The rehabilitation facilities offered by group income protection (IP) insurers are a formidable sales aid. By getting staff back to work as soon as possible employers can both minimise the disruption to their business and trim their premiums by improving claims experience.
But in the individual IP market, insurers realise they are playing a completely different ball game and they qualify most statements about rehabilitation with a self-justification verging on paranoia.
They know many policyholders may be sceptical about their willingness to pay claims at all and could construe invitations to receive rehabilitation as sly attempts to backtrack on obligations.
Anyone who doubts claimants are cynical should talk to Dr Stephen Duckworth, the chief executive of Andover-based Disability Matters. This company uses disabled staff to help rehabilitate IP claimants who have already been incapacitated for two to three years.
He says: “The fact we’re disabled ourselves can help them realise we’re on their side. But everyone we deal with is initially highly sceptical and thinks they’re seeing just another ploy by their insurer to get them off their books. One person even spent three days thinking I had a hidden camera in my wheelchair.”
Such consumer attitudes are a little too close to the truth for comfort. Most IP insurers started to introduce rehabilitation to tackle rising claims bills in the wake of high unemployment caused by the 1991/2 recession.
When claimants want to get back to work, rehabilitation can represent a classic double-win situation for both claimant and insurer. But the fact remains that most insurers are unlikely to provide help in this respect unless it is in their commercial interests to do so.
Pioneer Friendly Society is unusual in volunteering examples of when a moral obligation to help has outweighed considerations towards profitability.
These have included paying £1,500 to help a policyholder recover from an operation to donate a kidney to his son and £500 to a policyholder who donated bone marrow to her brother. Because both operations were outside the scope of cover there was no benefit bill to cut, but the attitude probably has more to do with the society’s mutual ethos than anything else.
All individual IP insurers stress that rehabilitation is strictly for those who want to help themselves and that they put no pressure on claimants to take advantage of it. Some point out this is not just for fear of their motives being misinterpreted. After all, those who do not want to go on training courses invariably do not succeed on them, so money invested in their return to work is wasted.
All major players will pay proportional benefit to help claimants ease their way back into employment by working part-time. On a case-by-case basis most will also consider offering medical rehabilitation, such as paying for physiotherapy or for private operations to jump lengthy National Health Service (NHS) queues, and vocational rehabilitation, which can involve paying for counselling and even retraining for those unable to perform their original occupation.
Canada Life is unusual in restricting itself to offering rehabilitation to those who suffer from anxiety and depression. A single claims visitor meets the majority of such claimants and recommends cognitive behavioural therapy if she, the claimant and their general practitioner consider it appropriate. But the company is considering introducing vocational rehabilitation and extending the medical side to musculo-skeletal claims.
The leading friendly society Holloway plan providers are also notable for not offering vocational rehabilitation at present and vary in the extent to which they are active on the medical side. (Holloway contracts are a form of income protection, typically offering day-one cover, premiums with no loading for occupation or gender, and a with-profits investment element.) Pioneer Friendly Society will consider paying for physiotherapy and orthopaedic opinion as well as towards some surgery. It wouldn’t want customers to have to wait in the NHS queue for longer than two months for magnetic resonance imaging (MRI) scans or three weeks for physiotherapy.
Cirencester Friendly Society offers no medical or vocational rehabilitation but is reviewing the matter. Tunbridge Wells Equitable offers a cross between a Holloway plan and a conventional IP structure. It will consider paying for physiotherapy and surgery and has looked at alternative therapies.
But it is unlikely the extent of a company’s rehabilitation facilities has much impact on sales in the individual market. Specialist independent financial advisers (IFAs) acknowledge the matter is well down their shopping list when it comes to product selection.
Diane Saunders, the principal at Leeds-based IFA Diane Saunders Financial Adviser, says: “Rehabilitation is not something I take into account that much at the outset but I know if companies have a good ethos evident in underwriting it’s likely to go through to claims.”
Brian Lentz, the principal at Portfolio Insurance Consultancy, an IFA based in Hatfield, says: “Rehabilitation is an added bonus but not one of the main reasons for choosing a contract. The selection decision tends to revolve around the amount insured, the premium charged, the conditions covered, including occupations and exclusions, and the IFA’s experience of claims-paying history.”
Providers are unanimous that they make exactly the same rehabilitation tools available in the individual and group markets but admit they market them in a much more low-key way in the individual market. Most make little or no mention of rehabilitation in their main consumer product brochures although they may do so in separate sales aids or in literature aimed at intermediaries.
In the few cases where providers and rehabilitation agents observe differences in attitudes towards rehabilitation between individual and group claimants, they are unable to support their observations with concrete data.
Joy Reymond, the head of rehabilitation services at Unum, says: “I’ve never observed any real difference between individual and group claimants. Self-employed people can be among the best to work with because they’re often more assertive and highly motivated to return to their business but it’s not that clear cut. There is the full spectrum of different types with both group and individual claimants.”
Reymond believes the one tangible difference is that the group market involves a triad of claimant, employer and insurer, and the employer can often help find a solution.
In the group market the involvement of the employer can also help bring claims to an insurer’s attention before the deferred period has elapsed. Reymond thinks this can be an important advantage because one of the key issues in rehabilitation is how fast it can be administered. The longer people are out of work, the less likely they are to want to return.
Some insurers are tackling this problem in the individual market by encouraging policyholders to get in touch as soon as they are ill.
Swiss Life, for example, asks IFAs for support in providing early notification and encourages policyholders in its How To Claim Guide to notify it within the first four to six weeks of illness. Even at that stage the company may involve expert opinions and pay for treatment if it feels it might prevent a claim.
Likewise, Friends Provident has a message on the front page of its policy conditions asking policyholders to contact it as soon as they are ill and it will consider paying for operations within the deferred period.