The independent review of the UK’s sickness absence system, jointly chaired by David Frost and Dame Carol Black, is asking what changes are required to help people stay in work and whether the balance of absence costs are appropriately shared between individuals, employers and the State. We would advocate fundamental change.
The group risk industry has long championed the value of group income protection (GIP) with its emphasis on prevention of absence and rehabilitation as pivotal to true welfare reform. Lord Freud’s recent comments made at events held by the Stockholm Network, IPPR and the ABI indicate this argument has struck a chord in Whitehall and that there is potential for the government and the protection industry to work directly together in future. This is extremely positive but how could this work in practice?
If I ruled the world, or at least the review, I would question the role of statutory sick pay (SSP). Step back and think about it, SSP is payable for up to 28 weeks, after which point, an application for Employment and Support Allowance (ESA) can be made. There then follows a 13-week assessment period for ESA. That’s a staggering 41 weeks’ worth of lost vocational rehabilitation time.
Early intervention is one key reason why the group risk industry is more successful than the state in managing a return to work
Group risk insurers know that early intervention is essential. They have long advocated that in order to achieve a successful return to work, the most crucial period for effective intervention and rehabilitation is four to six weeks after first absence especially for mental and stress related conditions and musculoskeletal injuries. This is a fact already acknowledged in Dame Carol Black’s review of the health of Britain’s working age population. It is these two types of conditions that the Government has identified as being typical of ESA claimants, and this is also true of GIP claims. Yet the state system allows a potential claimant to languish for 28 weeks before the assessment for ESA even begins.
So let’s be radical here. What if SSP were only paid for four to six weeks, after which time, the assessment period for ESA began? Employers could then pay an assessment allowance equivalent to SSP throughout the 13-week ESA assessment period or opt to take the SSP saving by taking their employees out of the state system completely and making private provision for them.
This would meet several objectives. Firstly, it would achieve more positive outcomes for private and public sector productivity, state coffers and the individuals concerned with the state emulating best practice. It would also free up funds for employers who might then be more receptive to the idea of overhauling their absence provision to include better short and long-term support for absent employees. And, crucially, it would bring ESA assessment timing better into line with GIP, thus realistically allowing the group risk industry, employers and government to work in partnership in a way we haven’t seen before.
There would, of course, be significant change to manage at outset and initial investment would be high which can be problematic in times of cut-back but, let’s face it, the current system is no longer fit for purpose and the benefits of change are compelling. Thinking has moved on so why shouldn’t the UK’s sickness absence system evolve to reflect this?
Early intervention is one key reason why the group risk industry is more successful than the state in managing a return to work. An employer with a GIP policy is currently able to assess an employee’s level of incapacity and to commence a return to work programme long before any assessment for state support is even due to commence. Surely bringing state and private systems of support into line makes ultimate sense and would better enable potential incentive programmes for nudging employers to make more private provision for their workforce?
And why stop there? Short term absence products, products that offer employer-facilitated access to protection, and employee/individual incentives could all play a part in reducing the UK’s sickness absence burden and result in a more resilient society.
Change happens. When it does, it’s better to be driving that change than just being on the receiving end. The Sickness Absence Review represents a huge opportunity for our industry, provided we grasp it. So let’s engage with the consultation in any way that we can. That way we can truly be at the forefront of what could be a radically different way of working together and bring about improved outcomes for all.
