Going for gold

One of the main concerns for employers and employees today is health and the impact caused by long-term disability both to an employee and their family, as well as on the future prosperity of the business. Indeed both employers and employees are right to feel concerned as long-term absence from work is a far more common occurrence than most people think.

According to the Department for Work and Pensions, there are over two million people who have been off work sick for six months or more and may never be able to return to work. In 2002, it was estimated by the Confederation of British Industry that employee absence cost firms a staggering £11.6bn. These figures combined with the fact that workers in the UK are three times more likely to be off work for more than three months due to illness and injury than to die, only go further to highlight the seriousness of the issue.

This is clearly why group income protection (IP) is now rated as one of the most valuable and valued employee benefits around. Improvements both in our environment and medical care have all resulted in longer life expectancy, therefore placing an increased burden on State welfare provision.

It is widely accepted that State benefits are designed to provide only a subsistence level of support and subsequent governments have been applying stricter rules making it more difficult to qualify, which have all contributed to the dramatic rise in group IP sales in recent years.

In fact the market for group IP has more than doubled in size over the past five years, according to GE Frankona Re's latest figures, with revenues totalling £507m at the end of 2002. However, as group IP plans have become more popular there has been an increase in the demand, particularly from advisers and corporate clients, for a new approach and better value for money.

Bespoke services

Scheme premiums charged by providers are still an important consideration, but recent innovations such as the introduction of bespoke claims management processes have become increasingly essential in the overall product selection criteria.

The development in claims management services over recent years has been in response to the concerns of providers, advisers and employers who reported that the number and duration of claims had been steadily increasing. Insufficient control and management of claims has resulted in a steady increase in the level of group IP premiums being charged at renewal.

In addition, employers will be looking at boosting business efficiency by getting key employees back to work more quickly than before, with the prospect of saving money on paying overtime, hiring temporary staff or incurring the associated costs in recruiting a longer term replacement.

It is the indirect costs that are less easily quantifiable, such as the adverse effect on goods and services and loss of customers, which could well be sustained over the short term but could seriously impact on the productivity and profitability of the business over the longer term.

As a result, the more a company understands the causes and changing nature of disability in the workplace, the more effective its control over the associated costs.

These are the main reasons why more brokers are only recommending products to their clients that are able to provide ' through the use of experienced and qualified disability counsellors ' an effective claims management service.

The key to any good claims management process is early intervention providing access to specialist services and expertise at an early stage, normally within a matter of weeks. This may help in preventing a potential long-term claim before it even begins. However, during and after periods of sustained incapacity many people may need help in adopting a new lifestyle. As a result, employers and employees are provided with extensive guidance and support, therefore facilitating the employee's successful return to work.

Employers do not have to use it, but it would be in their interests to do so. Use of these services may mean that providers do not, for example, have to pay out so much in income benefit claims. This may in turn potentially lead to scheme premium savings for the employer in future years.

Maximise benefits

The role of the adviser as well as the provider is crucial, not only in respect of promoting awareness of the undoubted benefits of claims management, but in order for these benefits to be maximised. The key is to ensure that employers have a clear and precise understanding of how the process actually works.

For any process to work efficiently it needs to be straightforward with the provider having in place clear lines of communication backed up by technology to ensure that claims are dealt with smoothly and quickly.

It is also in the interests of advisers to have an understanding of the issues facing employers. Those advisers who have taken an active role in the claims management process and are in regular contact with providers are able to produce regular updates and reports on existing claims and their progress to their clients. This is but one of the 'value added' services that a client has come to expect from a professional adviser.

Initially, the HR department receives a sick note from an employee and if this suggests that absence is likely to last for more than three weeks, the employer may ask the individual to complete a short questionnaire. A nurse qualified in the field of rehabilitation would then assess the answers before deciding on the next step. This may involve obtaining reports from the patient's GP and any specialist involved in the case. Alternatively, the nurse may recommend an assessment by an independent physician.

All the information is then collated to form the basis for an occupational health report. This will usually include a suggested programme ' drawing on therapy, counselling and other services in the public, voluntary and private sectors with the involvement of the employer ' for returning the employee to the workplace.

Employees who are confident that a group IP policy provided by their employer, will protect a proportion of their salary during a period of incapacity, could still have huge concerns over the precise nature of their illness or disability as well as the duration of their absence from work. To combat this, an employee will often have 24-hour telephone access to a special team of nurses, with whom they can discuss any concerns they have about their disability and their health generally.

Even if they have not recovered sufficiently to return to work by the time their employer's group IP plan's deferred period comes to an end and monthly benefit is due to begin, the rehabilitation process should by then be well under way. This often means that the claim payment period is reduced and lasts for just a year or two.

Reducing the length of time that someone is away from work is vital to the continuity of any business and by adding occupational health services, companies are in a position to offer added benefit to employees in a climate when it is increasingly difficult to find and retain good staff.

Employers may also be able to cut the cost of insuring this risk as future premiums could be reduced by falling claims.

Comprehensive, efficient and flexible claims management facilities are without question worth their weight in gold and can often make or break the success of any GIP proposition.

Ray Butler is head of group risk sales at BUPA