Rehabilitation services delivered through group income protection policies deliver value of £110m a year to individuals, employers and the State according to research from analysts Economics, Policy and Competition.
The study – ‘Income Protection and rehabilitation – working together,’ by independent economist Kyla Malcolm of Economics, Policy and Competition for Zurich found every £1 spent on rehabilitation to support the long term sick and disabled generates cost benefits totalling £16.80 for individuals, the tax payer, employers and insurers because people recover and return to work more quickly.
The report calculates £74m of direct benefit generated through rehabilitation support, consisting of £5m to individuals who are able to return to work and benefit from their original earnings, £27m for the tax payer through higher tax revenues and lower welfare payments from the individual being back at work, £17m for the employer through savings in occupational sick payments and £25m for insurers saved through fewer income protection payments made which in turn reduces premiums.
The research also highlights additional indirect savings that amount to around £35m which include the cost of temporary staff to cover absence, training and recruitment and lower productivity while an employee can’t work.
The £110m figure does not include non-quantified benefits such as the reduced burden on the NHS from treatments being shorter or sourced privately, continued pension provision for employees off work or the impact on family who take on extra caring responsibilities.
The value of rehabilitation has been calculated by comparing treatment pathways for typical claims, considering the journey to recovery with and without the rehabilitation support available under a group income protection scheme. These financial gains have then been used to calculate the benefits for other stakeholders.
Previous research by Malcolm found that the presence of Group Income Protection policies leads to savings for the taxpayer of £165 million per year, made up of £85 million from lower welfare payments and £80 million from higher income tax and National Insurance Contributions. Group income protection supports individuals while they are absent from work to the tune of £190 million per year.
Zurich UK Life CEO Gary Shaughnessy says: “With the UK’s workforce aging, we reiterate our call to encourage the Government to consider incentives for employers to improve take up. We believe group income protection needs to be at the heart of any UK welfare solution, which should be a partnership of public and private provision.
“Greater take up not only benefits individuals but provides considerable benefits to employers, the tax payer and the Government by relieving pressure on already stretched public funds and services.”