Industry and the Government share the provision of cover for what is known as ‘addressable risk’ in the UK. This means each side picks up its part of the costs of ill-health, healthcare, unemployment and pensions. At present, the Government is responsible for 65% of all addressable risk through its various benefit systems and 35% is covered by the insurance industry through the products provided to clients.
July 2009 saw the publication of ‘Vision for the Insurance Industry in 2020’ a joint report by an Insurance Industry Working Group (IIWG) consisting of the Chancellor of the Exchequer and insurance sector leaders. Our Group Chief Executive, Tim Breedon, was a member of the group, and the final report picks up several of our themes and thoughts for the future direction of the industry. The report could play a role in the economic recovery and is welcome evidence of long term thinking by the industry, despite the many immediate pressures it had to face in 2008 and 2009.
The insurance industry plays a unique role within the economy, by providing a mechanism to allow people to cope when a risk is realised. In 2008 the UK insurance industry paid out £239 million to customers every day in pension and life insurance benefits. The industry also paid out almost £9 million per day to householders in general insurance claims and £7.5 million daily for liability claims including those arising from accidents at work and professional liabilities.
Our core purpose as an industry is to provide our customers with ‘safety in numbers’, enabling the pooling of premiums and sharing of risks to spread the financial impact of the negative events that will happen to some of them. Without our industry each of those individuals would have to provide for their own future independently without the benefits of sharing the burden of the risk with others. For the majority, this just would not be possible.
