Last Word DILNOT – HAVE WE GOT WHAT WE WISHED FOR?
Does the insurance industry genuinely want to develop products that will provide a contribution to long-term care costs?
PETER LE BEAU MBE
I am writing this article in the wake of the Dilnot Commission’s report on funding care which has been anticipitated by the industry for several months. Notice I did not say “eagerly anticipated” because when studying feedback from a recent conference I ran I noticed one commentator who said “I didn’t realise we were going to speak for so long on long-term care!”. I took this as a note of disapproval and it worried me. First, I did not think a third of a discussion on opportunities for insurers to work with Government devoted to this subject was unreasonable and, second, it struck me that there are parts of this industry who do not regard long-term care as a viable opportunity. Surely after Dilnot it must be?
To summarise, the report made three recommendations. The first involves increasing the means-testing threshold to £100,000
for those needing residential care. The Commission also said that there should be a national eligibility framework. This has been put forward as a result of the way councils have altered their eligibility thresholds in recent years.
It has created a problem because people have different levels of access to services depending on where they live. This has meant that individuals have sometimes been reluctant to move, even to get closer to their family, because they could end up losing access to their care packages. The big recommendation in terms of the attention it has grabbed was the cap on costs. The Commission recognised it was impossible for the state to provide free care – this was recommended in 1999 and ignored by the then Labour Government.
Their solution is a partnership whereby individuals pay the first part of their care. It recommends a cap of between £25,000 and £50,000, with £35,000 seen as the ideal figure. The Commission believes this would mean that nobody ends up losing more than 30% of their assets in care costs. This is an equitable approach to a massive political timebomb and a human dilemma that affects hundreds of thousands of families every year.
The insurance industry has a chance to develop products that will provide this contribution to care costs and therein lies a conundrum. Does it want to?
Many people in the industry were disillusioned by the apathetic public response to pre-funded products in the 90s and see the same thing happening again. I hope this is a minority reaction because as I have said on numerous occasions we exist to provide products to mitigate risk and this risk is an important and priceable one. This is extreme disability cover for older lives and it is a need that many people are going to have. I do hope the industry’s response is positive and creative. Chances like this occur rarely and if we keep passing them up the Government may become a little puzzled about what it is that we do exactly wish for. Turn to page 11 to find the key points of the Dilnot review.
HI
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BAROMETER
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Dilnot report on long-term care Opportunities to insure risk PAGE 11
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PAGE 12-13
August 2011
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HealthInsurance
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