Nobody disputes that early intervention can reduce the income protection claims bill and consequently result in lower premiums. The Frost/Black review confirmed the value of an early return to work. Yet group risk insurers continue to bemoan the number of cases in which they fail to receive prompt notification of employees going off sick. A cynic would say insurers, intermediaries and employers all contribute to this unhealthy situation.
The insurers are arguably the least at fault. Nevertheless, they remain much more geared to providing pro-active claims management for large schemes than for SME ones and, ironically, it is the smaller businesses where the prolonged absence of an employee can have the greatest impact on the bottom line. Several insurers also highlight initiatives and stances that their competitors could possibly benefit from taking on board.
Legal & General, for example, offers group income protection schemes with 250 or more members a 5 per cent cash-back on annual premium if it is notified of 80 per cent of absences by week six. When this was first introduced in 2005 Legal & General’s average notification period for being informed of long-term absence was 19 weeks but now it is under nine weeks. However, the fact that only around half of eligible employers actively participate in the scheme illustrates the educational challenge facing the industry.
At Unum, Joy Reymond, head of rehabilitation and health management services, points to the merits of a new form of motivational interviewing devised in the US by Kenneth Mitchell, managing partner of WorkRx Group. Whilst Unum has not yet actively presented this approach in the UK, it is a key principle underpinning its work.
Reymond says: “It’s not just about getting in early, it’s about what you can then do, and the key is what will motivate someone back to work. I don’t think either stick or carrot will work because it’s all about understanding what’s important to the individual. Mitchell’s method provides a whole different way of looking at the problem so that it’s no longer a case of ’us versus them.’ “
Catherine Baxter, head of product development at Friends Life, stresses that intervention needs to be work-focused and tailored but that this doesn’t always happen. For example, some employees off with mental health issues are only getting general advice when they need to be motivated to return to work by having the emphasis placed on the benefits of work. Those with musculoskeletal problems, on the other hand, tend to need more practical advice on how to cope and adapt their roles.
Intermediaries can clearly do more to assist with early intervention but many specialist intermediaries already have impressive frameworks in place (see box below), so it tends to be the dabblers in group risk who are most at fault. Steve Bridger, head of group risk at Aviva UK Health, estimates that at least 80 per cent of his business comes from specialist intermediaries, and these have reasonable processes in place for early intervention. Only a minority of the non-specialists who contribute the remainder are considered not to be as familiar with the benefits of early intervention as they should be.
Nick Homer, proposition development manager at Zurich Corporate Risk, feels that the early intervention issue provides a notable opportunity for those advisers wanting to establish themselves in this space. He observes that a lot of product purchases are being made in response to perceived issues as opposed to being driven from a strategic point of view.
He says: “I still think there is a need for a broader helicopter view of business risks and staff welfare. Large employers are likely to have their own in-house capability but would still benefit from the involvement of an adviser, and SMEs would definitely benefit from the involvement of one. When we get quote specifications from employers and advisers on group risk they are often very light on information relating to the health and wellness strategy of the organisation.
“We try and get across to intermediaries at regular meetings that when we have a sense that a company has robust reporting systems and has engaged its line managers it gives us an opportunity to engage with it in a far more effective way. But they don’t always listen.”
We try and get across to intermediaries at regular meetings that when we have a sense that a company has robust reporting systems and has engaged its line managers it gives us an opportunity to engage with it in a far more effective way. But they don’t always listen
Most problems with early intervention, however, occur with employers and, although things sometimes get stuck along the chain before even reaching HR, the bulk of issues involve line managers. Some line managers don’t seem to be aware that they are supposed to report sickness absence at all whilst others are confused regarding whether they should be reporting to occupational health, the employee assistance programme (EAP) or the income protection or private medical insurance (PMI) provider. Indeed, recent research by industry body Group Risk Development (Grid) shows that suitable line manager training is still the preserve of a minority of employers (see preceeding page).
Cigna Healthcare, which offers absence management support when employer absence management systems meet triggers, cites lack of proper procedures being in place as the most fundamental reason that line managers refer late. It offers free training when it sets up a service but this is sometimes only attended by HR, even if it asks for line managers, and the messages often fail to filter down. The fact that line managers have so many responsibilities is also stressed as contributing to them failing to give the subject the attention it deserves.
Paul Avis, sales and marketing director at Canada Life Group Insurance, emphasises that line managers often don’t have the necessary IT or HR systems to prompt action and that they also tend to forget those procedures that are in place because people don’t go off sick very often. He therefore feels employers should consider introducing day one absence services and training line managers in sickness absence and should constantly issue reminders via twitter, Brainsharks and webcasts.
Avis says: “The issue is often one of culture where absence seems to be the domain of occupational health but the line managers must feel they own the situation. One of the most effective strategies for this is to give them disability diversity training which shows the positive and negative impact they can have on an individual’s circumstances.”
The fact that early intervention so commonly breaks down at the employer’s end could be seen as a reflection of difficulty of the task, but it may also reflect the efficacy of the attempts insurers and intermediaries have made to educate managers.
This is especially the case for SMEs, where everyone knows each other and messages would quickly get around if delivered in a sufficiently engaging manner. So, although most in the insurance community are not guilty of lack of trying, they still haven’t found the right solutions.
Grid research shows room for improvement
GRiD research conducted in October 2011 amongst a sample of 500 UK businesses asked:
“According to the 2010 CIPD Absence Management Survey, 82 per cent of absence is deemed to be short-term (4 weeks or less). What measures do you have in place to improve on this? (Respondents were asked to tick all relevant replies)
Return-to-work interviews 37.8%
Trigger points to review attendance 17.9%
Line managers trained in absence management 15.7%
Line managers take primary responsibility for managing absence 17.3%
Disciplinary procedures for unacceptable absence 20.9%
Occupational health involvement 10.5%
Flexible working 28.4%
Employee assistance programmes 8.5%
Stress counselling 10.3%
Health & wellness promotions 10.3%
Private medical insurance 7.8%
Capability procedure 7.4%
Absence rate key performance ndicator 6.0%
Attendance incentives 11.1%
Absence monitored by board 9.9%
Outsourced absence recording 0.2%
Outsourced absence management service 1.2%
Premier early intervention service
Stephen Ellis, head of group risk, Premier Choice Employee Benefits
“You can’t force employers to actually use the service”
Like many specialist intermediaries, Premier Choice Employee Benefits has a robust system for ensuring that clients inform it when employees are off sick. Since 2006 all employers have been required to notify it when any employee has been absent for 28 days or more and, in the case of a couple of clients, notification is required from day one for mental health issues. Once it has received notification it immediately informs the relevant insurer.
The system catches at least 90 per cent of claims well before the end of the deferred period but Stephen Ellis, head of group risk at Premier Choice Employee Benefits, acknowledges that there are still cases that slip through the net.
He says “Income protection insurers provide early intervention but you can’t force employers to actually use the service, and we find that there’s no-one from insurers asking for early intervention in SME schemes. Even though we’ve been proactive, in the odd case we get late notification from large companies or SMEs even after the end of the deferred period. Some fail to notify us because they are always confident that the employee will return in the very near future and don’t think it’s worth mentioning the absence. “
