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In its report released on Monday on the medium and long term challenges facing the UK insurance industry, the Insurance Industry Working Group noted that if the private sector were to increase its share in the insurance market by five percentage points, it could help a corresponding savings of GBP 17 billion per year for the public sector.
The working group was set up in October last year and is co-chaired by Chancellor of the Exchequer, Alistair Darling and Andrew Moss, Group Chief Executive of Aviva.
At present, the government is providing about 64% of the insurance coverage for individuals and occupational pensions, besides providing health and long term care and income protection measures, the group said. The total addressable 'risk management' market for these three areas is around GBP 340 billion, the report said.
The working group pointed out that over time, the challenge of funding these costs would rise, due to a decline in the relative size of the working age population and rising costs in areas such as healthcare.
"This raises the question of where the optimal balance between private and state provision should lie in the future and how much emphasis should be placed on personal responsibility", the report added.
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