The number of employees who have been long-term absentees from work through serious illness or accident runs into millions and the chances of joining them are increasing, according to recent surveys.
It is surely no coincidence then that specific rehabilitation clauses are now commonplace with providers of income protection (IP), aimed at getting people back to employment more quickly.
Recent research carried out for Scottish Provident shows that over 1.8 million people between the ages of 20 and 64 have, at some stage, been off work for more than six months and there is an one in 16 chance that others will join them.
As a consequence, almost all insurance providers have now widened the remit of their IP schemes to include rehabilitation programmes because, quite simply, it makes good economic sense for them to reduce their liability. It is also beneficial for the claimant to be assisted with their rehabilitation and for the employer, who may have thought that they had lost a valuable member of staff.
Demanding work
Employers are increasingly striving for higher productivity and, as a result, place ever greater demands on their workforce. This has lead to increased health-related problems as employees push themselves harder.
Jack Macnamara, chief underwriter at Lincoln, has observed this trend over a number of years. He says that the number of claims has gone up fourfold since the 1970s. Other insurance providers have noted that the nature of claims is changing, with traditional claims for muscular and skeletal injuries being matched by claims for mental illness.
The attitude that employees are expendable and easily replaced has changed, especially in highly skilled trades. The 1995 Disability Discrimination Act has also made an impact on the approach of employers towards long-term absence, which insists that they must take all the necessary steps to ensure disabled employees are able to return to work.
Only a few years ago, income protection and rehabilitation services were provided only at the discretion of claims managers, but now, with a few exceptions, insurance companies all have explicit clauses relating to rehabilitation, proportionate and relapse benefits.
Flexible approach
Nick Homer, product manager at Norwich Union Healthcare (NUH), says that despite these formal policy clauses, insurers remain extremely flexible in terms of support for claimants because it is of mutual benefit that the claimant returns to work. However he adds: "They also remain realistic about the level of support they are prepared to offer. They are not going to invest outside the policy limitations if there is no motivation."
Nick Lomas, marketing manager at UNUM, agrees that explicit clauses are there to demonstrate to claimants that the structures are in place to rehabilitate them, if they want. He says: "The focus is on helping those who want to get back to work do so."
Income protection benefits are not usually paid until after the deferred period, which can be anything up to 104 weeks. But with rehabilitation schemes, the best results are achieved if the insurer is notified quickly when an individual is first unable to work so that they can assess the situation rather than receiving notification towards the end of the deferred period.
Nicola Smith, employee benefits marketing consultant at Swiss Life, says: "Our claims experience shows that the longer the period between a claimant falling ill and notifying us, then the less likely it is for them to return to work."
Some employers might think this proactive strategy could be counterproductive as it fixes the idea of benefits in the mind of the employee from the outset. However, Lomas says that early intervention is key to gauging the claimants desire to return to work and then devising an individual strategy to achieve this.
"We have a disability counselling team with qualified nurses who visit the claimant within a few weeks of notification to gather information on the claim and establish whether there are any rehabilitation opportunities," he says.
It is at this stage that parts of the clause, such as relapse and proportional benefits, are carefully explained, as claimants are often unaware of the underlying benefits of the cover. Proportionate benefits mean that following a period off work and receiving full benefits if the claimant feels that they may be able to return to part time work or to a less well paid position elsewhere, they will be paid a percentage of their full entitlement in line with their reduced wages.
Dave Pitcher, technical development manager at the Health Claims Bureau, says: "If an individual is not able to return to work in their own occupation but can work in some other occupation, then they are paid a reduced benefit to help that person get back to work to rehabilitate them slowly."
Partial benefit
NUH offers partial benefit to those who think they can return to work before the end of the deferred period. Homer says it may even approach the employer to take the claimant back in a reduced capacity before they have made a full recovery, while still paying full benefits.
With IP, both claimants and employers should not feel that the claimant is being forced back to work when they should still be recuperating. A relapse benefit clause means that if the claimant undergoes rehabilitation before they return to work and subsequently suffers a relapse, then their benefit payments will begin straightaway. They will not have to wait until the end of the deferred period before their claim starts paying out again. Some schemes will keep relapse benefits open until 12 months after their restart date, but Homer says that relapses are quite rare.
Rehabilitation programmes themselves are diverse. To that extent, the rehabilitation offered is dependent on the motivation of the individual claimant.
In the US, insurance providers have a much tighter policy on rehabilitation. Some companies include in their packages a rehabilitation condition stipulating that if it is believed an employee could benefit from treatment then they must take it. Ross Ainslie, product actuary at GeneralCologne Re, does not believe this would work in the UK because rehabilitation only works if the motivation is there in the first place.
Attitudes
So what are UK insurance providers prepared to do to rehabilitate claimants? It depends on the attitude of the claimant when they meet with the insurer's assessors, but if they are motivated to return to work then an individual plan will be drawn up to achieve this. This could include such assistance as paying for physiotherapy, retraining and counselling.
Karen Evans, assistant product manager at Friends Provident, says: "In the past we have paid for people to go on residential rehabilitation courses and we sometimes arrange for sessions with occupational therapists or with job placement companies to see what transferable skills they have."
In the face of increasing numbers of debilitating stress claims, UNUM has worked on specialist rehabilitation services which include advice on gradual return to work policies, and motivational and self-understanding courses.
When there has been a serious injury and the claimant is on an NHS waiting list and rapid treatment could speed up the recovery process, it is not uncommon for insurance providers to pay for private healthcare, including consultations and operations - but only if the claimant agrees and medical advisers believe it will be of immediate benefit. With individual IP, insurers also do not rule out replacing the projected income payments with a one-off lump sum payment to the policyholder.
Evans maintains that there is no real difference in the treatment of claimants whether they are part of a group or individual scheme. She says: "The ill person is an individual and when it comes to the stage that they need help getting back to work, we try to treat everyone the same."
The only difference between individual and group income protection is that an individual may not get the same level of support from their employer because they will have less real vested interest.
The amount of rehabilitation a claimant can expect under most IP policies is essentially dependent on their attitude. Insurers cannot force claimants to have rehabilitation and IP is still regarded as long-term cover rather than a temporary rehabilitation-type insurance.
Ben Marquand is a staff writer
