"There are clear positives but £5bn is savings, and where exactly it’ll come from, is understandably worrying a lot of people."
- Peter Hamilton, Head of Market Engagement at Zurich UK
Earlier this month, Liz Kendall, Work & Pensions Secretary, announced that Universal Credit (UC) disability benefits could be cut by half from April 2026. Labour will also legislate for a change in Personal Independence Payments (PIP) so people will need to score a minimum of 4 points in at least one activity to qualify for the daily living element of PIP.
Furthermore, the eligibility age for the health & disability component of UC will increase to 22 years old – for PIP, age eligibility may also rise from 16 to 18 years old.
To support people entering (or returning to) the workplace, the government has promised a £1bn employment package to deliver tailored support for disabled people and those with long-term health conditions.
In response to the UK government's intention to reform the welfare benefits system, the Income Protection Task Force (IPTF) published an open letter calling for collaboration with the protection market to ensure that welfare reform is both “compassionate and effective.”
Jo Miller, Managing Director of the IPTF, explained, “While there is no doubt that the welfare system needs a radical overhaul to create necessary savings, this is inevitably going to create concern in many parts of society about the fairness, effectiveness, and impact of an overhaul of this most sensitive area.”
The task force would welcome the opportunity to discuss:
- The best way to ensure that individuals who take responsibility for their financial security through Income Protection (IP) policies are incentivised or, at the very least, not penalised within the welfare system,
- How vocational rehabilitation and added-value services within IP propositions effectively support claimants in returning to work,
- Supporting renters as well as homeowners in mitigating the financial impact of ill-health or injury, helping to maintain housing stability
“We recognise that genuine reform requires input from multiple stakeholders, and we believe that engaging with the protection insurance industry will add significant value to the government’s approach. We look forward to the opportunity to work together in ensuring that welfare reform is both compassionate and effective,” Jo concluded.
Protection Reporter asked several IPTF insurer members why this collaboration would be advantageous. Alan Waddington, Distribution Director at Cirencester Friendly, said, “We see the value of helping people get back to work every day and could work with ministers and government departments to highlight how the right support services can do just that.”
He noted the protection market can also assist with financial education so that “people who are in work know how to protect themselves against the financial impact of ill-health or injury.”
Peter Hamilton, Head of Market Engagement at Zurich UK, agreed, “Insurers have long had an important role to play in both preventing ill-health and rehabilitating those who’ve fallen out of work, and we should continue both to evidence with hard data the positive impact of this government and to reinforce both how much of what we do already is aligned with helping stay in work.”
Discussing how the protection market can support people in the welfare benefits system, Alan concluded that there’s “no easy answer to this as people currently not working and on welfare benefits will have an existing condition of some description and therefore, potentially challenging to cover. However, that doesn’t mean that getting cover is impossible.”
Peter highlighted that “The insurance model of procuring and pooling prevention and vocational rehabilitation with financial benefits and healthcare services is cost-effective and well-suited to small & medium-sized enterprises (SMEs) […] helps to support a successful return to work through vocational rehabilitation services such as mental health support, access to rehabilitation clinics, and return-to-work planning.”
Rachael Welsh, Head of Marketing & PR at Guardian Financial Services (Guardian), echoed this narrative, “especially in terms of sharing experience of the protection market providing rehabilitation, early intervention, and support services.”
She said: “We understand the government needs to make savings of £5bn which means that some welfare support will provide less financial help, certainly over time, and it’s likely to become more difficult for some to receive that support.
“We know that experts, campaigners, and those in receipt of various benefits are currently working through the implications of the green paper before it becomes actual policy, so it’s a little early to provide a detailed critique.”
That aside, Rachael felt the news “reinforces the point that protection insurance can free customers from worries about their financial futures and can provide access to an important range of support services which help people get back to their feet.”
Ryan Griffin, Protection Director at Beagle Street, noted that the protection market plays a “key role” in creating a population of financially resilient people and will continue to do so in years to come. “It’s vital insurers work together with the government to ensure any proposed changes to the welfare system are effective and put people first,” he said.
Raising concerns, Alan stressed that “Anyone who’s not worked and been on welfare benefits for any length of time, will need guidance and support to reintegrate into the workplace, both from a physical and mental wellbeing perspective. My biggest concern is whether this kind of support will be in place when people need it.”
Peter felt the broader agenda of 'Get Britain Working' makes sense but it’s not a simple solution. “It will require cross-departmental collaboration on things like 'good jobs', transport, childcare, training, and more. Employers need to be readier to recognise and recruit the talents of disabled workers – including our own industry employers.
“It’s good to see the proposal that benefit claimants will be encouraged to 'try' work where they can […] There are clear positives but £5bn is savings, and where exactly it’ll come from, is understandably worrying a lot of people,” he concluded.
