A step in the right direction sums up 2001 for group income protection (IP), with product development nibbling away at the growing problem of claims management.
Concessions for employers willing to shoulder some responsibility for absence management signals the direction that group IP is taking. And not without cause, as containing the cost of long-term claims is the only way of keeping this product vital.
“The biggest area of interest is absence management,” agrees Paul Casey, the media relations specialist for GE Frankona Re, “with both Unum and Norwich Union working on this area.”
Casey says employers have been poor at addressing absenteeism to date.
“Most will have some feel for the direct costs, such as the absent person’s pay,” he says, “but few have any idea of the indirect impact of absenteeism on productivity and replacement staff.”
Market response may have started as a move to keep the lid on claims, but it now seems to have developed into a science of its own.
Unum’s New Beginnings campaign is another signpost for rehabilitation awareness, and confirms group IP’s shift in direction.
If education is the key to opening up the IP market, as providers have been saying for years, then this is a serious stride into uncharted territory. Other insurers will be taking notes.
Norwich Union Healthcare, in the market since 1967, relaunched back into this sector “as a serious player” in June 2001. According to marketing manager for IP Nick Homer, a premium discount of up to 15 per cent is on the cards for businesses keeping absenteeism databases and taking proactive steps to reduce staff absence through stress counselling and private medical insurance (PMI) benefits.
Also aware of the trend for claims containment, Legal & General has formed a strategic alliance with Cigna Healthcare to manage IP claims and staff absence costs.
Many of these moves were prompted by a growing awareness of the Disability Discrimination Act, with employers now having to demonstrate real consistency in the way absent employees are treated – plus supporting them back into the workplace. Group IP insurance helps by defining the employer’s philosophy to sickness and providing access to rehabilitation expertise.
May 2001 brought the launch of a new cafeteria-style plan from Norwich Union, aimed at its existing pensions customers and offering choices such as life cover and PMI alongside IP.
Royal & SunAlliance also revamped, aiming to make the concept of free cover easier to understand and using a formula based on salary rather than benefits.
Three yearly benefit reviews were also introduced last year in a move to encourage growth in the market, but, says Casey, it remains to be seen if this will have the desired effect.
And all eyes – those of claims managers and new business underwriters – have been focused on work-related stress statistics, which continue to rise. Lateral thinking is the route many providers are favouring.
“Cognitive therapy is one area where an insured IP scheme can add extra value,” says Royal & SunAlliance group risk marketing manager Peter Anderson. “This covers those employees whose recovery can be assisted by treatment but where that treatment is not immediately available or there is a lengthy waiting list. Funding treatment may well be the best route for everyone, maybe even removing the need for any long-term claim under the policy.”
Swiss Life – currently working on new developments, with a view to a launch this year – is also on the rehabilitation trail.
“We are actively encouraging early notification of claims,” says Swiss Life employee benefits marketing consultant Nicola Smith. “We communicate with the employer and provide a guide to claims that illustrates the benefits of rehabilitation.”
Scottish Equitable introduced a claims management service in October 2000. Employee benefits development manager Sue Sneddon says: “Providers are looking not just at selling products but at providing added-value services which can differentiate them from their competitors. That’s the way the market is going.”
Group IP certainly looks to be becoming more of a proactive benefit as insurers move into rehabilitating employees in the early stages of their ill health. What the market would like to see now is an official acknowledgement of this welfare aspect.
“We’d like to see real incentives from government,” says Smith – a sentiment shared by all providers.
Tax breaks, encouraging employers to take out protection cover for long-term sickness, would really be a step in the right direction.