Queen's Speech: Change the debt based culture

“My Government will introduce a bill to... encourage long-term savings so that everyone has enough money for their old age."

…Or maybe even two?

The population of the UK is ageing, with older people making up a bigger percentage of the population and living longer than ever before. This needs a radical response in public policy and the ABI is pleased that the Government will be bringing forward Bills to reform state pensions and start to address problems with long term care. We need to see a change from a debt based culture to one based on savings where people take more responsibility for their old age.

The introduction of auto-enrolment in the autumn was a major push towards a society built on savings. Millions of people in the UK will be starting new pensions and for many it will be the first time they save for their old age. Auto-enrolment needs to work and the private pension industry has recognised that it has an important role to play in this so that people can have confidence they are getting a good deal. That is why we launched a Code of Conduct on Retirement Choices in March. It will ensure that consumers are able to shop around for annuities and get the information they need about the best product for them. It is why we are so committed to making pension charges more transparent, so customers know what they are paying for. A Pensions Bill which simplifies and clarifies state pensions so that people understand what they will get from the state – and what they might want or need to pay for themselves – will only help make sure everyone saves more.

The reform of public and private pensions is designed to give people the retirement that they look forward to. People are living longer and staying healthier and most will have many happy years of old age, but the ABI also welcomes steps to help those who need higher levels of care and support. It is widely known that the Government is bringing in a Bill that is designed to tackle the problem of long-term care and the insurance industry wants to be part of this hugely important debate. We would like to see a national campaign to raise awareness of what is available and how long-term care is paid for. We know that far too many people are unaware that they will need to pay for it themselves. There will be discussions about the level of any ‘Dilnot’ cap, the mean-tested level, and the paying of hotel costs, but whatever the outcome it must be more widely understood what is available. The ABI also believes that proper, regulated financial advice from independent professionals needs to be made available to those people (and their families) who will be paying for some or all of their care themselves. It is a difficult time for many, when the children of elderly people need to make a fast decision about their care, and the Government must make sure that everyone gets the advice they need.

The insurance industry is not just about making sure everyone has enough money for their retirement and old age. We also live in the here and now. The ABI is acutely aware that many are facing tighter household budgets and need insurers to help out. Last year saw the Government bring in the Legal Aid, Sentencing, and Punishment of Offenders Act which is radically reforming the way personal injury claims works, which should lead to falls in car insurance prices. We know that young drivers have particular difficulty with car insurance – which is a direct result of how dangerous many of them are to themselves, their passengers and other road users - and we look forward to a Green Paper which will consider options to make them safer. The ABI also knows that many people across the UK will be concerned that the Statement of Principles, an agreement governing insurance for homes at risk of flooding, comes to an end in June. We are in intense negotiations with the highest levels of Government to find a replacement which ensures widely available affordable flood insurance. If an agreement is reached we hope the Government will be able to bring in any legislation it needs as part of a general Water Bill.

Finally, the ABI anticipates legislation being announced in the Queen’s Speech to support a package of measures that will improve the support available for mesothelioma sufferers. This horrific asbestos-related cancer affects 200-300 people each year and cases are expected to peak in the next few years. Last summer, Lord Freud announced measures that will speed up the legal process, beef up the Employers Liability Tracing Office which helps sufferers find an insurer to claim against, and bring in a levy on insurers to provide assistance to those sufferers who cannot find an insurer to claim compensation from. This set of insurer-backed proposals is expected to run for around 40 years and provide over £300 million to around 3000 mesothelioma sufferers over the next decade.

As always, this Parliamentary session looks set to be a busy one for the insurance industry and the ABI looks forward to working with Parliamentarians and others in the political sphere across a wide range of issues.