The changing nature of the UK workforce, driven by an ageing population, presents huge challenges for policymakers, businesses, and other stakeholders. Group risk benefits have a vital role to play in meeting this challenge. Group life, group critical illness, and group income protection (GIP) all address specific risks that are exacerbated by demographic change, and therefore provide vital cover to employees and their families.
At a meeting of the All Party Parliamentary Group for Health in May, Dr Paul Litchfield, chief medical officer at BT, pointed out that an ageing population is behind increasing rates of non-communicable diseases in the workplace, namely musculoskeletal conditions, mental health problems, and cancer. This is causing significant problems for employers, in the form of much higher levels of long-term sickness absence and poorer staff retention.
Group income protection is therefore a solution for employers, as well as their employees. The most recent evidence from Canada Life’s early intervention service shows that last year eight out of 10 early intervention referrals led to recovery before the claims stage and that, where claims were made, early intervention shortened their duration substantially. Unum supported 1,470 people with its rehabilitation service last year, with all age groups benefitting: over a third of those returning to work (35%) were under 40, 15% were under 30, and a further third (34%) were over the age of 50.
As skills shortages make competition for talent more intense, benefits that show an employer’s commitment to employees’ wellbeing should be increasingly valuable. GIP also helps employers fulfil their duties under the Equality Act and create a more disability-friendly workplace. Ensuring that employers can attract and retain staff living with a health condition or a disability is vital if businesses are to fully benefit from the skills these individuals have to offer.
The state also has an interest in this area. The government set itself the ambitious target of halving the disability employment gap, which means getting 1.5m more disabled people into work by 2020. As the Resolution Foundation argued in its June 2016 report, Retention deficit, this can only be achieved by dramatically reducing the number that leave work due to health problems and find themselves on long-term sickness benefits.
Among the government initiatives designed to help tackle this issue is Fit for Work, a service that provides free advice about matters affecting work and health, as well as a voluntary return-to-work service for those who are off work due to sickness. Anecdotal evidence from the service so far reveals both successes and challenges. Feedback from employers that use the service is highly positive, however, referrals to the service from GPs are lower than the government expected. The government is likely to make changes to the service with proposals in its green paper on long-term sickness absence, to be published in the autumn, but it will also look at a broader range of measures.
Ahead of the publication of that green paper, the ABI has been making the case to government that increased take-up of GIP can help it meet its target of halving the disability employment gap, as well as improving financial resilience of individuals, reducing the state’s spending on disability benefits, and improving productivity. Furthermore, a December 2015 report by Kyla Malcolm, commissioned by Zurich, Income protection and rehabilitation: working together, found that the current GIP market delivers £192m in fiscal savings annually. These come in the form of increased income tax receipts, lower spending on Universal Credit, and improved return-to-work rates as a result of insurer-provided rehabilitation.
Given the clear alignment of interests, we are delighted to be working with the government to identify how government, insurers, trade bodies, and other stakeholders can work together to ensure that more employees can enjoy the kind of protection offered by GIP.
Joe Ahern is policy adviser, protection at the Association of British Insurers (ABI)