We aim to ensure that we relate to the day-to-day lives and concerns of our customers, and as a shareholder we aim to set new and higher standards of stewardship and engagement with the businesses in which we invest.
Insurance products help to protect individuals and businesses against the financial consequences of a wide range of risks – everything from poor health and natural disasters to the risk of outliving savings in old age. By reducing the impact of these problems, the insurance industry allows people to bear risks with greater peace of mind and reduces potential reliance on the state when individuals with these products find themselves in times of financial difficulty.
Our products can also help to facilitate household budgeting and long-term saving, enable people to get through the financial consequences of unfortunate or catastrophic events and also to plan and prepare for the more enjoyable things in life.
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 inevitably 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.
Not enough people in Britain are privately insured against accidents, ill health or loss of income. People expect the Government to provide them with some level of financial protection against these events and this is wholly appropriate. The private sector can, however, provide advanced welfare services that can help families to better protect themselves.
The Government held a large number of consultations in 2011 that were relevant to our industry and the products and services we offer. In total we responded to over 55 consultations in 2011, including pension reforms, regulatory changes, social care and welfare reform.
We have a great deal of expertise across Legal & General, which we have been able to share with Government as they look to improve the pensions and social care systems in the UK and reduce the costs of welfare provision. We contributed to the debates around auto enrolment, early access to pensions, long-term care, simple financial products and several other areas that have an impact on the majority of the population.
The insurance industry has the expertise and the capacity to help the state increase the quality of welfare provision and save money by growing a complementary private sector safety net with well-designed tax incentives and simpler regulations. One example would be to focus on the potential to maximise the benefits of Group Protection. This is an area where we have been able to share our experience and expertise with Government in the debates around early intervention and rehabilitation and our success in helping individuals back into the workplace.
Legal & General has been providing income replacement and other social protection products since 1836. We believe that our skills in rehabilitation and enabling individuals to return to work could help the Department of Work and Pensions (DWP) to provide more effective services at reduced expense. Put simply, if we can help a family keep most of their income when times are hard, they are less likely to need to rely on the welfare system.
The broader principles of risk-sharing also apply to pensions and potentially long-term care. Our industry already assists people in planning for their retirement. This is another area that has seen much focus from Government.