Insurers 'could provide welfare'

stokecity_m · 27 Jul 2009 at 13:12

malfunkshun said:
Nope, mine doesn't include permanent disability cover, but some policies do, but would only pay out if there was no prospect of you ever working again, which is slim tbh.

it might be slim - but you would still need a policy that covered this

DampCat · 27 Jul 2009 at 13:12

mattheman said:
So what happens if the company goes bust?

The accounts are moved to another insurer. Just like large claims are now. Claims in excess of a couple of million pound are split amongst underwriters to maintain balance in the industry. If a company goes bust (it wouldnt), the risks would be redistributed amongst other insurers at the very least for the remainder of the policy term.

You shoudl research these things before condeming them.

semi-pro waster · 27 Jul 2009 at 13:15

malfunkshun said:
semi-pro, ingoring my levels (I pay £9 for cover of £1200 which is, now, about 75% below average but the scheme is dissolved after this year so my rate will increase a lot)
I think that the average is about £20 for £900 at my age (36). It is worth noting that payments received under these policies are tax free

You appear to have a pretty good deal there - I hope you never need the cover again though of course.

In general though that doesn't seem an entirely unreasonable sum for the level of cover offered. I'm not sure that it is particularly attractive for myself currently but it is certainly something to look into, especially if you could get a reduction in your NI of a similar sort of amount.

mattheman said:
So what happens if the company goes bust?

Then you've got a problem but most likely not much of one since there will be spreading of the risk - if it is anything like the banking system then insurers must have a certain amount of capital behind them (enough to cover X% of the risk at any one time) and the chances of that many people claiming at once is small. There is also likely to be some spreading of the risk through insurers 'laying off' some of the policies to other (usually) larger insurers - it may also end up being government backed as a final failsafe.

mattheman · 27 Jul 2009 at 13:18

semi-pro waster said:
You appear to have a pretty good deal there - I hope you never need the cover again though of course.

In general though that doesn't seem an entirely unreasonable sum for the level of cover offered. I'm not sure that it is particularly attractive for myself currently but it is certainly something to look into, especially if you could get a reduction in your NI of a similar sort of amount.

Then you've got a problem but most likely not much of one since there will be spreading of the risk - if it is anything like the banking system then insurers must have a certain amount of capital behind them (enough to cover X% of the risk at any one time) and the chances of that many people claiming at once is small. There is also likely to be some spreading of the risk through insurers 'laying off' some of the policies to other (usually) larger insurers - it may also end up being government backed as a final failsafe.

End up being government backed you said the special word, it always comes down to the government, the tax payer always pays.

platypus · 27 Jul 2009 at 13:18

mattheman said:
Oh you'll pay that aswell.

You can easily opt out of NI.

mattheman · 27 Jul 2009 at 13:24

platypus said:
You can easily opt out of NI.

you can but there are issues with that.

semi-pro waster · 27 Jul 2009 at 13:24

mattheman said:
End up being government backed you said the special word, it always comes down to the government, the tax payer always pays.

Only if a chain of phenomenally unlikely events occurs then yes. However if we look at it another way you can argue that by delegating to an insurance company the tax payer has saved £X billion per year until such time as it is caused to step back in to cover the shortfall - which it would have been covering initially anyway. The money saved could be used for whatever is deemed appropriate at the time - money that would not be present without the delegation to an insurance company.

In such a case I'm struggling to see how the taxpayer or the UK economy is much worse off.

mattheman · 27 Jul 2009 at 13:26

semi-pro waster said:
Only if a chain of phenomenally unlikely events occurs then yes. However if we look at it another way you can argue that by delegating to an insurance company the tax payer has saved £X billion per year until such time as it is caused to step back in to cover the shortfall - which it would have been covering initially anyway. The money saved could be used for whatever is deemed appropriate at the time - money that would not be present without the delegation to an insurance company.

In such a case I'm struggling to see how the taxpayer or the UK economy is much worse off.

but you forget that the money would be spent on other things and when that point comes we'll be in teh same mess as we are in now.

Moredhel · 27 Jul 2009 at 13:27

mattheman said:
you can but there are issues with that.

Such as? I didn't know you could opt out, would love to know more about the pros and cons of doing so.

chiLLZ · 27 Jul 2009 at 13:29

mike5678 said:
Hopefully the beginning of the end of the welfare state.

