View all newsletters
Receive our newsletter - data, insights and analysis delivered to you

ABI calls on UK gov to introduce income protection tax break

The Association of British Insurers (ABI) has called on the government to introduce a tax incentive for employers purchasing group income protection (GIP), which could extend coverage to a further 1.5m employees in the UK.

By Ronan Mccaughey

The Association of British Insurers (ABI) has called on the government to introduce a tax incentive for employers purchasing group income protection (GIP), which could extend coverage to a further 1.5m employees in the UK.

ABI analysis shows a tax incentive, as part of a larger package of measures, could mean coverage increases from its current levels at 7% to reach 12% after five years.

According to Landman Economics modelling, this increased coverage could also save the Exchequer more than £220m over five years.

Responding to the government’s Green Paper on Work, Health and Disability, the ABI said its proposed package of measures would increase financial resilience for individuals, households, business and society

Call for annual protection statement

The ABI also called for the government to encourage employers to issue an annual ‘protection statement’ to their employees in order to make them aware of their combined sick pay and benefit entitlement in the event of an absence from work due to health reasons.  

The package of measures proposed by the ABI also includes:

  • Building the population’s awareness and understanding of their protection needs through initiatives such as the Financial Advice Market Review (FAMR) and the Single Financial Guidance Body (SFGB)
  • Removing what the ABI describes as disincentives created by the introduction of Universal Credit to employees and the self-employed taking out their own Individual Income Protection (IIP) policy
  • Creating an index of employers ranking them based on how they support staff with disabilities and health conditions
  • Encouraging companies to consider how to best promote disability inclusion; some companies may find it useful to appoint ‘Board champions’ to promote disability diversity in the workplace
  • Considering how sickness certification can be improved in order to ensure that individuals absent from work for health reasons receive the right support quickly

The ABI’s assistant director and head of health and protection, Raluca Boroianu-Omura, said: “Households in the UK are among the most financially exposed in the developed world. Serious illness and death often lay bare the fragility of households in the face of economic shocks.

Our suggested measures are a win-win, with more consumers being protected while saving the Government money.  If implemented, the ABI’s proposals for change set out in the response to Improving Lives: The Work, Health and Disability Green Paper could help to provide security and peace of mind to millions more households in the UK, bringing a whole range of social and economic benefits.”

The UK Minister for Disability, Work, and Health, Penny Mordant MP, will be attending an ABI event on 23 March to speak to leading industry figures about the challenges of closing the disability employment gap, and the role that insurers can play.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The industry's most comprehensive news and information delivered every month.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Life Insurance International