Governments should consider introducing mandatory provision of income protection insurance following the COVID-19 crisis, research by the University of Oxford and Zurich Insurance Group suggests.
In a new report, the researchers explain how some types of mandatory insurance, such as coverage for disabilities and unemployment, could help protect people from the economic distress caused by events like the pandemic.
Based on interviews with Zurich senior leaders in 17 countries, the research recommends auto- enrolment of employees into plans that offer basic income protection and participation in pension schemes.
It also provides governments, insurers and employers with advice covering financial education, reskilling, social protection, healthcare, and retirement and savings, which could help ensure employees are well-prepared for life after work.
“While some countries were hit harder by COVID-19 than others, people in every corner of the globe found themselves facing financial hardship and drained their savings, and, in some cases, retirement funds, as a way to stay afloat,” said Alison Martin, Zurich’s EMEA CEO.
“Our findings highlight the demand for solutions that will make it easier for people to prepare for and make it through these kinds of crises.”
Calls for mandatory and compulsory protections are already being raised in some countries, such as in Spain, where discussions are being held regarding a UK-style model of pension auto-enrolment and the introduction of compulsory savings programs.
In the UK, there are currently discussions around making employer-funded sick pay compulsory.
Zurich said that it expects heightened interest for income protection insurance and term life coverage following the pandemic, but warned that such interest has been slow to develop in the past, and may not translate into heavy demand.
There is a need for education around the importance of preparing for any type of costly setback, according to the new research, which lays out some of the ways insurers and others can provide that help.
“Employers are grappling with concerns around training, reskilling and caring for their people, and this research looks at how leaders are prioritising and managing these issues, many of which were exacerbated by the pandemic,” said David Henderson, Zurich’s group chief human resources officer.
“To address these concerns, look to the report’s recommendations, which call for such strategies as offering incentives for participation in skilling programs, helping employees prepare for retirement through financial education programs and auto-enrolment in pension plans, and conducting assessments of wellbeing activities to ensure they adequately consider employees’ physical and mental health.”
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Author: Chris Seekings