The ageing society, mental health and wellness are all driving the group risk agenda. Nick Martindale takes a look at how providers are responding to the challenges.
Both society and the world of work are changing at an alarming rate. Trends which have been talked about for years are now reality, and both employers and group risk providers are having to adapt.
The most notable example is the ageing workforce, brought about as a result of demographic shifts but also changes to state pension age, company pension schemes and the wider post-recession economic environment.
Figures from Canada Life suggest 73% of people now say they cannot afford to retire, up from 67% in 2016 and 61% in 2015. Aon's 2017 UK Health Survey, meanwhile, found 80% of employers believe an ageing population is either already an issue for them or will be in the near future, and 96% either agreed or strongly agreed that they were responsible for influencing employee health and changing behaviours.
This trend is only set to continue. A Department for Work and Pensions report suggests that in five years' time there will be 763,000 more people in the UK aged 50-64 and 292,000 fewer aged 16-49, while, according to The National Institute for Health and Care Excellence (NICE), 21 million working people will have a long-term health problem by 2030. "The workforce is ageing quicker than many realise," warns Unum head of public affairs and CSR John Letizia.
Group income protection (GIP) policies are already evolving to meet the needs of older workers and the issues employers face. "Older workers are already much more likely to use the return-to-work services in GIP and to make a claim, so GIP is doing a good job of protecting those people and their employers," says Letizia, adding that his own organisation has changed its policies by extending cover for employees up to the age of 80, and launching a new service called AgeingWorks to help employees who care for older people.
Cessation of cover
There are areas in which employers need to take action, however. Group Risk Development (GRiD) spokesperson Katharine Moxham points out that while employers are not legally obliged to extend provision of insured group risk benefits beyond age 65 or the state pension age, many are choosing to do so as their population ages. "They will find that group risk providers can be flexible in accommodating a range of upper ages or other solutions, such as a limited payment period under a group income protection policy," she says. "It is best to think ahead on this issue though, as it is always easier to negotiate terms in advance rather that at the point when the first employee reaches age 65."
One reason for this, says Canada Life marketing director Paul Avis, is that employers with a group income protection policy may have unintended consequences unless they act. "In 2011 our industry got a default retirement age exemption which says if there is an insurance product in place organisations can say to someone they have in a claiming position that they need to retire at the claims cessation period," he says.
This will generally be the age of 65 or the state pension age for that individual. "The frustration is that a good half of schemes on income protection are still stuck with a termination age of 65, not 65 or state pension age," he says. "You want to action that because otherwise if you get to 65 and the state pension age is 67 then you have a period of self-insurance between 65 and 67, and the exemption is untested in these circumstances."
The consequences of failing to do so could be significant. "If a younger employee claimed there could be a period of non-insurance from the age of 65-68," he adds. "The employer might be asked to self-fund the cover for the extra three years or possibly even longer."
Employers could also find themselves having to make tough calls over whether someone is likely to recover sufficiently to return to work or whether to release them from their contract and claim on income protection, as they find themselves dealing with more staff with age-related health issues. "This can be an emotional decision," says Punter Southall Health and Protection managing director John Dean.
"The employer needs to make a call on whether there's a chance the employee could recover and come back to work. If not, taking them off the payroll can mean that person loses their life insurance and pension, which could be considered cruel. It's a no-win situation. There needs to be a grown-up debate on whether employers should keep long-term sick people on the payroll or not, particularly as the workforce ages and people are still working into their late 60s."
There could also be further changes to group risk policies down the line, believes Staffcare director of engagement and insights Marcus Underhill. "Potentially the payout to someone who is 25 is disproportionate in value to the payout on a death claim," he says. "I expect most companies to move to restricting permanent health insurance claims to five years rather than retirement age. Flexible working, part-time working and later-life working will not go away and all risk policies need to evolve to reflect this. Trying to restrict cover is not the likely solution."
Another issue with which employers must grapple is that of mental health; an area which has become increasingly prominent over recent years. There are a number of causes for this, from workload to non-work matters, but one rising issue is that of financial stress.
According to the Financial Advice Working Group, 50% more people are reporting money worries in 2017 than they did in 2006, while research by the Money and Mental Health Policy Institute suggests two-thirds (67%) of employees who experience financial difficulty have at least one sign of poor mental health. The institute recently highlighted the role GIP can play in helping reduce stress when those with mental health problems are unable to work, as well as speeding up their return to work through providing access to therapy.
The demands of caring for elderly relatives can also cause stress. Research by GRiD found this was a main cause of long-term absence for 42% of employers, and of medium-term absence for 36%. "There is a wealth of support available within group risk products," says Moxham. "This can include specific support for carers, access to advice, fast-track access to counselling and signposting to support groups."
