A sustainable future for long term care: the insurance industry perspective

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The insurance industry has the experience, expertise and products to help inform the care funding debate while delivering significant benefits for people seeking ways to fund their long term care. Our population is ageing: the number of people aged 85 and over is expected to double by 2030. Disability rates increase rapidly with old age, so it is clear that the future demand for long term care will far outstretch the current care system. The Kings Fund has projected that expenditure for adult social care, in England alone, could reach £24.1 billion a year by 2026. The State provides some funding for long term care, but it is means tested and not everyone qualifies for support. Research shows that more than 40% of people entering residential care will have to pay all or most of the costs themselves. These costs are considerably higher than many people expect. The need to self-fund can put huge pressure on people’s savings and assets. People simply do not plan for care. The latest research shows that people barely save enough for their retirement. There is widespread perception that the Government pays for all care. According to recent ONS statistics 59% of people believe that the State should be primarily responsible for ensuring people have enough to live on in retirement. The lack of financial planning, and the increasing elderly population, compound an already financially stressed public care sector. The complexities of the State benefit system, and disjointed care service delivery arrangements, mean that the system is reaching its breaking point. We are entering a critical period, where society needs to come together to make better choices and agree a settlement for long term care which is simple, affordable and sustainable. The ABI believes that the insurance industry can work in partnership with Government and support the Commission on Funding of Care and Support and other key stakeholders to help create a sustainable system for long term care funding, using its skills in pricing risk and predicting longevity. We recognise that the scale of this issue will require close co-operation between all sectors and we look forward to informing policy and contributing to developing a settlement.