Absence management has become big business in recent years. With employee absence estimated to cost UK businesses over £10bn each year, it is an issue that employers can no longer afford to sweep under the carpet.
The majority of larger corporate businesses have their own systems in place to deal with absence, along with a foolproof set of insurance policies to cushion problems that may arise. But smaller firms do not always have the time or the money to implement such systems, until a problem occurs. This therefore presents an excellent opportunity for IFAs to advise smaller firms on affordable products to safeguard their most important asset the workforce and insure against what could be a costly oversight.
If a firm fails to install protection against staff absence, the problem may soon become more serious. Nicola Smith, communications manager, employee benefits at Swiss Life, says: "The smaller the business, the bigger the impact absence has. It is the smaller firms who may not have systems in place to manage absence and monitor the problem as a whole.
"Traditionally, it is people in less senior roles who tend to take time off more frequently, but when senior staff are sick, they are more likely to take a longer period of absence, due to conditions such as stress-induced depression.
"When there are no insurances in place, having senior staff absent can have a very real effect on the company, as they will have no help to rehabilitate and get back to work in addition to no salary. It is very easy for the situation to then spiral out of control."
Protection in practice
If we look at the case study opposite, a number of concerns can be raised and opportunities for providing insurance solutions recognised.
Stress-induced illness has fast become one of the main contributors to long-term absence in the workplace. If we look at John Fell's symptoms, it is not hard to relate the problem to his recent promotion and the extra pressure this change may have created. Dudley Lusted, director of corporate development at PPP Healthcare, says: "Stress problems, such as those demonstrated by John, are often down to a failing to retrain staff. What the employer needs to do is to find out the causes of the problem."
In addition to assessing the workload of staff, Louise Zucchi, media relations manager at Norwich Union, suggests that a group PMI policy could help ease the situation. "Group PMI with an add-on counselling service would be helpful here. John could seek confidential help, advice and support as soon as the problem arose, improving his chances of recovering sooner and reducing the likelihood of lengthy absences and the problems caused by having to cover a managerial position," she says.
Although John has only been absent for a relatively short period, this sort of condition often leads to a much longer time off work. In this scenario, an income protection product could become a vital safety net for both the employer and the employee. More insurers are also beginning to incorporate rehabilitation services into income protection products, providing excellent long-term support.
Rod McCarthy, marketing actuary at Scottish Equitable, explains: "By insuring a possible loss, the employer can be sure that no extra costs will be incurred if employees are absent for a long period. Income protection can also give access to disability management and rehabilitation services, working to the advantage of both employers and their staff."
Alleviating back pain
The case study also outlines two employees with back conditions, driver Chris Edwards and secretary Caroline Dickson. Along with stress, musculoskeletal conditions are also responsible for a considerable amount of employee absence. Simple factors such as the positioning of desks, or health and safety issues such as lifting techniques can often add to an existing problem.
If a condition is serious, then it is important to provide medical support for employees, as the employer could be made liable for the condition if nothing is done to help. Lusted says: "With any back problem it is always vital to establish whether the condition is serious. The employer needs to be aware that if the employee is not fit to do their job and their condition deteriorates, the company could be found liable. In order to speed up the recovery of the employees in this company, I would recommend a group PMI scheme."
Zucchi also advises using group PMI to quicken the recovery of employees with back complaints. If a complaint is dealt with early on, it may prevent the condition becoming untreatable. "PMI would mean that both Chris and Caroline would be able to get treatment quickly, including physiotherapy, osteopathy and chiropractice, where appropriate and depending on the policy. However, if the problem becomes chronic rather than an acute treatable condition, it may be difficult to cover," she says.
Returning to work
A group PMI scheme may also help to get Dan Jennings back to work. As he is currently on an NHS waiting list for a knee operation, he is likely to be absent from work for a considerable time, before he even starts to recover. As Smith says: "In Dan's case, a PMI policy would have kicked in by this point, meaning he would get surgery much quicker than on an NHS waiting list."
Another option for the company to overcome the problem of Dan's absence may again lie in an income protection product. More insurers are beginning to see the benefit of including rehabilitation services in income protection schemes, as it means employees get back to work sooner, and claims are shorter.
Jane Dale, director of group risk at Legal & General, says: "Income protection would work well for Dan, as this could turn into a long-term absence. Following an assessment, the insurer may also consider funding the cost of a private operation, to help him get back to work quicker and minimise the amount of the claim."
The trend towards insurers providing additional services, to both save money and help people on income protection make a quick recovery, is also outlined by Zucchi: "The demand for rehabilitation within income protection schemes has definitely grown in the last two years. Not only does it get the employee back to work quicker, benefiting them and their employer, but it also limits the time the insurer pays out for, saving money and having a positive impact on premiums."
Taking an income protection route may also be of advantage to employers, removing sick pay issues from the absence equation. Ann Greenwood, head of corporate and voluntary consulting at BUPA, says: "If the company does not have a reasonable sick pay scheme, I would first of all advise them to get income protection, so that wages are covered if employees are absent for a long time."
The need for companies of all sizes to provide employees with comprehensive cover for illness, is a growing need. More insurers are waking up to the fact that products need to include more holistic and rehabilitation support to ensure employers, employees and insurers themselves, do not lose out. The quicker a problem is solved, the less treatment is usually needed, meaning employees are back to work and fewer claims are made.
With employer litigation issues growing as employees begin to gain more legal rights in the workplace, employers of both small and large workforces need to protect their businesses.
Added to that the increasing number of benefits tied in with both group PMI and income protection products means IFAs have access to an expansive market where advice, especially for smaller firms with limited human resources, is urgently needed.
Kirstie Redford is senior staff writer
