The majority of GIP claims are paid, but who is looking after the six in seven that aren’t even covered asks Jelf Employee Benefits managing director, corporate and individual protection Chris Ford
Research from Grid shows that 82 per cent of group income protection (GIP) claims are paid. Some have seen this as not such great news, but I believe this can be viewed positively, by both the industry and employers. It actually shows that the protection is working – four in five employees receive a valuable benefit, and the remaining one in five are independently assessed with a plan for early return to work.
The more worrying figure comes from Unum research which shows that only one in seven employees is covered by GIP, begging the question who is looking after the other six?
There are many value-added benefits under GIP that are generally not very well promoted and therefore not utilised. One key benefit is the early intervention and rehabilitation support, which can make all the difference in getting employees back to work more quickly. This is an often over-looked – but crucial – additional feature of GIP. With the increasing emphasis on employers to understand, and address, reasons for absence, this should be seen as a core benefit.
Research shows that incapacity is 3 times more likely than death, and figures from the DWP show 1 million workers are off sick for over a month each year.
But only one in ten employers offers GIP, as the product labours under a legacy view of it being an expensive luxury benefit. This simply isn’t the case – used effectively, these costs can be offset through improvements in cost of absence. It’s not untypical for us to see good improvements in duration and/or cost of absence when GIP policies are fully utilised. One of our largest clients has reported significant savings in the total cost of absence by embedding GIP in the absence management process.
Unlike private medical insurance, GIP isn’t typically valued as highly by employers; largely because the longer-term impact of absence remains difficult for the majority of employers to quantify. Consequently, little is made of this benefit when it is communicated to staff. However, the 82 per cent of employees that have had claims paid will certainly endorse this as a highly valued benefit, and much more should be done to communicate it.
Wrapped up within GIP is a large amount of support for managing absence. It can include processes for recording absence, with triggers to identify employees’ absent for stress and back problems, where proactive intervention will be beneficial to both the employer & employee. Absent employees who are engaged earlier are more likely to return to work quicker.
GIP is just the first step, but when so few employers are utilising the wider support commonly available with this benefit, proactive engagement with absent employees is even harder. Robust independent assistance is available and we would encourage employers to consider the wider value of this insurance
The industry must stop looking at GIP as a product sale. If it’s just looked at once a year as part of the annual review cycle it isn’t going to be valued. It’s not just an insurance product; it’s a solution. In practice it should be a valuable tool to help employees should they go absent, and assist them back to work as quickly as possible. So the focus should be on value, not the cost.
We need to bring the insurance to life. There has been more widespread promotion in recent years, but more can be done. I’d also like to see a more flexible approach to GIP. Rather than just looking to offer an off-the-shelf product, I’d like to see a more solutions-focused approach from the industry.
I also think we can learn from the healthcare market. When employees have private healthcare their insurer writes to them directly with full details of cover & associated benefits, including what to do when they need medical assistance. This helps understanding & engagement. Could GIP providers use this approach?
Now is the time to get GIP onto the agenda of the employer and harness the positive impact that it can have. Welfare reform, the sickness absence review and the Health and Work Service are all initiatives that put the responsibility of employee welfare squarely with the employer. The actual cost of supporting sickness benefits is significant and rising, and UK plc will need support.