A time and a place

I have always been slightly cynical about the benefit of rehabilitation from the insurers' perspective. To be frank, having seen and heard of its practical application over the last few years, I remain so.

We have reached a position where personal injury insurers rush to show their rehabilitation credentials with a plethora of glossy brochures on the subject and rehabilitation providers of every ilk have sprung from nowhere to service this need.

So what exactly is, this new fangled rehabilitation thing? It is the application of medical therapy to assist an injured party's return to work or to a better quality of life.

And who's going to pay for that? Insurers are, of course. And how do insurers benefit? If the injured party gets better sooner and goes back to work then his claims for wage loss will be less. In the case of the injured party who will never be able to return to his pre-accident employment, with the addition of a vocational assessment, it can be established what residual earning capacity the injured party has.

The 'conspiracy theory'
It did occur to me that just about all the therapies usually recommended by rehab consultants were provided free of charge by the state (or rather, at the tax payers expense) and so the use of private treatments as recommended amounts to nothing more than a stealthy shifting of the financial burden of treating people injured in accidents at work from the state to the private sector.

Indeed, scrutineers of the Personal Injury Pre-action Protocol 38th re-draft in February 2005 will have noted the inclusion of The Rehabilitation Code which does suggest state sanction.

Don't get me wrong, I do believe there's a place for rehab in today's insurance industry. But I really don't think that insurers have yet worked out the correct basis for application that will return the most benefit.

Also, those organisations selling rehab have not yet worked out how to demonstrate the cost benefit to insurers while maintaining the prerequisite impartiality needed when recommending treatment to the injured party.

Doing the sums
Consider if you will the current London liability market. Premium rates are softening by the week.

Pitch this against the story of a large insurer who spent tens of thousands rehabilitating a quadriplegic for many months, with their consultants eventually claiming success because the injured party could now comb his own hair. This may be a genuine success from the injured party's point of view but insurers, as businesses, will only ever measure success in financial terms.

In the other extreme, in lower value cases, all too often we see rehabilitation consultants concluding an immediate need for physiotherapy.

The cost of the rehab report alone I have never seen at less than a £1000.

That may not seem a significant sum but, with insurers commonly using rehab on claims as low as £15,000, it constitutes nearly a 7% increase. Obviously, treatment costs are in addition.

Now, that may be justifiable if a commensurate saving in damages is made due to earlier return to work by virtue of the treatment but, otherwise, it may simply be a burden which loses the insurer its competitive edge.

If, like me, you have rehabilitation brochures on your desk, look to see if they guarantee to save insurers money.

One brochure on my desk demonstrates the benefits in terms of absence management. It makes commendable claims about how a pilot company reduced absences by 22%, saving nearly £500,000.

But these aren't absences as a result of accidents at work from which claims will flow and thus this brochure doesn't compel me to buy the product shown. Indeed, careless or ignorant rehabilitation consultants can actually cause the value of claims to increase.

Excessive claims
We recently had an example of a rehab consultant discussing with a claimant his psychological condition resulting in the claimant suddenly realising that he had such a condition and adding this onto the compensation claim he was pursuing.

Another recent example recommended buying the claimant a computer because he didn't fancy being an HGV driver anymore - his occupation when he was injured - but was interested in computers.

Another rehab report enclosed £1000 of taxi bills accrued, it was alleged, transporting the injured party to the doctors surgery to have her dressing changed.

But closer scrutiny of the account showed many trips to Tesco at our expense, quite separate from trips to the doctor's surgery.

Some of these apparent excesses may have formed justifiable components of a settlement, but I would prefer our legal advisers to decide on this rather than the rehab consultant.

Demonstrating their value
I believe the majority of the findings reported by rehab consultants, certainly those which are relevant to insurers - such as the need for physiotherapy - are facts which insurers would come by in the normal process of handling the claim. That is to say from the loss adjuster or the instructed medical consultant for example, and thus add no value.

This is with the exception of vocational assessments but we have been using employment consultants to great effect for many years.

I believe rehabilitation providers will struggle to demonstrate their value in the UK insurance market unless they learn to discover their unique selling point.

If their target market is large employers who will truly benefit from absence management then that's fine. But if they seek a market from insurers, they should be more in-tune with the needs of insurers especially their need to maximise profits.

Insurers, in turn, should be wary of the application of rehabilitation.

This is especially true in large cases where injuries are so devastating that, with all the will in the world, no amount of rehabilitation will either return the injured party to the workforce or significantly improve his quality of life, thus decreasing the value of his claim.

On the other hand, the application of rehabilitation to low value cases strikes me as foolhardy. It adds to the overall cost of the claim. So considerably, proportionately, that across a whole account this could easily lose the insurer its commercial edge.

Rehabilitation is best used to simply monitor the claimants' medical progress without intervention.

If the state is responding reasonably, with anticipated delays in the provision of treatment equating to less wage loss damages than the cost of providing private treatment, then it is inappropriate for the rehab consultant to recommend its use.

What insurers really need to know is the exact point at which the injured party becomes fit to work and to ensure the medical examiners update their medical reports as close to that point as possible.

Unfortunately, it is still the case that too many injured parties remain injured until their damages are paid, and then make a miraculous recovery. IT

' Rob Turner is claims director at Abacus Syndicates