Paul Avis of Employ-Mend questions whether the recent bolt ons to Group Income Protection (GIP) products are merely marketing ploys or represent a fundamental shift in the way that the benefit will be operated in the future.

Having worked inside (Unum and L&G), for (three large research projects) and alongside (we provide the software and technical support for the Canada Life absence management programme) Group Income Protection insurers for the last 15 years I think that I am better placed than most to assess what is going on in the market.

However with market penetration at only 6-7% of the working population it is a shameful position for the market to be in after years of supposed product development.

Things are changing though and with L&G having ‘steps to health’ which offers discounted and free health products, Norwich Union having bought into Occupational Health supported by an outsourced Employee Assistance Programme (EAP), BUPA beginning to tie their diverse strands of benefits and services together and Canada Life launching Absence Management, EAP, a double diagnosis approach for chronic conditions (with case studies which proves that this both saves and enhances employee’s lives) and business telephonic support services, providers are beginning to position their GIP offerings as the hub of integrated healthcare management programmes.

As the market leader, UnumProvident’s active inertia (busy doing nothing except acquisition!) must be a cause for concern for advisors as whilst they have spectacularly failed to grow the market their competitors can now deliver much more comprehensive employee health management programmes which in turn will mean that they will have more sustainable GIP premiums/propositions in the future: after all prevention of claims is better than cure! So what should employers now be looking for when choosing a GIP provider and how will these new bolt ons reinvigorate the GIP market?

The importance of getting in early
Having worked in GIP insurers I was often asked on a late notified claim to backdate the payment (and pay interest!) to the end of the deferred period-how frustrating was that for intermediary and insurer!

The problem was that end user clients had few mechanisms for spotting long-term absentees and often it was only when occupational sick pay ran out that they reverted to GIP, often as a mechanism to pay their way out of trouble, having done little to support the employee back to work.

There is an increasing amount of evidence to show that early intervention is essential in reducing long term absence: in 2003 The Department for Work & Pensions reported that each week one million people would be off sick which relates to 4% of the working population with 17,000 still off sick at week six and of those 83% or 14,000 returning to work by six months.

This leaves 3,000 still certificated at six months as absent and only 10% or 300 will then ever return to work, leaving 2,700 new individuals every week applying for long term incapacity benefit and other state support.

Currently there are 2.7 million people (one in 13 of the working population) claiming these benefits and whilst this 2003 applicant figure has reduced to 650,000 successful applicants in the last year (with 50% of those claiming being of five plus years duration this is still a lot of people to be adding to current claimants) the Government launched a complete overhaul of their approach to payment in February 2005. (Source: DWP 2003/2006). They also comment that unplanned absences are hardest to manage. (Source: DWP 2005 Job Retention Pilot). The Chartered Institute of Personnel Development (CIPD) also believes that the length of time an individual is off work sick has been shown to have a strong relationship to the likelihood of returning to work. Studies they have undertaken show:

• After six months’ absence there is only a 50 per cent chance that an employee will return to work.




• At 12 months this falls to 25 per cent.




• After two years there is practically no chance.

(Source: The Guide Recovery, Rehabilitation and Retention, CIPD 2005)

Even our own Occupational Health (OH) suppliers/partners say that if an employee is not back at work within six weeks of an unplanned absence then there can be only a 50% likelihood of a return to work. In conclusion six weeks seems to be the point at which physical health concerns begin to be superceded by mental health concerns about a return to work. Evidently this conflicts with long deferral periods GIP schemes as many employers only value the GIP from the point of claims whilst the insurers themselves are desperate to get in as early as possible.

So how can insurers, intermediaries and end user clients get in early?
So how can insurers best get employers to provide claims forms at say three weeks on a 13 week deferred contract and six on a 26 week and thereby potentially helping an employee to return to work before the end of the deferred period?

UnumProvident has had some success in achieving this with their ‘Active Key Account Management’ (AKAM) approach to employer support, but as this is for larger schemes only and is reliant on the line manager remembering to record the absence on whatever monitoring system the employer has, consistency and understanding can be subjective and can lead to a variable approach to claims management.

The best way to achieve the consistent, and some would describe as a requisite, prescriptive approach is to have one of the new breed of outsourced contact centre notification points where employees call the absence management provider rather than the line manager when they are going to be sick.

Not only are most of these 24/7 365 days per annum (which is a real employee benefit as they can call in at any time for example at 2.00 a.m. having looked after sick children rather than having to wake again at 8.00 to call the boss), they ensure that all absences are recorded and nobody is missed.

Whether nurses taking such calls is of any value on day one is debatable as in the view of most calls being flu/cold, migraine/headache and stomach upsets it is rare that clinical support is required at this stage. If clinical support is needed by the employer on day one, then NHS Direct can be signposted by a non clinical contact center and is free!

During such calls the process of understanding the absence can really be explored and employees may be more open and honest with a third party than their line manager. By capturing the true cause of absence at this early point, employers will know the real reasons for both absence incidences and days lost and will be able to begin to target how best to remedy these for example if flu absence incidences are high then vaccinations may be worth considering, if back pain is losing the most days then reinvigorating and paying for manual handling training, on site physios etc could be immediate remedies.

Having assessed the cause of the absence the contact centre can then begin to use whatever support services are in place. For instance if the employer has a Private Medical or Cash Plan in place then the claims helpline numbers can be provided so that before an employee sees their GP they remember that they have the benefit and know how to gain an onward referral.

This should not increase the claim fund/experience (as most employees finally remember they have the benefit and will claim!) but will increase the speed of treatment thereby limiting the occupational sick pay and therefore increase the business benefit of the expenditure. With EAP usage often lagging around the three-5% mark, reminding employees of its existence at this early stage can dramatically increase this (we have employers who achieve in excess of 20, 30 and 40% usage!) and by actively promoting it at all stages of an absence, this affords employers greater protection from litigation should an employment tribunal be called.

The final dimension for this initial call is to assess whether the absence is work related by asking ‘how did that happen, what brought that on and why do you feel like that’ etc and if the employee says that the absence is work related then health and safety, the general insurance intermediary and even employer liability insurers (ELI) can be advised by email.

Some of the ELI have their own vocational rehabilitation teams and so can start that return to work process from day one. Often at less than a minute long and being a non-intrusive or bullying experience, employees respond well to the absence notification process and are then in the system. In summary therefore having anyone but the line manager taking the calls is the best way to start the GIP claims process.

GIP insurers have talked for a long time about the importance of getting to absent employees early and getting them back to work as soon as possible and in turn this has led to a repositioning of the contract as a service (outsourced vocational rehabilitation) rather than as an insurance contract in more sophisticated advisors minds.

The premise was that due to the potential cost of a claim, the GIP insurer had both the financial motivation and skills base to do all that they could to get the employee back to work and if unsuccessful then the insurance element would provide financial security and retention of Private Medical and death in service benefits for the employee (as still in service) and Disability Discrimination Act (1995) compliance for the employer.

However this approach was always flawed by late notification of claims and as a result this has been remedied by the new breed of absence management programmes. Canada Life are seeking clear data about what impact this approach can have on claims, but initial thoughts are that with early notification, they are hopeful that there will be a significant impact on their claims, so confident are they in their approaches to work reintegration.

Not only will this mean more sustainable GIP premiums going forward but more importantly that the benefit should now thrive as the hub of an integrated healthcare package.