The Labour government and the group risk industry should, in theory, be a partnership made in heaven. The former is desperate to cut NHS waiting times, slash the welfare benefits bill and get as many people as possible back to work.
The latest Office for National Statistics (ONS) data shows unemployment for people of working age had crept up to 4.6 per cent for the three months to April 2025 – the highest level for nearly four years.
And, according to research published by The Health Foundation this March, 8.2 million working-age people report a long-term health condition limiting their ability to work. Only half are currently actually in work.
This is clearly unsustainable. In October 2024 the Office for Budget Responsibility (OBR) forecast that total spending on health and disability benefits would increase from £64.7 billion in 2023-24 to £100.7 billion in 2029-30.
But group risk providers pride themselves on offering rehabilitation facilities and added-value features which can help sick and injured people back to work and prevent them from going ill in the first place.
Crucially, at a time when many companies are struggling, insurers don’t charge extra for these services – including their costs within overall scheme premiums. So, if the government could help employers become more aware that they may have such “free” services available it could help relieve the burden on the state.
Indeed, the government could perhaps even make a low-cost group income protection scheme compulsory for employers — in a similar way to auto-enrolled pensions.
Even if the payment benefit was capped at two years, rehabilitation facilities and added-value features could be available for the entire workforce.
But to date, more than a year after Labour was elected, there has been little evidence of concrete change, a consistent theme dating all the way to Dame Carol Black’s 2008 Working for a healthier tomorrow report.
However, there is currently a widespread feeling across the group risk industry that we are genuinely on the cusp of a significant breakthrough. This differs notably from the vague hopes commonly expressed previously.
Fundamental to this is the idea that the current government is better at listening and, in particular, grasping that returning people to work can involve a lot more than simply occupational health.
Dr. Julie Denning, CEO of Working To Wellbeing and chair of the Vocational Rehabilitation Association (VRA), is positive at “seeing vocational rehabilitation on a slide for the first time” during the recent Health Foundation review.
She says: “From the vocational rehab perspective I can really feel a shift in terms of willingness to listen, even if I can’t put my finger on exactly where. I feel it’s because there’s a crisis. We’ve got to get the economy growing and there are far too many people out of work, both young and old. It’s a perfect storm.
“I have high hopes that vocational rehab will be an integral part of the conversation in terms of getting people back to work in the independent Keep Britain Working Review being led by Sir Charlie Mayfield.” (See Box).
Mayfield review
Sir Charlie Mayfield is the name rolling off every commentator’s lips. Although not actually a politician, discussions with him have formed the closest links most insurers have recently had with government – which appointed his review.
Any other dealings have been vague and largely confidential. For example, Legal & General talked to Labour in the year before the election, and say they continue to contribute to sector debates on the future of work. Aviva’s government policy teams confirm they have “definitely contacted government during the last year”, while Unum “has been actively contributing to the government’s agenda on work, health, and productivity.” But all three insurers wax lyrical about Mayfield.
L&G’s group protection claims & governance director Vanessa Sallows, says: “It’s really important he’s doing this as he understands business and the challenges employers have.”
Ron Wheatcroft, technical manager at Swiss Re adds: “I do detect a different approach to the Charlie Mayfield review than to the plethora of other ones, and it feels as though it has much more of a sense of purpose and dynamism. With the last couple of reviews, I’ve rather felt it was just the same old stuff which no one was going to follow through on. The hope is he recommends the government gets behind vocational rehab.”
Sir Charlie was not available for interview by Corporate Adviser but the fact that this May he attended a Summer Symposium at industry body Group Risk Development (Grid) and took out a whole day to visit Aviva’s offices in Eastleigh certainly bodes well.
Barry Waring, chair of Grid’s ‘Raising The Profile’ committee, was struck by Mayfield’s ability to grasp the challenges insurers are facing in the UK market and by the efforts he’d made to understand other European systems, making reference to Denmark and Holland, which he’d just visited.
Aviva head of group protection distribution Jason Ellis says: “He seems to have picked up on the case management piece. He sat with case managers at Aviva, spoke directly to them and looked at some cases we were working on. We saw someone genuinely coming at this with an open book, whereas previously as an insurer we’d always felt our message wasn’t landing.”
Impact on cost structures
The proof of the pudding won’t actually occur until we see Sir Charlie’s report, due this autumn. But, if all this optimism proves justified and demand for group risk’s “free” services rockets, will insurers really be able to continue not charging extra for them?
Zurich head of market management, corporate risk Nick Homer says: “In my view the insurance industry could grow at a manageable rate if the government got more involved. Support services would continue to be a relatively small proportion of overall costs if utilisation significantly increased, and we would get the benefit of it mitigating more claims.
“I personally think our industry could double in size over a fairly short period without it giving us significant concerns around broader capability and resources. Especially as a lot of support services are very digitally enabled.”
Such expansion would certainly be a nice problem to have to worry about. Because, even if Sir Charlie makes the hoped-for recommendations, the government still has to act on them. It could decide it has other priorities, which would be the mother of all false economies.