led review have now been published, which marks the first step towards giving people greater choice about how they can meet the costs of their care.
Swiss Re said:
"Swiss Re feels that the issue of social care is important to the UK community and we are pleased to have been actively involved in the review which led up to the statement. The review identified a number of areas where more work is needed to give people access to appropriate information and advice and more choice about how they meet their care costs."
"The growth of platform solutions makes it easier for individuals to look at all of their assets together on a consolidated basis – pensions, other savings and even housing equity. This will allow people to make the best use in later life of the savings and assets they’ve worked hard to build up."