Milton court, Dorking, has a lot in common with the insurance company contained within its walls. Both UNUM and the 400 year-old property have enjoyed an illustrious and eventful history.
The building itself has a reputation of charitable activity – housing widows and granting poor families refuge in the last century. Similarly, UNUM is committed to safeguarding widows and families through its insurance policies. Various similar benevolent parallels can be drawn and UNUM is obviously very much at home in its Surrey mansion setting.
The company was previously known as NELPHI, and used to deal in pensions and life cover. The name change came in 1991 to reflect the relationship with its new parent company, UNUM Corporation of America, and since then the company’s business has specialised in income protection.
UNUM is the UK’s market leader in group long term disability insurance, otherwise known as income protection. And as a subsidiary of UNUM Corporation, it can lay claim to being part of a global company which is the world leader in this field. And this reputation as a long-term disability expert means the company is well placed to introduce innovative products.
Last September’s launch of Essential Ability Cover provoked mixed reactions within the industry. This provided a new definition of incapacity, based on a person’s ability to perform basic activities, rather than on their ability to carry out a specific occupation. However, critics were not happy about the level of cover being offered and concern was voiced over the likelihood of claims being paid.
Despite its critics, the pioneering concept of Essential Ability Cover cannot be doubted. It allows blue collar workers, who have traditionally been excluded from income protection because of high risk occupations and prohibitively priced premiums, to have access to cheaper cover.
The Abilities Test is made up of 11 different trials, including tasks such as getting out of a chair without using its arms; lifting a 2kg bag of potatoes from counter height; and walking up and down a flight of 12 stairs without taking a rest. Being unable to perform three or more of these tests means claimants are eligible. Although, they must also be incapable of performing the “material and substantial duties” of their own occupation.
UNUM says Essential Ability Cover has been very favourably received by IFAs. Over 1,000 intermediaries called its IFA hotline during the launch campaign asking for an information pack and audio tape. Figures show UNUM recorded a 34% increase in total new business premiums in 1997 and the Essential Ability Cover plan now accounts for a quarter of all new individual policies.
Martyn Field, managing director at UNUM, has been with the company for 20 years and is convinced of the value of Essential Ability Cover: “It is essential we provide a product at a price everyone can afford. We want the market to grow and this brand new product can fulfil the needs of different employees. We try and quote for everything – although there are one or two high risk occupations we don’t quote for.”
And although it would be premature to try and chart the progress of such a new scheme, Field is optimistic for the future.
Rehabilitation is the UNUM’s watchword, and the launch of Essential Ability Cover is just part of the company’s long term commitment to improving claimants’ quality of life and ensuring they can return to work, circumstances permitting.
In 1986 UNUM was the first to introduce an after care service for long term disability claimants, and it has spent time and money investing in a team of counsellors to work with claimants throughout the country. The objective of the counselling initiative is to provide extra advice and assistance to claims applicants, and to facilitate the fullest and speediest recovery.
Field believes the need for an effective and professional after care network is long overdue in the insurance industry. The Rehabilitation Studies Unit, University of Edinburgh, is responsible for the ongoing training of UNUM’s disability counsellors and Dr Paul Cornes, senior research fellow at the unit, has repeatedly promoted the advantages of a rehabilitation service to the UK insurance industry.
Cornes says: “On an individual casework basis, the disability counsellors are encouraged to pioneer early intervention strategies. They look at claimants’ personal, medical and occupational circumstances; review and advise on their entitlements to disability benefits and allowances; determine if any particular rehabilitative help is required in order to assist employment,” says Cornes.
Field adds that speedy claims help both the policyholder and the insurer. He says: “Our disability counsellors are all qualified nurses who try and meet all new claimants. A lot of claimants want to try an alternative occupation, and the counsellors can help them to do this. If they do this, it may mean a smaller income. If this is so we can top it up, provide a proportionate claim.”
Field says that while rehabilitation and an efficient claims system will always be a top priority for UNUM, also high on its agenda is its ongoing specialisation in long term disability. The acquisition of The Windsor Life business in the early 1990s has allowed UNUM to expand into group life and group critical illness and Field admits the company is now considering individual critical illness.
The expansion has continued with the launch of personal accident cover, but Field emphasises UNUM is never going to be an investment company. He says the future lies in a different direction: “We want to ensure that we will have flexible products. For example, employees could say how much they wanted to spend of their benefits on which product: they could determine their fringe benefits. This is something that IFAs are already focusing on.”
Field observes UNUM is well aware of the general shift towards flexible products within a varied market. He believes that promoting a mixture of policies within a benefits scheme could prove to be a way of moving long term disability forward.
He is also optimistic about the current political situation: “UNUM and the Labour Government complement each other. The Government’s focus on ability within disability, and the efforts to get people back to work, whatever they do, fits in well with UNUM. We see major opportunities for income protection.”
The past 20 years have seen UNUM develop into an insurer with distinct and achievable goals. And Field believes that the focus on customers and staff, demonstrated through to company effectiveness and shareholder satisfaction, has been crucial in this process.
Industry pundits have long been speculating about the huge potential growth of long term disability. But the combination of UNUM’s commitment to customer care and its ability to launch innovative products into untapped markets may mean it is time for the speculation to end – and the work to begin.