More generally, there is a strong business case for employers making use of the support services that are available through group risk products, says Moxham. "Employers are increasingly seeing the value of managing mental health issues more effectively and group income protection is a fantastic tool to have in the kitbag for this," she says. "Of the 2,289 people group income protection insurers helped back to work last year before a claim became payable, 54% had help to overcome mental illness. This clearly demonstrates the effectiveness of early intervention, the value that insurers add beyond the pure payment of claims, and the positive outcomes that can be achieved when all parties work together."
Employee assistance programmes (EAPs) can be particularly effective in helping individuals cope with practical issues such as debt, says Avis, as well as stress. "Men will engage with an information service more than they will with an emotional counselling service," he says. "A good EAP will ask what else they can do to support them. The quick answer to mental health is getting the EAPs to triage into other forms of counselling support." According to research by Staffcare, some 89% of employers now offer an EAP to all staff, compared to just 30% in 2004.
There has been a significant improvement in the quality of such products in recent years, says Secondsight head of group risk and wellbeing Morag Livingston. "Companies have had to look at new ways of adding value to their overall benefits offering," she says. "I'd argue that now the time has come for increasing numbers of intermediaries to help drive this forward."
Providers are also taking steps to make some elements of mental health support available to those employees who are not insured too, as well as developing bespoke pathways for treatment, as Generali has done. "This might include cognitive behavioural therapy, counselling either through the EAP service or with other qualified individuals, and psychiatric assessments," says Generali director of UK employee benefits Simon Thomas. The organisation is also developing a Wellbeing Investment Matching initiative, which will help clients fund further initiatives such as on-site training for line managers around spotting the signs of mental health issues.
Despite the progress that is being made, however, there is still room for improvement. "The gap is at the start, when employees start to feel unwell," RedArc managing director Christine Husbands. "While some group risk products provide employees with an EAP, utilisation is usually very low and they usually only provide counselling services for mental health conditions, when other therapies may be more appropriate." Currently, just 26% of employers provide mental health training for line managers, according to Staffcare's research.
Often additional services under group risk policies are paid for by employers at the expense of other provisions too, suggests Underhill. "There is a greater understanding of the value of early intervention rather than simply treatment around stress and mental health but, due to budget restrictions, it is often by re-engineering spend," he says. "Some companies have moved from 4x salary life cover to 2x salary and reinvested the excess into preventative areas of medical risk."
Linked to the issue of both ageing workers and mental health is that of workplace wellness, which has also been a key focus for both employers and group risk providers in recent years. "One of the big debates going on in group risk at the moment is whether we're a support service or an insurer specifically in the context of mental health and back pain," says Avis.
There is a clear economic argument in favour of providing early intervention services, he says; only 7% of people who use such services end up making a claim, and in the case of mental health this lasts around seven months rather than the standard timeframe of two years. Using second medical opinion services can also make a difference; around one in two people gets a refined treatment plan as a result, and one in five receives a different diagnosis.
Over the past couple of years, there has also been a move towards promoting wider health through insurance providers, including using technology such as Fitbits or step-counters as well as wider health screening programmes. Here, too, the focus needs to shift towards a more preventative mindset, focusing on the whole workforce rather than those who might need to make a claim, suggests Dean. "We'd like to see companies providing all staff with health screenings or wellbeing programmes that positively impact the whole workforce, such as providing people with wearable fitness devices and giving them advice about nutrition."
In fact, employers are now starting to demand better levels of provision around wellness, suggests Thomsons practice lead for health and wellbeing Luke Prankard. "The added-value services and proposition of group risk providers are now key differentiators for employers when looking to select a provider to work with them," he says. "Providers see the need to support employers in this way but most are proving slow to evolve their proposition to meet this new need, or are focusing too much energy on providing the cheapest product. This is actually ill-advised, as employers place greater importance on value for money than costs."
In future, there is also likely to be more pressure on the government to help both employers and insurers develop a system which can meet the changing needs of society, as much as employees. "The previous government recognised the benefits of GIP and wanted to increase the number of people who are protected," says Letizia. "I'd urge the new government to continue that work and to publish its white paper on work, health and disability as a priority." He calls for more effort to help employers understand the impact sickness absence has on their business, and a temporary tax break to encourage smaller businesses to take out GIP.
Ultimately, it is in everyone's interests to develop a system which can cope with the challenges that come with an ageing workforce and one that is increasingly vulnerable to stress and ill-health. "With the challenges facing the NHS and 40% of its resources spent on preventable diseases, the government needs to take action," says Prankard. "It cannot maintain the same approach and expect the results to be different. By incentivising employers to measurably improve their employees' physical and mental health, and provide early intervention support to employees, the government can achieve significant savings."
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