27 October 2015
CHECK AGAINST DELIVERY
Introduction
Thank you Cathy for that introduction and to you all for joining the Work Foundation and ABI for our joint event on the important topic of how we can improve the health of our working population.
It is often said that a company’s staff are their biggest asset. So successfully keeping employees fit and well is crucial to having successful business. And successful businesses are crucial to delivering a successful and growing economy.
Today we will hear a great deal about the importance of support and intervention in helping to tackle sickness absence. A wide range of stakeholders have a role to play in tackling this issue. Clearly employers are critical, hence our partnership today with the Work Foundation. And insurers are critical to the debate – not just through our employment of over 300,000 people across the UK – but also because insurers are experts at helping their customers – whether businesses or individuals - through the provision of income protection products.
But the help and support insurers provide is about so much more than protecting income. It is about prevention, intervention and payment. And I want to spend a few minutes today to explain what I mean by that.
Prevention
As the old adage goes: prevention is better than cure. Helping to keep employees healthy and in the workplace is the best outcome for the business, the State and, most importantly of all, the employee.
And insurers can help prevent employees from becoming ill by, for example:
- health awareness days, focusing advice on weight, alcohol, smoking or stress;
- through employee assistance programs which provide confidential access to medical, legal and counselling helplines or online support; or
- by analysing absence data and helping employers to identify opportunities to minimise sickness absence.
Intervention
In terms of intervention, it is widely accepted that people who are off work for more than six months through sickness, have only a 20% chance of returning to work in the next five years.
So helping employees who are unwell get back to work quickly is vital.
And one of the most important aspects of income protection policies – if slightly under-recognised – is the role that rehabilitation plays in helping to achieve this goal.
Insurers provide high quality support and rehabilitation to employees either off work, or at risk of leaving work, due to illness or injury. This can include treatment for mental health issues, musculoskeletal conditions and cancer – the three main reasons for being absent from work.
In addition, employers are able to gain support and assistance with HR functions such as:
- absence management;
- training for line managers in how to support affected staff;
- developing and agreeing graduated return to work plans;
- liaising with all the health professionals involved in an employee’s care; and
- access to, and support from, experts and patient groups.
This support and assistance is especially valuable to smaller employers who may not have a human resources infrastructure to deal with sickness absence and who are likely to be less familiar in managing people with serious health problems.
And insurers’ early intervention, for example, by providing physiotherapy and cognitive behavioural therapy, provides the best chance of effectively treating a condition before it become more serious. Through early treatment, an employer’s overtime costs can be reduced, as can the need for the use of temporary staff, helping to maintain overall workplace productivity.
Analysis of claims data by our insurance company members indicated that with effective intervention 8% of individuals did not stop working at all, 70% returned to work with their original employer and 22% found work with a different employer. And Unum are publishing a report today which highlights that early intervention services reduce sickness absence across all conditions by 17% on average – a reduction of more than an entire year (60 weeks) for the average long term absence of 7 years.
Payment
So prevention and intervention are absolutely crucial. But not all employees or individuals are able to return to the workplace. And the payment of a percentage of salary, higher than the level of income replacement provided by the State, protects them and their families from financial hardship. This provides a lifeline to the claimant and their family but also provides a benefit to wider society.
Withdrawal from the workforce for health reasons is associated with a 28% probability of entering poverty. Research commissioned by the ABI with the Centre for Economic and Social Inclusion found that there are 10.8 million middle income households in the UK that would be entitled to little or no welfare support if the principal household earner had to stop work.
In addition to the financial lifeline provided to the claimant, this support also delivers a benefit to wider society. It means that individuals are less likely to claim welfare payments, will continue to pay tax and national insurance and can continue to contribute to their pension– protecting both their pre and post retirement income.
Increasing the uptake of income protection
So despite the clear benefits of the use of income protection products to help people get back to work more quickly through the use of rehabilitation, or through financial support if a return to work is not possible, the uptake of these products by UK individuals and business remains low by international standards.
As an industry, we need to get better at communicating the benefits of IP to business.
And we need to work with Government to make sure that any disincentives to the uptake of IP are removed at the same time as making sure the right “nudges” are in place to ensure the greatest number of people can benefit from the services our industry provides.
There is a role for tax incentivisation here. It’s never a popular argument with Government but that just means that as an industry we need to work harder to make the economic and social case. There are long-term savings the Exchequer can make through the increased uptake of IP including increased taxation revenue, decreased welfare spending and less pressure on the limited resources of the NHS. All at the same time as delivering healthier and more productive workplaces – a win/win for the Government on the one hand and businesses and their staff on the other.
And now is a key time to be having a discussion about tax incentivisation. The introduction of pension auto-enrolment means that, for the first time, many SMEs are discussing the types of benefits packages they want to offer their employees in the future. Making it cheaper and easier for companies to offer group IP is crucial to increasing uptake.
And through a strong and effective trade association like the ABI, the industry are constructively engaging with the Government to debate the issues, provide the evidence and make the case.
It is against that backdrop that I introduce our next speaker. Lord Freud is someone who I have worked with for many years. He is someone who takes the time to understand and consider the issues as well as focussing on what is in the long-term interests of society – two qualities not found in every politician I have encountered over the years! And I’m very grateful to him for taking time out of his busy schedule to be with us today.
So it gives me great pleasure to invite Lord Freud, the Minister of State for Welfare Reform at the Department for Work and Pensions to address us.
Thank you.