REFORM

Couple, both working, two children, renters; GIP at 65%IN WORK (+ partner earns £9,000)H’hold weekly income £540(£290 net earnings+ £175 partner net earnings+ £40 Tax Credits+ £35 Child Benefit)POST SICKNESS WITHOUT IPHousehold weekly income £470 + £65 Housing Benefit + Child Benefit)POST SICKNESS WITH IPHousehold weekly income £512(partner earnings + £90 Tax Credits +Child Ben + £210 IP payments)RR87%RR95%Rehabilitation benefits of IP –getting people back to work fasterIn a March 2014 report for Zurich on group IP,Kyla Malcolm highlighted that as well as providingincome benefits while individuals are unable towork, GIP insurers also offer early responserehabilitation services that can help individualsreturn to health and work faster than theyotherwise would 12 . The success of rehabilitationdepends on a range of complex factorsincluding the nature of the disability, the role ofthe employer, and the motivation of the individual.Single, no children, renter, self-employed; IIP at 60%IN WORKAnnual salary: £31,000H’hold weekly income £470(£470 net earnings)POST SICKNESS WITHOUT IPHousehold weekly income £180(£70 JSA + £90 Housing Benefit + £20 CTS)POST SICKNESS WITH IPHousehold weekly income £360(£360 IP payments, no other benefits)RR38%RR76%A study by the Work Foundation 13 of 13,000employees in Madrid with musculo-skeletalproblems found that referring employees forspecialist treatment after 5 days reducedtemporary work absence by 39%, andpermanent absence by 50%. It is estimated that35 million work days are lost across the EU tomusculo-skeletal problems each year, at a costof 2% of EU GDP. The Work Foundation reportestimated that if the UK had a similar system,employees would be able to work an extra62,045 days a year.CESI’s modelling and analysis of householdsacross the UK showed that there are 10.8million households that would see theirincome fall substantially if the principalearner left work due to ill health. working families – would see their incomesfall by more than one third if the principalearner lost employment income due to illhealth, even after taking into accountentitlement to State support; 40% of working families – would see theirincomes fall by more than half.While precise impacts from rehabilitation aredifficult to identify in all cases, the annualgains from return to work activities areestimated at around £20 million for taxpayers,£5 million for individuals and £15 million foremployers. Taxpayers, individuals andemployers are all better off by gettingpeople back to health and back to work asquickly as possible.Building on the recommendations of the Black /Frost review, there are potentially substantialbenefits to be gained from increasing theavailability of rehabilitation services for employeesexperiencing serious illness or injury. Rehabilitationwill not help in all cases, but for those for whichit is effective the benefits are substantial foremployee and employer, in terms of faster andfuller recovery to fitness and return to work.However, robust and statistically significantevidence on the impact of rehabilitation in theUK is lacking. The ABI and CESI see this as anarea that merits further evidence gathering andanalysis. We also see the potential for the IPindustry (and rehabilitation providers) to workwith the government’s Health and Work Serviceto gather and assess evidence on the impact ofrehabilitation, particularly to assess which typesof rehabilitation intervention are most effective.This evidence could then be used to ensurerehabilitation resources are efficiently targetedwhere they can have greatest impact.12Kyla Malcolm (2014) ‘Income Protection – Working together to improve take-up’, Zurich13The Work Foundation, Bevan (2013) ‘Reducing temporary work absence through early intervention: the case of MSDs in the EU’17Follow us on Twitter @BritishInsurers