The social welfare sector offers many opportunities but insurers must be ready for the job
The social welfare sector faces a tough economic climate, with less government funding, fewer donations to charity and reduced business budgets for corporate social responsibility. At the same time, the UK has an increasing need for care as a result of population dynamics, more fragmented family structures and increasing homelessness.
A change of culture has been developed by the government both to ease the immediate financial concerns and to prepare us for the future. Provision of care will centre on an individual’s needs and funding will follow the individual. In addition, local commissioning of care will be adopted, bringing new processes and a greater focus on ‘outcomes’ rather than ‘outputs’.
Such a dramatic change in policy would usually be implemented over many years. But the coalition government is driving the pace of change through its fiscal policy.
The changes present many opportunities for brokers and insurers. First, the policy changes are likely to lead to a dramatic growth in independent advisory organisations. Each will require insurance cover and a careful evaluation of management liability exposures to ensure the full breadth of professional activity is protected.
There will also be a rise in the number of domiciliary care providers. Care providers and housing associations have already started moving into domiciliary care. They will need careful questioning from insurers and brokers to draw out their full organisational structure, how care is delivered, the nature of service users, the source of business and the staff recruitment policy.
The changes will also lead to an increase in specialist care providers. Existing providers may set up specialist units and there will be start-ups from experts moving into the private sector. Existing care providers will need increased liability limits of indemnity to take on what were previously local authority services. The nature of the contracts will need to be scrutinised to understand the full extent of risk.
Demand for insurance by service users and their families will also rise. Insurance for foster carers may shift from local authority insurance programmes to the foster carer.
There will be openings for insurers and brokers to develop products to meet the changing responsibilities of providers. Insurers will need to look at their claims expertise to address the new exposures giving rise to claims.
Insurers working in tandem with brokers and social welfare advisers will be best positioned to meet the challenges ahead. Generic risk assessments that identify trip, slip and property hazards will be wholly insufficient to meet the needs of diverse care organisations. Off-the-shelf risk assessment will no longer be enough. Independent inspectors will require evidence of satisfactory outcomes for individuals.
If brokers are serious about engaging with the challenges and opportunities in care and health, they should team up with insurers that have the full range of expertise – from initial enquiry through to renewal – and the financial strength to sustain the indemnity required beyond the life of the policy. IT
Anne Hudson is business development manager at Markel Insurance.