As the majority of income protection providers will testify, stress is becoming a worry. Mental illness claims are on the up and work-related stress is usually touted as the reason
The Health and Safety Executive estimates that five million workers in the UK are affected by stress, making it the second largest occupational health problem after back pain. This culminates in an average loss of 180 million working days in the UK at a staggering cost of £4bn every year.
Income protection providers are inevitably feeling the brunt of this trend. UNUM, for example, has seen an 88% increase in mental illness claims since 1993, with a quarter of all new claims being linked to mental illness. According to Norwich Union Healthcare (NUH), some 30% of all new claims are for anxiety, stress and depression, compared with 20% five years ago. However, 'stress' is a rather woolly term. Ask a handful of people for their own definition and you are likely to get as many different answers.
Stress in itself is not an illness, says Nicola Smith, employee benefits marketing consultant at Swiss Life. We all suffer from stress but it is our ability to cope with it that determines whether or not it will make us ill.
"When it becomes constant and the individual can no longer cope, it can manifest itself into mental and physical illnesses," she says.
Working culture
John Humphrey, practice head at Marsh Employment Risk Services, which designs intervention programmes to help employers manage absence, says there are a number of reasons for this trend, but working cultures do play a big role.
He says: "Levels of stress are ultimately rising as people succumb to the pressures of a faster and tougher business environment."
Another factor also seems to be a relaxation of the British 'stiff upper lip' - stress no longer carries a social stigma and is not something we just have to grin and bear. Claiming to be stressed is more legitimate now and increasing litigation in this field is evidence of this, according to Humphrey.
But because stress can manifest itself in mental and physical symptoms, it is difficult to fully assess the direct impact on income protection. Humphrey says that stress is often an important driver in physical illness. While the problem would usually be classified as a mental illness, some physical conditions that result in a claim may well have been stress-induced. For example, back pain is frequently associated with stress.
Christine Owen, head of occupational health at employee benefit consultants William M Mercer, says that the link between stress and back pain is a 'chicken and egg' situation - there is a potential link between the two, but it is often difficult to find out which symptom came first. Humphrey adds that big killers such as coronary heart disease may also be stress-related. NUH has also noted this trend and says that while 30% of new claims are for mental illness, stress may play a part in an additional 20% of claims.
Premiums
With claims for stress, anxiety and depression rising, it would not be surprising to see premiums increased by way of compensation. But improvements in other areas have balanced out the total claims spend so stress has, as yet, not forced providers to push premiums up.
Nick Lomas, marketing manager at UNUM, says: "Although there has been a rise in stress claims, there have been improvements in the treatment of conditions such as heart attack and cancer and we have now found that back pain is responding well to active rehabilitation."
Nick Homer, income protection manager at NUH, says that he is confident the insurer is able to manage the stress problem and has not, so far, had to raise premiums as a result.
"We have identified this trend and are trying to understand and manage it better, but claims experience is the key driver of rates and if on review we have not been successful, this will be reflected in the price," he says.
Education, education, education
But while providers may not have applied blanket premium increases to cover increased claims costs, premiums have risen for certain occupations. Teaching is one example. Over recent years the profession has undergone a number of changes increasing pressure on teachers and making it a notoriously stressful job. UNUM, for example had previously ranked teaching as a class 2 occupation but in recent years it has fallen to class 4.
NUH has had a similar experience with the profession, according to Homer, but has made amendments to the product to prevent teachers being priced out of the market. He says: "A few years ago, teachers were occupational class 1, but they are now class 3 and this has been driven purely through our claims experience."
The insurer now offers teachers the opportunity to exclude mental illnesses from the policy, reducing the cost by around 50%. But with 90% of claims from teachers being stress-related, this option has not proved popular among IFAs. However, Homer says that where price is an issue, some cover is always better than none.
"We would rather our customers took out the Rolls Royce cover, but this option is clearly more valuable than walking away without any cover."
A difficult diagnosis
Part of the problem in dealing with stress stems from the fact that without a mass of physical symptoms, it is not as easy to recognise or diagnose as, say, cancer or a broken leg, which can ultimately make it difficult for those affected to raise the issue with their employer.
According to Owen, stress can be an emotive, subjective condition as well as a difficult one to manage. But on the plus side, it does respond well to intervention and with early intervention can be managed in a lot of cases.
However, employers do not always know how to deal with or handle stress, and this is one area where income protection can have a role. Owen says employers are now increasingly looking at how to reduce the impact of stress as well as its causes.
However, she adds: "Income protection is only part of the solution - it needs to incorporate both claims and case management and this involves balancing the nature and the level of disability. The focus needs to be on what the individual can do rather than what they cannot."
While more income protection providers are looking at rehabilitation and active claims management, many do not actively promote this in their literature, as much of this takes place outside the policy's terms and conditions.
Owen says: "A lot of employers that buy income protection are unaware the insurance company will still pay part of the benefit and that they will help to get employees back to work."
This usually involves liaising with the employer, the claimant and occupational therapists to encourage a comfortable, stress-free, managed return to working life. A short-term fix or rushing the claimant may worsen rather than improve their condition. The focus of the insurer has to be the same as the employer to get the individual to return to and remain at work.
"The fundamental issue is that it needs to be a part of a total care process. The case needs to be managed by the appropriate people," Owen adds.
Early intervention
An important aspect of this is informing the insurance company sooner rather than later. The longer stress is not addressed, the harder it becomes to resolve.
Even though employer's are bound by the Disability Discrimination Act, some may not be confident about a stress claimant's ability to work, says Homer.
"Employers can be reluctant to take staff back after they have suffered a mental illness as they can be considered a potential risk."
But income protection providers can intervene to facilitate a return to work. NUH has recently had such a case. While the employee was a valued member of a staff, a return to work was seen as a risk by the employer. But NUH encouraged it to take back the claimant on a part-time basis with a commitment to pay full benefit, relieving the employer of paying the salary.
Homer says: "The individual proved that he was capable of a return to work and was taken back on a full-time basis by the employer."
Looking after staff
Fortunately for IFAs and income protection providers, more employers are now recognising the need to protect their staff.
Humphrey says: "Stress is a key risk management issue. Businesses traditionally focus on the catastrophic risks, but there is now a realisation that small incidents, such as a stressed employee, occur in so much volume that the costs can be greater than a one-off catastrophic disaster."
He adds that employers are now making greater attempts to monitor and control stress through stress audits, management training and, on the occurrence of stress, case-managed intervention. Even where an income protection scheme is in place, such intervention will help employers control the cost of cover by, hopefully, preventing an absence becoming long-term and resulting in a claim.
Income protection can be a good form of stop-loss cover for employers, but they should be managing absence well before a claim arises, according to Humphrey. He says: "Insurance intervention often comes a bit too late in the cycle. After six months an illness may be difficult to shift."
It is for this reason providers are actively encouraging employers to advise them of absences before they turn into claims. Lomas says: "The earlier we know about a potential claim the better, as we can assess up-front what can be done to help them."
Rachel Williams is senior staff writer
