The cost of IP could be cut with more emphasis on rehabilitation, says Nick Kirwan
When you realise that on average 27,000 people leave employment each year, never to return, as a result of work place injury or illness, the chilling reality is all too clear. Increasingly, employers are waking up to the need to avoid the consequent drain of skills that losing these people entails ' and the more that can be done to raise the profile of the issue, the better.
Insurers and advisers can play their part in raising awareness of this issue too. When people are off work due to illness or injury, income protection (IP) plays an important part in helping to maintain a lifestyle. With the declining numbers of final salary schemes, fewer employers will be able to offer people in ill health the option of early retirement and the need for IP becomes ever more important.
However, the best outcome for all concerned is when the employee can get back to work and this is another area where IP can help. Most policies have some form of proportionate and rehabilitation benefits built in, for example, by providing partial benefits which allow people to ease themselves gradually back into work.
This is a useful tool to employers and employees alike, as it means the recovering worker can return to work a lot sooner, if it's done gradually, than they might have been able to if there was only an option to take full-time hours for financial reasons. It is also another good reason for advisers to recommend IP, perhaps on a group basis or through a worksite marketing scheme.
However, having a suitable active rehabilitation policy in place would be necessary to get the most out of these benefits. By ensuring early intervention to plan for rehabilitation, there is then increased likelihood that people will get the help they need to make sure they are fit to return to the workplace, even on a part-time basis.
Proportionate and rehabilitation benefits provided under IP also fit well with employers' responsibilities under the Disability Discrimination Act, an important part of which is about helping to get people working wherever possible. Through law, employers have a responsibility to help get people back to work by making reasonable adjustments to areas such as working practices, hours and equipment.
It isn't just IP plans that may have proportionate and rehabilitation benefits. These may also be provided under certain corporate insurance policies such as Employer's Liability Insurance. Sometimes you will find it pays money towards helping with more flexible working hours, if this will help the injured employee return to work.
Perhaps at an industry level we should be starting to look at the possible implications of a successful rehabilitation scheme.
As a country, if we are better at getting people back to work, we could see a reduction in the number of people claiming benefits. This could result in reduced Government spend and even a possible reduction in the cost of IP.
It is sometimes thought that a push on rehabilitation could discourage employers from taking out IP, but perhaps we might see differential pricing for policies, whereby it would be cheaper if the employer had a pro-active rehabilitation policy in force.
