Mandatory disability insurance for self-employed workers

At the time of reading this, there are about 1.1 million self-employed people in the Netherlands, only 23% of whom have disability insurance (AOV). There is a chance that AOV will become mandatory for self-employed workers, however, this will not be until 2024 at the earliest. In fact, implementing this mandatory AOV is not as easy as thought. This is because every self-employed person is different and has their own unique risks. This includes the fact that blanket coverage is not really relevant for self-employed people.

Why do mandatory AOV?

There are a number of reasons in favor of introducing mandatory AOV. From the social aspect, the desire is for everyone to be protected from the consequences of disability, but there are also a few other reasons:

1. Unfair competition

Unions believe workers are now competing unfairly with self-employed workers. Relatively many self-employed people do not have insurance, and for this reason, among others, they are therefore relatively cheaper for employers than if you hire someone.

2. The duty of acceptance

To date, insurers have the right to reject an application based on risk. With mandatory AOV, insurers will be subject to an underwriting requirement. This results in the fact that in the future anyone can get insurance.

3. Financial security

Currently, when a self-employed person becomes incapacitated, they cannot always count on government support. However, in these cases, the bills continue as usual. Mandatory AOV provides more financial security during these cases.

Why not a mandatory AOV?

In addition to the above reason to do mandate mandatory AOV for self-employed workers, there are also a number of concerns. Every self-employed person is different and therefore the risks vary from one self-employed person to another. Freedom of choice is one of the most important things for self-employed people. Another question is whether the premium is feasible for self-employed workers. In fact, self-employed people do not currently insure themselves for disability because of the high premiums. They find it too expensive and for that reason prefer to take a risk.

What does mandatory AOV entail?

The insurance applies to self-employed workers, but not to the self-employed with staff. Furthermore, according to Labor Foundation plans, the premium will be income-dependent, estimated at 8% of income. In addition, mandatory AOV covers 70% of last-earned income and the maximum income to be insured is €30,000. The AOV will continue until the state pension age is reached. Finally, the self-employed with small incomes must also pay a premium and receive benefits. The amount of this benefit takes into account the average income of the previous three years.