Bridging the incapacity gap

It's been one of the most discussed subjects in the insurance industry in recent years, with countless time and massive energy put into ways in which it can become more of a reality, yet the sad truth remains - as far as the UK is concerned, rehabilitation just isn't happening on the scale it should do.

The ABI, the International Under-writing Association and countless insurers have paid lip service to the concept, yet the evidence on the ground is that those policyholders with bodily injuries following a claim simply are not being rehabilitated in anything like the numbers they should be.

It's not even a question of cost for insurers. As the financial benefits of rehabilitation have been well proven. What seems to be stopping further progress in this area is the intransigence of the legal profession, which has its own reasons for wanting to continue settlements in the time honoured fashion.

And the fact that rehabilitation isn't being used to the extent it could be is especially frustrating at the moment, given that there seems to be a huge need for the services that specialists in the field provide.

According to John Hutton, the Secretary of State for Work and Pensions, 2.7 million people in the UK are currently on incapacity benefit. He wants to reduce this figure by one million over 10 years as part of a radical overhaul of the system.

According to the government's plan, more severely disabled people will receive a higher rate of benefit and have no obligation to look for work, while claimants who refuse to take part in back-to-work schemes risk losing part of their benefits.

Selling expertise

But, crucially, as far as rehabilitation is concerned, proposals contained in the current green paper will make general practitioners take "active steps to support" patients who want to return to work, thus providing a fantastic opportunity for companies in this sector to work with surgeries and sell their rehabilitation expertise.

Given such a climate, the time for insurers to step up to the mark should be now.

According to Dave Southwell, UK general insurance personal injury claims manager at Zurich Insurance, this is just such the case. "We do have an active role to play because we can return people to work quicker, thus reducing the number of people claiming incapacity benefit," he says.

In his opinion, a really sensible means to do just this was recently - set out by the ABI in its paper Care and Compensation, which proposes a number of means for encouraging rehabilitation, including tax incentives for employers to provide rehab-ilitation care, through a new tax credit; extending the role of the Health and Safety Executive and the NHS to include promotion of rehabilitation; and a new code of best practice to improve responses to accidents and ill health in the workplace.

Of course, if the proposals outlined by the ABI are eventually worked into legislation then the chances for rehabilitation in this country will be dramatically improved, but at the moment such a step forward remains wishful thinking.

In the immediate future, therefore, the question remains as to how far the insurance industry as it currently operates can really help to reduce the incapacity bill. And here the assessment is more sanguine.

According to Peter Bye, a director of medical insurance intermediary the Private Health Partnership (PHP), there is little prospect that insurers who specialise in private medical insurance can help here.

"Technically it would mean putting extra benefits into policies that don't currently exist," he comments. "So it would have to be a long term solution to a long-term cost, as medical insurance policies are set up to provide solutions to acute problems."

Besides, he adds, adding a benefit such as rehabilitation to policies would necessarily be a complicated matter, "and the PMI market is complicated enough as it is".

Despite such pessimism, he suggests that opportunities nonetheless exist as far as the critical illness market is concerned, where the possibility of offering some sort of rehabilitation service as opposed to a cash lump sum is more readily achievable, given the will of the providers themselves and the inclination of policyholders actually to make use of such a service.

Jan Lawson, managing director of PHP, is also sceptical about the extent to which insurers can play an effective role. "There's not an awful lot PMI can offer because by the time that incapacity benefit is being claimed the individual is probably chronically ill and the insurance market will have washed its hands," she explains.

Standard offering

The solutions do lie out there, she adds, but much of the difficulty is that the industry is unwilling to charge potential policyholders the small amount extra that it would take to ensure that rehabilitation is a standard offering.

Lawson continues: "The one problem is that it's all very well insurers saying to someone who has a critical illness, 'here, you have pounds 50,000 which you need to cope with the situation' when for a small increase in the cost of a policy they can provide a much more holistic service, which is where the rehab side comes into it.

"That's where the insurance industry is falling short at the moment."

And it's not as if the expertise isn't out there, she suggests, saying that there are care support and advisory services that look after people with long term and critical illness which are "like a privatised version of Social Services".

It would appear then that despite the difficulties for underwriters to assess individuals claiming incapacity benefit, opportunities nonetheless exist for the industry to provide a platform for the greater adoption of rehabilitation.

Yet, as with so much that has been said about this subject over the years, whether the theory will translate into practice and actually help the government in its aim of getting more people back to work remains a much more difficult question to answer.