The Government hopes its proposed Incapacity Benefit reforms will see around one million long-term sick people back in work within 10 years. Will it work? And how will this latest proposal affect the insurance industry?
Market Views
Andy Chapman, Pioneer Friendly Society
The Government's realisation that it needs to introduce some form of claims control on Incapacity Benefits (IB) is good news. The bad news, however, is the way it is proposing to tackle the problem.
Can I offer an invitation to the Secretary of State for Work and Pensions to spend a week in the claims department of my organisation, Pioneer Friendly Society?
If he accepts, he will see that merely asking claimants of IB, soon to be called Employment and Support Allowance, to attend interviews for jobs, get GPs to do your dirty work, or put employment advisers in GP surgeries, will not encourage people back to work.
Claims management is a bit more complicated than that. It is about early intervention, helping people, assessing medical evidence in a considered way and about treating customers fairly.
If done well, it will ensure those who deserve payment get it. Those who need help getting back to work get this through proper rehabilitation.
The small percentage who try to defraud the system are dealt with quickly and payments are stopped.
If the income protection (IP) industry controlled its claims management in the same way the Government is now trying to, no one would buy IP as we would have lost the public's confidence. If, on the other hand, the Government took a leaf out of our book it may not only get its IB claims under control but could also benefit from positive PR. Will this latest reform work? Instinct and experience suggest not. Will it affect the insurance industry? Possibly, as it gives us a chance to show the positive benefits of IP.
MARKET VIEWS
Dr Mark Simpson, AXA PPP healthcare
The Government's objectives for IB reform must be twofold.
Firstly, to slow and halt the rising number of those moving on to IB. Secondly, to begin to engage those currently receiving IB back into productive employment.
The current situation is not sustainable and under-utilises the capabilities of those who could contribute on an economically effective basis. Moreover, it will no longer be viable when the impact of the present demographic timebomb facing the UK workforce bites.
There needs to be a fundamental shift in the mindsets of those involved in IB services, whether they are civil servants, doctors, claimants, insurers, intermediaries or employee representative bodies. At present, the onus rests on demonstrating proof of disability and parties are aligned primarily in this respect and the secondary identification of fraud.
Reform will need to centre on identifying abilities and the employment opportunities in which to use them. These abilities and their placement must be honest and realistic and attuned to the realities of the employment market. In this scenario, the influx of labour from former Eastern bloc countries may no longer be sustainable if such jobs - suitably modified if necessary - would allow current claimants to take the first steps back to the labour market.
Coercion will therefore not bring about the Government's aim in reducing claimant numbers for IB. The political will to change and align expectations may save the loss of a future generation to an adversarial welfare system.
Dale Tranter, Sesame
The Government's latest IB initiative is being sold as helping people who want to get back to work to do so. Given the number of previous initiatives, one wonders if there are any claimants left who are physically and mentally capable of going back to work.
Claimants will have to pass a personal capability assessment to claim benefit, but with only 176 full-time doctors able to carry out these assessments, this may be a considerable problem.
The Government may also find getting some of the targeted 1.8 million claiming single parents back into work harder than it imagined. The benefit will be rechristened Employment and Support Allowance in 2008 and payments will be higher. So, if the Government does not succeed in getting its target one million claimants off the register it will end up spending even more.
This will have a negligible impact on the insurance industry. Being brutal, we do not seek clients from the poorer end of society, which is where this initiative will have most effect. There may be some impact at the margin with those IP policies where state benefits are deducted.
As these measures are aimed at the framework of society and IP relates to physical or mental incapacity, I cannot see that it will have much effect on our industry at all.
Joanne Hindle, UnumProvident
The Government's Green Paper on IB reform should be viewed as a much-needed step towards helping more people back to work.
The Government's commitment to pilot the provision of employment advisers in GP surgeries is particularly valuable, as is the £360m investment in a national roll-out of the Pathways to Work scheme.
In the pilot, the latter initiative has been an undoubted success, showing that it is possible for many claiming IB to get jobs with the right help and support.
Another significant step is the recognition of the Workplace Health Connect initiative, which promotes the fact that employers, particularly small employers, need support to take on disabled staff and be more involved in job retention.
The Government has stated that it wants to work with employers, employees, health professionals and insurers to develop a support package that develops healthy workplaces, keeps employees in work and makes healthcare as effective as possible in rehabilitating people.
This is excellent news and something UnumProvident is keen to be involved with. Although the detailed implications for insurers are not yet clear, the opportunity to be involved is not one we should ignore.