Seriously what an ignorant thing to say, the country will really go down the toilet then. loads of desperate people on the street, crime goes up and everyone who works hard invests their taxes into policing and income into home security. you wont be able to walk anywhere without going in a car because of all the muggings and ****. the amount of begging and people just camped out of street corners would be 1000 times worse. have you been to a country that cant afford any kind of welfare? it not nice for those who even have money

wordy · 27 Jul 2009 at 13:30

malfunkshun said:
Already the case for me Also for a lot of people I know that can't/won't rely on state benefits. I am more than happy to pay £9/month to cover my income in the event of accident or illness at it's full level rather than £60odd (?) a week state benefit.

Same here, critical illness cover isn't too expensive and is comforting to have.

DampCat · 27 Jul 2009 at 13:32

semi-pro waster said:
Then you've got a problem but most likely not much of one since there will be spreading of the risk - if it is anything like the banking system then insurers must have a certain amount of capital behind them (enough to cover X% of the risk at any one time) and the chances of that many people claiming at once is small. There is also likely to be some spreading of the risk through insurers 'laying off' some of the policies to other (usually) larger insurers - it may also end up being government backed as a final failsafe.

This is correct. In the UK all insurers are required to have what's known as Solvency Capital which is exactly what is described above. In the event of some catastrophic failure of the system, there are a chunk (i *think* it's around 30% of earnings) to ensure that no one is left in the lurch.

On top of that, the vast majority of insurers (not all... RBS don't do it) pay a fee (5% - 10%) to split risks should there be a disaster of some form. The most recent example i can think of would be the US WTC, where Lloyds would have got a kicking for it, a group of insurers agreed to shoulder the burden after the first 5 million or so, splitting the damage into smaller chunks.

If an insurer goes broke, as SPW has said above, then the risks would likely be sold off to another (although in reality there probably wouldnt be any money changing hands) insurer, which will keep the policies alive at least until the end of the agreed contract for each individual risk (known as "run off"), and then the risks will either be reinvited if acceptable, or encouraged to look elsewhere if it's not the normal type of risk that insurer would look to handle.

It happens more than you think. Lloyds got whooped over the asbestos polava in the 80's. Carole Nash got a beasting before selling out to Groupama and transferred a load of business elsewhere.

If there was some kind of global ctastrophe that caused everyone to claim at once, there may be an issue and some people might lose out... but the likely hood of that happening would be worlwide drought, a nuclear attack, and asteroid... basically, you'll have more important things to worry about than how much money you'd lost per month to insurance

malfunkshun · 27 Jul 2009 at 13:32

stokecity_m said:
it might be slim - but you would still need a policy that covered this

You are probably right, when the scheme dissolves I will either try and get a good deal of the company that provides my current cover or shop around for the best fit for me at the time. To be honest guys, the younger you start one of these the better since it seems the premiums increase the older you are when you start them.

stokecity_m · 27 Jul 2009 at 13:39

what would happen to tax credits etc? as they are a form of welfare.

malfunkshun · 27 Jul 2009 at 13:43

I would imagine you'd need to tell them about the change in income/circumstances?

mattheman · 27 Jul 2009 at 13:43

http://video.google.co.uk/videoplay?docid=6646340600856118396&ei=m59tSt-nEomC-Aao1c25Cw&q=sicko

watch this, it shocks me that some of you think about private, there will be a point in your life that the private insurance will reject your insurance renewal or increase the amount by an unaffordable amount then what would you do?
Yes, it will come and it when you hit old age.

malfunkshun · 27 Jul 2009 at 13:54

what the..... thats an American film?

mattheman · 27 Jul 2009 at 13:57

malfunkshun said:
what the..... thats an American film?

yer remember what happens in the US will reach us sometime in the future.

DampCat · 27 Jul 2009 at 13:58

mattheman said:
yer remember what happens in the US will reach us sometime in the future.

You literally have no idea how the insurance industry works here or in the US do you? Have you the slightest idea of the differences?

You've completely invalidated this entire thread :/

malfunkshun · 27 Jul 2009 at 14:05

Meh, I am going to leave the thread. Your frivolous, ill-informed Anti-Labour threads are becoming tiresome

I don't make posts to be a troll, I post to have a reasoned arguement if I can. If my arguement is shown to be wrong then that is good, I learned something. Your recent glut of posts like this either make quotes out of context and/or offer nothing to back them up or respond to counters.