Delving deeper into the group risk claims stats

The annual GRiD claims stats have been published and, with a focus on group income protection, Suzanne Clarkson investigates suggestions that the industry is reaching a tipping point where the number of people being helped to return to work will eventually exceed the number of income replacement claims. Group income protection (IP) is getting to the stage where it no longer ‘does what it says on the tin'.

That shouldn't be taken as a negative. Group IP providers have gone through a huge transition over recent years from product providers to service providers.

Although income replacement/salary continuance is still an important feature, this element is taking a back seat to the arguably more important job - for employers and employees - of helping people return to their normal lives following illness or injury.

Maybe something really straightforward like ‘Back to normality' support would perhaps be more fitting these days.

That feeling of "normality" is worth its weight in gold. Just take five minutes out to watch the Pickford Family video on the Seven Families website to understand why.

This real-life story of a family helped by Seven Families - a fantastic initiative led by the Income Protection Task Force - shows that even those considered least likely to return to work can still be a valuable member of the workforce. And the personal value to them of being able to work is priceless.

Rehabilitation in the spotlight

Group IP insurers are now headlining press releases with annual return to work statistics.

Aviva, for example, has just reported that 9 in 10 (88%) of employees who were supported by the provider's early intervention services (EIS) made a successful return to work in 2016.

Canada Life reports that 80% of employees who engaged with EIS returned to work before their absence resulted in a claim, with only 7% putting in a claim form and an average absence duration of 7 weeks, well within the usual 6 months deferred period.

Unum released its second annual Return to Work statement in April, which stated that 1,040 people with serious health problems got back to work thanks to Unum's services last year, up from 1,003 in 2015.

Research by Oxford Economics in 2015 demonstrated that using EIS via Unum's rehabilitation team resulted in a reduction in the length of absence by up to 18%.

Is everyone pulling a sickie?

This is all great news but more needs to be done. According to the announcement by industry body Group Risk Development (GRiD) 2,289 people were returned to work before a claim became payable thanks to an active early intervention made by the insurer, and 14,499 group IP claims were paid.

Compare that against the 2,239,110 insured population for group IP during 2016 recently confirmed by Swiss Re in Group Watch 2017.

Then consider the fact that 137.2 million working days were lost to absence last year, according to the Office for National Statistics' latest figures.

This equates to an average 4.3 days per worker and if we assume, for the sake of argument and averages, that each worker in the UK took 4.3 days that's 32 million workers who took an absence last year. In other words, every single member of the UK workforce was off sick at one point in time[1].

It's clear to see from this why the Government wants to reduce its disability bill - as set out in Department for Work & Pensions/Department of Health Joint Policy Unit's Green Paper Improving Lives: The Work, Health and Disability.

Widening the insured pool

Group IP has already successfully extended into the insured employer workforce with an additional 275,296 people covered since 2012 with an increase of 132,930 in 2016 alone.

Compared to sales of individual IP, the group industry is doing really well but still faces the challenge that only 17,168 employers offer this benefit (although some will self-fund their long term sick pay).

Putting that into context, according to the latest Business Statistics Briefing Paper from the House of Commons' Library, there are around 1.3 million businesses in the UK which employ people.

Whilst 2016 was the first year since 2006 where more employers bought the product (only 57 new ones) the industry is failing to bring valuable early intervention and rehabilitation services to more employers, yet it is reaching more people.

Even SMEs can get in on the act via most - if not all - insurers.

There are some providers solely dedicated to this burgeoning sector such as Ellipse, which also offers day one absence management to small companies and the Canada Life CLASS system has group IP on it.

Whilst mid-market UK companies with employees abroad can get specialist help and expertise from Generali-UK, which also offers a raft of day zero and early intervention services, plus absence tracking.

Insurope's Multipool offered by Canada Life also offers small multinational employers full UK group IP support in a pooled context.

Return to work as a key metric

All agree that awareness of group IP's absence management and prevention possibilities needs to be raised.

This seems to be happening in that employee benefit consultants report that corporate clients are more interested in the support a provider will offer in helping them ensure workplace health, wellbeing and reduced absence, as opposed to comparing claims data.

Katharine Moxham, spokesperson for GRiD, commenting exclusively for COVER on the results, said: "The industry is doing a great job - not only in supporting people financially but also in getting people back to work."

On the return to work figures, she adds: "These figures have been collated for the last three years and have steadily increased as a percentage of the overall claims submitted, rising from 20% in 2014 to 25% in 2015 and 27% in 2016, demonstrating the effectiveness of early intervention, working in partnership and how much providers do apart from just paying claims."

Change in claims reporting methodology

On the subject of claims, it's worth noting that the change this year in ABI methodology for reporting individual IP claims brings the individual sector more in line with GRiD methodology for the group sector.

The focus going forward will be on actual new claims paid rather than total in-payment claims, the latter of which can be considered misleading as it includes historic data.

