Companies report 'no interest in care insurance'

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Media captionAlex Adamou on his mother's care: "You have to make cold-hearted calculations"

There are no plans for any insurance products to help people plan ahead for their care needs in old age, leading companies have told the BBC.

Creating such a market was one of the key aims underpinning the government's decision to introduce a cap on care costs in England from next year.

Two years ago Prime Minister David Cameron said he hoped the plans would "open up an enormous market".

But 17 major companies said there was not enough interest in such policies.

Care experts said the revelation was a blow.

About 60% of people are expected to need care in their old age - with one in 10 facing costs in excess of £100,000.

From April 2016, the government is setting the cap on care at £72,000 from the age of 65. Currently people face unlimited costs - although those with little wealth get help towards their costs.

Under the change, once an individual has spent that sum, the state will pick up the bill for care - although people will still be liable for £230 weekly living costs if they are in a care home.

BBC Cost of Care project

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The BBC has launched an online guide to the care system for the over-65s. The "care calculator" covers both residential care and the support provided in people's own homes, for tasks such as washing and dressing.

Users can submit their postcode and find out how much each service costs wherever they live in the UK.

There is also a dedicated BBC Cost of Care website with news stories, explainers, analysis and video.

By covering the catastrophic costs, ministers hoped insurance policies would be offered to people so they could make small payments in the decades before they reached the age when they needed care.

The only products currently on the market are immediate needs annuities, which involve people paying a one-off lump sum - often about £100,000 - when they start needing care.

The idea is that they will then be paid an income over the rest of their life to cover the costs of care.

However, some people have reported the policies have failed to keep pace with the rising costs of care - and, because of the upfront money involved, they are out of the reach of many people.


The BBC approached 20 companies and received 17 responses as part of its Cost of Care project, which includes an online guide to how care works and what it costs.

The companies participated on the basis they would remain anonymous. One said a key problem was that people tended not to plan for retirement and the government's proposals had not "fundamentally changed that picture".

Another reported that few people were prepared to "defer consumption today to pay for an event which may not occur".

How does the care system for the over-65s work?

Care refers to everything from support provided in people's homes to round-the-clock help in care homes.

Unlike with the NHS, people have to pay towards these services.

Some get help from their local authorities, but others pay the full cost of their care. One in 10 people faces lifetime costs of more than £100,000.

About 420,000 people are currently living in care and nursing homes across the UK, while about one million receive help in their own home.

There are another 1.5 million people who rely on friends and family for support.

Care Minister Norman Lamb said: "I do challenge the insurance industry - don't be conservative on this. Step up to the plate. They have a responsibility in my view too. We need to do this collaboratively.

"We've taken the steps that they wanted us to take to enable them to do these reforms. And I think they need to be ambitious and to recognise the importance of providing products so that people can plan for old age."

But Yvonne Braun, of the Association of British Insurers, said the industry was ultimately responding to the "law of supply and demand".

"If you wanted to sell to somebody in their 30s, 40s and 50s, or even 60s, I think you would find it very very difficult. Younger people... have other financial priorities - specifically paying off their mortgage and supporting their children."

She said it was more likely that other insurance products, such as critical illness cover and life insurance, would be adapted to cover care costs.

James Lloyd, director of the Strategic Society think tank, said there were always doubts the insurance industry would develop products.

"The government could lower the cap to try to encourage more interest, it could just accept that people will have to pay the £72,000 in costs or develop its own state insurance model - that has happened in Germany. But there really isn't an easy answer."