Renewed focus on the large numbers of claimants found ineligible for state disability benefits has highlighted the contrast between the protection afforded by the State and the insurance industry.
A new report by Citizens Advice, endorsed by several leading health and disability charities, claims that seriously ill and disabled people are being “written off” by those assessing their eligibility for State benefits, who are finding them fit for work and thus entitled to neither support nor financial benefits. It raises “grave concerns” about work capability assessments (WCAs) – the tests used to determine claimants’ eligibility for employment support allowance (ESA), which replaced incapacity benefit (IB) in October 2008 under the Welfare Reform Act. The report claims that WCAs do not take sufficient account of variable symptoms, take no account of the context of the claimant’s work environment and make poor recognition of mental health problems.
The government’s own research shows that just five per cent of sickness benefit claimants are found to be unable to work by the WCA. Twelve per cent are allocated to a work-related activity group (and expected to prepare to return to work) while over a third (38%) are found fit for work. Thirty-two per cent more of those being assessed are being found fit for work under ESA than under IB.
However, research conducted by protection provider Friends Provident suggests that the vast majority of advisers who sell income protection (IP) are not using the changes in the Welfare Reform Act as a tool to boost sales and 28% believe that the State would be able to provide clients with enough money to live on via ESA.
In response to the Citizens Advice report, Ed Stuart-Brown, head of protection at Friends Provident, said that a “huge amount” of the population is “more than capable” of covering themselves privately.
He added: “The insurance industry looks to pay out. If we do not, then our promises are worthless, and people stop paying money. The whole basis of assessment is one that says ‘how do we look to pay out, and how do we support the claim?’”
Stuart-Brown stressed the value of taking out an own occupation IP policy and emphasised the importance of insurers employing dedicated claims staff, who are allocated on an individual basis to each claimant. Russ Whitworth, director of claims & underwriting for Legal & General, also highlighted the personal approach taken by insurers and the close liaison with the medical profession.
“We do not merely take a snapshot of a customer’s ability to work but instead we assess all policyholders on their ability to undertake their own occupation,” the spokesman said.
While operating on very different principles, there are signs that the government could learn from the approach developed by insurers.
“We are seeing cases where the government’s aim of moving people into work is being totally undermined,” said David Harker, chief executive at Citizens Advice. “A much more sophisticated approach is needed, that not only looks at a person’s ability to undertake a certain task on the day of the test, but considers supporting medical evidence and other aspects, such as the variability of a person’s condition and the external barriers they face in finding work.”