Until the Government makes a clear delineation between the long-term care costs it will fund and the contributions expected from individuals, insurers will struggle to develop appropriate products.

This was the message from the Association of British Insurers (ABI) delivered at a seminar on long-term care convened by the think tank Reform. The meeting began with a keynote speech from Lord Warner, who is working alongside Andrew Dilnot on the Commission on Funding of Care and Support. While confirming that the settlement the commission devises will involve a partnership between the state, individuals and families, the peer focused on the limitations of various funding options on the table.

He described former Prime Minister Gordon Brown's proposal to give the elderly free personal care at home a "fantasy", applying the same epithet to the idea of 100% state provision and claiming there was "good evidence" that people "not longer expect the state to sort out all their problems from cradle to grave." However, he also stated that "the social support for compulsion [mandatory contributions from individuals] is not there".

Asked about the potential for employers to play a role, as they do in other countries, he said he was "very cautious about dumping things on payroll tax".

"In the area of occupational pensions I do not see a huge swell of employers seeking to increase their liability," he said. "It may be that employers can be a route into collecting some of the dosh."

Lord Warner also had short shrift for the insurance industry's efforts to date. Equity release "has not won the hearts and minds of the great British public," he said.

"There would not be a commission if there were a vast array of products that helped people to meet their needs," he added. "I think, at the end of the day, the industry looks at risk and prices, and offers products that respond to risk. Presumably, the industry has had a lot of trouble trying to price this risk. There are also parts of the industry which think that governments have not stepped up to the plate in terms of the guarantees they will give."

This was precisely the message from Nick Kirwan, assistant director of general insurance and health at the Association of British Insurers.

"Our plea to the Commission is that we can work with any funding model, providing that the gap is well-defined," he said, referring to the gap in funding not provided by the State.

Lord Warner's comments met with a mixed reaction.

Paul Lewis, a financial journalist on the panel, said "there is no solution but compulsion", echoing concerns voiced following the publication of the previous Government's green paper on the subject that any voluntary funding scheme would fall prey to low take-up. Jules Constantinou, head of marketing of Gen Re Life Health, suggested that a workplace scheme could approve attractive to employees if they were able to earmark a contribution specifically for their future care needs.

The Dilnot Commission was established by the government following the general election last year and is set to deliver the conclusion of its 12 month review of the funding of long-term care in July.