Arthur Schopenhauer observed
that all truth or changes passes through three stages. At first there is ridicule, followed by violent opposition and thirdly,
acceptance as self evident. Always start
a blog with a German philosopher is my rule ……
Could auto-enrolment to sick
pay be the next State intervention? Prior
to auto-enrolment to pensions, if you asked me how many traditional providers welcomed
or wanted it I’d have said “not so sure any of them”. But they got it and a bit more besides with
the “pensions freedom” changes. If the
government thinks that saving for old age can be sorted out by a combination of
employers, law and telling people it is the new normal, what’s next ?
The next target for the
government could be long-term sick pay cover.
From the outset the approach
to sick pay intervention would need to be different. The basic interface
between welfare benefits and insurance sick pay is difficult. The concept and
execution is not as simple as pensions because the welfare system will always
want to keep families and children out of extreme poverty.
A situation may arise where
employers are obliged to facilitate this but not necessarily provide entire
working-life cover for their employees. As insurers we could play a role in
aiding the process. Digitally we can develop rules-based systems that could
tell people when to buy top-up cover or when to basically stay with State
provision. Bearing that in mind, group risk insurers need to be developing
those systems now. While some may doubt that auto-enrolment to sick pay will
happen, the direction of travel is clear and companies that are ahead of the
curve will fare better than those that adopt a ‘wait and see’ approach.
We like to think not too much
changes in our world but the reality is that we are already in the middle of
this change. Income protection in the event of incapacity to earn being outsourced
to the private sector is now likely.
