Should rehabilitation services kick in earlier on income protection products? Could this help the industry to manage rehabilitation and claims more effectively?
Market views
Mike Williams, Watson Wyatt
Timely intervention in potential long-term employee absence/ incapacity is a key component of successful rehabilitation. Income protection (IP) insurers already provide varying levels of rehabilitation, together with requirements for potential claimants to notify them within set timescales from the advent of incapacity.
It is in everyone's interest for an employee to return to work as soon as possible, whether the employer or the individual provides the IP.
Success, however, is also influenced by the employer's sickness absence policies and protocols. Early intervention and contact at the outset of sickness are crucial in keeping the individual as an employee. Alienation from the workplace is an issue and could provide a barrier to return to normal activity from as early as two weeks. Certainly at four to eight weeks, prior to the notification requirement on many IP policies, there is already a psychological barrier compounding the root cause of absence.
Just bringing rehabilitation in earlier on IP policies, therefore, misses the point. The real need is for a fully integrated approach to employee wellbeing and absence management, with appropriate reporting and interventions from day one of absence. This potentially encompasses all facets of employee health, from pre-employment and in-employment screening, to occupational health, medical care and rehabilitation, supported by appropriate IP for those unable to work.
Joy Reymond, UnumProvident
Put most simply, IP products protect the employer from the financial hit of long-term absences among their employees. Rehabilitation has traditionally been focussed on long-term cases, as these are the most difficult to resolve and the most expensive in terms of liability.
However, employers are increasingly seeing IP as an employee benefit as well as a benefit to the bottom line. They recognise that the ability to return to work after a disabling injury or illness is the single biggest predictor of a person's future economic, social and mental wellbeing. Helping their employees achieve this outcome must therefore, be one of the most important objectives of any IP product.
Most people who are off work due to an illness or injury recover quickly and need no help to return after a short spell of sick leave. But some people do not return quickly, and the likelihood of doing so declines dramatically over time.
The selective use of early rehabilitation in such cases is key to a successful IP product, even when it is not entirely clear whether the absence will result in a liability for the insurer.
Helen Merfield, HCML
There are several issues that need addressing to enable the benefits of rehabilitation to assist IP claims. These all primarily arise from the policy wording used by underwriters.
The 'deferment period' often places no onus on injured or ill individuals to notify insurers of circumstances that are likely to lead to a claim being made. Meanwhile, the faster rehabilitation is considered and enacted, the greater the benefits for all stakeholders. Requiring early notification from potential claims would enable insurers to consider early proactive assistance.
The 'same occupation' wording also negates the need for claimants to mitigate their loss in these types of claims instead of considering alternative employment and maximising their future potential. The impact of unemployment on an individual's physical and psychological wellbeing must not be underestimated. Rehabilitation can provide the proper support infrastructure to enable individuals to prevent the downward spiral into long-term ill health.
As with other lines of insurance, rehabilitation can offer improved quality of life for the individual and their family.
For insurers, the cost savings will need to be measured and publicised if there is to be wider uptake of rehabilitation. More education is also required into the wider benefits of rehabilitation, especially for the individuals themselves.
Nick Homer, Norwich Union Healthcare
The principle of early intervention equals effective claims management is a sound one that should be encouraged. A typical claim notification requirement on an IP policy must be given before the period of incapacity has lasted two months or before the expiry of the deferred period if shorter. To impose a stricter requirement in the contract would be considered an unfair contract term.
However, in practice, some insurers are very keen to be notified of any potential claims as soon as there is a possibility that the incapacity could exceed the deferred period. It is well known that the earlier a person is supported with their incapacity the more successful they are likely to be in achieving an early return to work.
Insurers recognise this fact and may therefore, be prepared to provide support or assistance before their contractual liability begins.
When it comes to claims we are, of course, dependant on the client informing the adviser or insurer of the incapacity at an early stage. Often this isn't the case and potential opportunities to intervene are lost. Both advisers and insurers need to further promote the potential benefits of early notification of claims if the industry is going to make real progress with active intervention.
