Absence is often thought to make the heart grow fonder. For employers counting the financial cost of a valued employee's long-term absence, this will almost certainly be true. Most will be keen to help individuals return to work quickly, as the longer they are away, the longer it is likely to take them to come back, if they do so at all. As a result, a number of insurers in the group risk market are now adding new services to existing products or developing new ones to help employers, whether large or small, to reduce long-term absence. Simon Bailey, head of marketing for employee benefits at Aegon Scottish Equitable, says: "What we are seeing is insurance companies being able to offer more around absence management."
Some insurers have started to use early intervention mechanisms and to provide absence recording tools to identify potential cases of long-term absence, a trend that was not in evidence five years ago. Jill Pollock, head of corporate solutions at Bupa, explains: "[There] is a growing awareness that early intervention for [staff] who are off sick has a significant impact on the business and reduces the length of time they are off."
Other insurers, such as Legal & General, have decided to offer incentives to employers to reward early intervention. Employers that insure more than 500 staff and notify the insurer of at least 80% of long-term cases by the sixth week of absence qualify for a bonus of 5% of their premium for up to the first two years, and possibly longer depending on results.
There is some debate, however, about just how effective such approaches are. Bailey questions whether incentives merely mask the cases where gains can be made from early intervention. "The big plus is that it offers an incentive for the employer, but does it help [insurers] get involved with the right cases?"Historically, group risk products have been the domain of larger employers, however, insurers are now developing products designed specifically for small and medium-sized enterprises. Unum, for example, launched its dual benefit group income protection product in January to this market. This has a four-to-eight week deferred period compared with the traditional 13 and 26 week options and is thought to be the first time a deferred period of less than 13 weeks has been offered. Wojciech Dochan, head of commercial marketing at Unum, says: "With a smaller workforce, [employers'] experience of a claim will be more infrequent. We decided to [offer shorter] deferred periods and provide [earlier] access to rehabilitation services."
The product also provides a monthly payment to employers to help them cover the cost of making adjustments to the workplace or to pay for temporary cover. At the end of the income benefit period, a lump sum payment is also made to the employer.
Insurers are increasingly thinking about how they can help employers to stay in touch with and rehabilitate staff. Bupa, for example, works with employers to identify how existing healthcare perks in the workplace can be used to aid an employee's rehabilitation, and source additional products if required.
Over the past few years, a number of providers have introduced additional services to group income protection and critical illness products that can help with rehabilitation, even if this is not their primary use. Aegon Scottish Equitable includes access to the Red Arc counselling service, while Canada Life and Generali provide access to the Best Doctors scheme, which enables staff to seek a second opinion.
Further changes to product design are potentially now on the horizon with the Welfare Reform Act 2007 due to come into effect later this year. The legislation is designed to reduce the number of people claiming incapacity benefit by making the qualification criteria tighter and by encouraging the long-term absent back into the workplace. The changes could have an impact on the group risk marketplace. Current group income protection limits, for example, take incapacity benefits into account, which may prompt some providers to make changes to their products. Unum has already revised the terms of its income protection offering, altering the limit from 75% less incapacity benefit to 80% without any offset.
Other insurers have decided not to make any changes. Pollock says Bupa's government relations team does not believe the legislation will have a great impact on its existing products. However, Bailey says assessing whether change is necessary could take time. "Everyone will expect, over a period of time, a range of new benefits and benefit structures, [but] we're not there yet." EB
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If you read nothing else read this...
- A number of insurers have developed products to help employers tackle cases of long-term absence.
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