Cover versions

Have your clients got the right Group Income Protection cover in place? Steve Bridger, Head of Group Risk at Aviva, explains the different impacts that two types of Own Occupation cover could have on policyholders.

With the government pushing people towards their employer rather than the welfare system as a safety net for long term illness, it has never been more important for employers to ensure they have the right Group Income Protection (GIP) cover in place.

At first it may appear that there is little difference between “own” occupation cover provided by insurers, however, there are two very distinct differences in the market today – specific Own Occupation and generic Own Occupation.

While specific cover provides the employer with protection in the event that their employees are unable to perform their job role, generic cover looks at ability to work more broadly. It takes into account ability to perform the job with a different employer where particular tasks may not be required.

For example, take an accountant whose back condition precludes her from driving extensively. She is field based so prolonged periods of driving are essential for her current role. With specific cover, the insurer will be looking to reduce its long term claim liability by funding vocational rehabilitation and providing support in order that she can recover and return to work as quickly as possible. In the event that this is not successful the insurer would support a claim on the basis that she cannot return to her role within the firm.

With generic cover, the situation is different. The insurer will look at the job duties of an accountant within this industry and may decide that she could work for another employer where driving was not essential. This means the claim may be declined and the employer would be left without funding for rehabilitation.

Specific cover supports the rehabilitation process and complements the government’s aim through welfare reform to encourage employers to play a bigger role in managing sickness absence.

Specific cover may work out more expensive than the alternative, but if choosing generic cover it is important that your client understands what this means for their business and employees.

Whilst generic cover probably means a lower premium, it could lead to complaints

if claims are declined when the policyholder is unaware of the distinct differences between the two methods of assessment. The claim could be declined if a job role within the general occupation description exists with another employer and the employee is medically fit to perform that job.

Specific cover means the premium will almost certainly be higher – however this cover will afford your client with the peace of mind that benefit will be paid if any of their employees are medically incapable of returning to their previous role within your client’s workplace. If the specific assessment definition is met, the insurer will want to install support mechanisms and provide funding to ensure the employee returns to work as soon as possible.

Overall, generic cover may work well for a policy taken out by an individual. It may last through a number of employments and will protect against illness or injury affecting the individual’s ability to perform their underlying occupation.

However, for an employer to indemnify a promise to support their employees if ill or injured, specific cover of the employee’s role provides peace of mind. It also reduces the possibility that the employer has an employee unable to perform their role and unable to claim benefit.

For further information contact Aviva on 0842 300 4452 or email HCGRSS@aviva.co.uk