Rehabilitation is increasingly offered alongside income protection. But there's still confusion about whether this benefit affects ability to claim, says Johanna Gornitzki
Work-related absence costs the UK economy £11.6bn each year, a trend that industry experts suggest is unlikely to abate any time soon. It is therefore hardly surprising that many firms have shifted their focus from simply trying to prevent workers becoming unable to work, to helping them get back on their feet as soon as possible. But while more and more insurers offer some sort of rehabilitation services alongside income protection (IP), there still seems to be some confusion as to what impact this could have on claims.
To examine this, it is important to first look at what triggers an IP claim. This typically depends on the definition of 'disability'. The most common and sought-after definition of disability is a claimant becoming unable to follow their 'own occupation'. This is followed by 'suited occupation', which means policyholders have to be unable to do a similar job that would suit their training, education or experience. Other definitions widely used are 'any occupation', 'activities of daily living' and 'activities of daily work'.
Commonly, different occupations will attract different definitions of disability, with low-risk workers usually able to opt for 'own occupation', while high-risk workers have the less attractive definitions. Accountants for example, generally classified as low-risk, would only have to be unable to continue to undertake their specific duties in order for the claim to be justified. High-risk workers, on the other hand, would usually find it much harder to claim, as their policies' claims criteria are much harder to satisfy. "To sum it up, all valid claims need to satisfy the definition selected at outset. It is very much on a case-by-case basis," says Stuart Gray, managing director at Portus Consulting.
However, once a claim has been accepted claimants have to continue to prove that they are unable to perform the duties set out in their policy in order to keep on receiving the payout. This is where many consumers seem to be confused. On the one hand you have providers pushing rehabilitation services, which typically would include allowing claimants to return to work on a part-time basis, while on the other, you have insurers' claims criteria which a client needs to meet in order to be eligible to claim. So what can or cannot claimants do?
Historically, claims criteria tended to be quite rigorous, but things have changed over recent years and the majority of IP insurers would now support people who would like to return to work gradually, with the main aim of trying to help individuals become fully rehabilitated. This forward thinking stems from the fact that most providers have recognised that the longer employees keep active the better it is for their health and the greater their chance of recovery. "What we do is aim to be very flexible and work with the employee and the employer. If we, for example, recognise early on that an individual will be likely to be off work for a long period of time, we offer early intervention even before the claim would have started to pay out," says Joy Reymond, head of rehabilitation services at UnumProvident.
In a bid to make it easier for individuals to return to work gradually, most providers have begun to offer staged IP products, where policyholders receive a combination of benefits from the provider and pay from the employer. Explaining how it works, Andy Milburn, IFA market manager at Royal Liver, says: "We will reduce their benefits if they go back to work part-time - through a feature called proportionate benefit - or we will re-open a claim if they relapse after returning to work without them having to claim all over again."
However, not all insurers take the same stance, with some providers deducting a proportionate amount of benefit from the claim if the employee goes back to work part-time. "It could also be quite complicated for employers to work out how much they should pay so the total amount the claimant receives will not be too much or too little compared with the amount he would have received if not working at all," admits Reymond. Moreover, she also believes most consumers are unaware that they can perform some work-related tasks without getting penalised for it.
Agreeing with Reymond, Mark Howard, rehabilitation director at FirstAssist, says: "I think the industry is totally confused and that consumers aren't aware of what they can and cannot do. There needs to be a lot more education." Experts agree that education is pivotal if rehabilitation is ever going to be fully embraced by consumers.
"Employers and insurers all have an interest in doing all that they can to ensure claimants not only get all the help available in terms of early intervention and rehabilitation, but also, in not being penalised for trying to get back to work," adds Colin Micklewright, manager of business development for group income protection at Canada Life.
To make matters worse, there are no generic guidelines stating what work policyholders can or cannot do before their claims are withdrawn - it is up to each individual insurer. However, most providers do not think it would be feasible to try to reach an industry consensus, arguing 'if it ain't broke, don't fix it'. A few, however, admit that a common approach could be a good move, particularly in situations such as whiplash injuries, where all claimants would be suffering similar problems.
As well as introducing industry guidelines, another solution might be return-to-work targets, widely used in the US, which forecast the length of time a person with a certain illness or injury would be off work. These set out clearly what needs to be done to get a claimant back to work. But while some praise the idea, others warn that they could be misleading since medical issues are not the only factor affecting the length of absence - social factors also come into play. These could affect everything from claimants losing touch with their employers to being away for such a long time that their jobs are no longer available.
"While it is working well in the US, I do not think anything is black and white, so it should only work as guidelines not set rules. It is a target but you cannot determine the outcome. I therefore think it would be a bit harsh to judge a claim on this basis," says Deborah Edwards, director of RTW Plus.
One step further, some have even suggested making rehabilitation compulsory for a claim. This is a sensitive topic, however. Commentators on one side of the fence believe insurance products will eventually have to mirror the government's intention to make State benefit claimants jump predetermined hurdles before they can be eligible for support, while those on the other side argue that you cannot force anyone to undertake a certain treatment.
While this debate is unlikely to be settled any time soon, IP providers have come to realise that rehabilitation benefits not only policyholders, but employers and insurers as well, and have begun to accommodate for it. Canada Life, for example, has just announced a new development for its group income protection schemes, where claimants taking part in a recognised rehabilitation programme can receive benefits up to their full pre-disability income.
"Sometimes people end up worse off when seeking rehabilitation. We want to ensure that this will not happen to our customers, and will instead reward them for actively trying to get back to work," says Micklewright.
Most people off work due to sickness or injury want to return as soon as they can. Yet many would decline rehabilitation due to their lack of understanding of how it would sit with their claim. To avoid this, intermediaries need to sit down with their clients and explain how it works. What's more, this would provide another opportunity for advisers to show clients that IP offers so much more than just a monthly payout.
COVER notes
Most providers offer staged IP products, where benefits are reduced if the policyholder goes back to work part-time.
A debate is currently raging about whether rehabilitation should be compulsory in order to receive a payout.