So now that an industry-wide standard approach is starting to be established, perhaps the next step for the group market should be assessing the success an insurer has in returning the employee to the workplace.

With individual IP, if an employee can't return to work and they fulfil the product disability definition, a claim should be made and accepted.

It's not quite so cut and dry on the group side where the real value in the product, from both employers and employees, as stated earlier is represented by the service elements of early intervention and rehabilitation.

Comparing insurers on EIS & rehabilitation

And therein lies a further problem as each insurer offers a different model.

For example Canada Life offers a day 1 early intervention service (EIS) where there is a complex/subjective claim and once an employee is engaged within the process the submission of claim form only happens when a return to work is not possible.

Conversely L&G offers a 5% early intervention bonus where a company lets the insurer know of at least 80% of their long-term absences within a specified time period (based on the type of scheme and employer size).

Rehabilitation - and human - elements are also factored into assessments made at the claim stage where group IP is concerned.

This can again muddy the waters somewhat, making like for like comparisons between insurers difficult.

Going the extra mile

A case in point. Mental health is a big issue. That's a given. The Chartered Institute of Personnel & Development reports year after year that stress is the most common cause of all long-term absences. In spite of its prevalence, however, stigma remains.

Jon Blackburn, Rehabilitation & Clinical Services Manager at Aviva, said: "Last year, 57% of all cases into the rehabilitation team for early intervention had mental health conditions, but only a third of all claims were due to mental health."

Research by Aviva has found that a quarter of people have taken time off work with stress but blamed it on a physical illness[2].

It's only through the kind of support - and human element - provided by group insurers' in house rehabilitation consultants, working hand in hand with claims consultants, that these kind of intricacies can be identified to help ensure that employees get the right care at the right time, facilitating a return to health and work.

This works best of course where there is partnership working between all parties.

Paul Avis, Marketing Director at Canada Life, adds: "There are many examples from all group IP insurers of instances where negotiation between the employer, insurer and member helped facilitate an early return to work.

"Plus countless examples of where ex gratia payments have been made to members where they might not meet the disability criteria but a payout of some sort would help provide much needed support."

Case studies

Anonymised, real-life case studies collected during the GRiD claims survey process demonstrate instances where group insurers have gone above and beyond.

One illustrates a case where the insurer was unable to pay a claim under the terms of the policy: the policyholder wasn't suffering from an illness or injury that prevented her from working in her insured occupation.

Her absence was due to the fact that her family had been involved in a horrific accident, which caused the death of her 4-year-old daughter and her mother - the carer of her three children whilst she worked - sustained life-changing injuries.

The circumstances surrounding the policyholder's absence where so extreme that the insurer felt it appropriate to support her by paying a lump-sum equivalent to six months' benefit as a gesture of goodwill, effectively supporting her and her employer whilst the legal process relating to the accident progressed.

In another case, a young lady in her 20s was referred the insurer's EIS when she was unable to go to work due to a social phobia, exacerbated by having to cope with the emotional struggle of having visible red blood vessels on her face.

With the agreement of the employee's GP the insurer arranged for the employee to be seen by a dermatologist who recommended laser surgery, but this was not available on the NHS.

The insurer agreed to pay for the cost of a course of laser treatments. The young lady returned to work part-time three weeks after the treatment, delighted with the results and having the confidence to go out, meet her friends and get back to normal.

Future meaningful comparisons

So with claims acceptance rates between individual and group protection now starting to be aligned and reported on the same basis, perhaps there is a bigger challenge for the group market and a more relevant comparison: how good are you really at returning employees to the workplace as that seems to be the measure of success and value that should be assessed?

Moxham adds: "The 27% figure [meaning the 2016 return to work stat] captures active early interventions. It does not capture those additional cases where people had been claiming then returned to work.

"The next logical step would be to collect data on returns to work in their entirety but this is reliant on being able to standardise industry protocols for recording such figures."

In addition, or alongside this, can group insurers get to a stage where they can prove ROI?

In the corporate world that is the real measure of insurer value and would finally lead to increased organisational take up - the key industry challenge.

Zurich may already have that aspect sussed. The insurer has calculated that for every £1 spent on rehabilitation activities, around £16.80 of benefits arise in total.

A detailed breakdown and further analysis can be found in Zurich's 2015 report Income protection and rehabilitation - working together.

Nick Homer, Head of Market Management at Zurich Corporate Risk, said: "Only around one third of this benefit accrues to insurers - in part passed on to customers through lower premiums - with the other two thirds benefitting taxpayers, employers and individuals."

Food for thought: as other insurers are actively now evolving ROI models, which perhaps explains why the market has been successful in growing the number of employees covered.

The market now needs to focus on growing the number of employers buying into this product.

This might be best achieved by providers repositioning themselves as service providers - not just insurers.


[1] The entire UK workforce currently stands at 31.84 million, ONS Feb 2017.