Working from home can boost productivity and retention rates - a new report suggests half of managerial and administrative work will be carried out at home by 2010. Alison Boyle reports

Days of cramming onto crowded trains or facing the rush hour traffic could all be coming to an end.

The RAC Foundation is to publish a wide-ranging independent review next month, `Motoring towards 2050', which is expected to show that a growth in the number of people working from home will reduce travel congestion by over 45%.

Last month, a survey by Employers for Work-Life Balance, commissioned by Lloyd's TSB, found employers are increasingly demanding flexible working. Couple these and commuters could be cashing in season tickets very soon.

A number of insurers have already embraced the idea of staff working from home and have seen productivity and retention rates soar. But is this likely to be a growing trend for the industry?

Numerous studies have been conducted into homeworking and teleworking. The Labour Force Survey estimates there are nearly 1.6 million people, or about 6% of the workforce, that fall under the definition of `teleworker'. This is anyone who did at least one day's work at home or used the home as a base and say they could not have done so without a telephone or computer.

According to a report commissioned by the Economic and Social Research Council, by 2010, nearly half of managerial and administrative work is likely to be undertaken at home.

Royal & SunAlliance (R&SA) made the headlines late last year with news it was to close 12 regional offices of Property and Casualty Services (PCS). It said the network of 300 loss adjusters would now work from home.

R&SA currently has between 1,600 and 2,000 full time homeworkers, mostly working as motor engineers, claim advisers or loss adjusters.

Saved money
R&SA claims advisers regional manager Lynn Greenwood says the number of homeworkers has increased in recent years.

"We were finding that a great number of field staff were travelling into the office and going back out again virtually passing their own homes. They were neither office-based nor home-based," she says.

The system has saved the company money because of the low-cost advantages of having staff work from home, but Greenwood says there are other benefits.

"It allows the company to have a broad geographical spread in areas where it would be unsuitable for it to have an office. Also field staff are spared the stress of commuting, especially as their job involves a great deal of travelling."

The stress of commuting is likely to play a large part in people's desire to work from home. A survey conducted by Mori last year looked at stress levels in the workplace and found that 41% of workers rate travel as the most annoying aspect of the job.

The survey also discovered that of the office workers who cannot currently work from home, two in five would seriously consider moving jobs and over a quarter would take a cut in salary in order to be able to do so.

Churchill Insurance won Most Innovative Working Practice award for its homeworking scheme at the Financial Innovation Awards last year. The company says the scheme, which went live in March 2000 after a four-month trial, was started as a business need and also for the added bonus of offering greater flexibility to its staff.

The flexibility seems to be working; the company reported that results from a test phase confirmed people working at home were 15% more productive. It reports that its retention rates have been extremely high.

Churchill's 100 homeworkers deal with customers' car insurance claims and general inquiries.

Churchill head of operations Charles Breslin says: "Not everyone is suitable for homeworking and staff need to be quite flexible. There is also the isolation factor. We manage this by making sure they have social interaction with other Churchill staff and that they are part of email groups. Also they are invited to social events each month."

Insurance discount
Another issue is health and safety. R&SA's Greenwood says companies have to follow the same health and safety guidelines for home staff as they would for people working in the office. There is an annual home environment review and employers are encouraged to carry out their own ongoing health and safety checks.

If there is an accident or equipment is stolen or damaged, homeworkers are covered under their employers' insurance. However, they are told to inform household insurers that they are now working from home in case their policies need to be changed. Most homeworkers receive insurance discounts, because the risk of fire and theft reduces with greater occupancy.

Despite the perceived success of work at home schemes for companies in the insurance industry, not everyone believes homeworking is the future. A report from the TUC last summer claimed it wasn't all it was cracked up to be. Although the TUC conceded it was a trend that was likely to grow, it said it had failed to take off in the way predicted by many trend spotters.

TUC deputy general secretary Brendan Barber said: "It's a big mistake to say work will change simply because it can and it looks like an attractive option for at least some employees. Employers have to be prepared to change too, and when UK employers talk about flexibility, too often they simply mean their rights to hire and fire."

However, insurers have seen a steady growth in the number of people seeking insurance for their home business and have now started to offer special combined policies. These combine normal building and contents cover with extended cover for computer equipment and common commercial requirements such as public liability and business interruption.

Business equipment
Cornhill Insurance household manager Steven Ward says that although its bespoke home business product is growing it is still relatively small.

"This is because there are growing benefits under a standard household policy for business equipment. It is a free part of the policy. This is something that has been developed in the past five years as insurers have recognised that more people are working from home

"There is a grey area over whether a laptop is domestic or business equipment. In many cases homeworkers' equipment will also be covered by the company that employs them."

He adds that it is common for some home-run businesses to be inadequately insured and not covered for certain liabilities.

With the work life balance becoming a growing issue for many employees, insurance companies might have no choice, but to start offering staff more flexible working arrangements.

And if the trend continues to increase, insurers could cash in with a range of combined policies to suit the new breed of home worker.

Broker checklist - the cover homeworkers need

Property insurance
People working from home have to notify their home insurers, with regard to buildings and contents, as failure to do so could invalidate their cover. Some homeworkers could see an increase in premiums, but many have experienced a reduction as the perceived risk of fire and theft reduces with greater occupancy.

Liability insurance
Liability insurance that homeworkers may need to conside include:

  • Public and products liability. This covers legal liability following injury to others or damage to the property resulting from business activities, including injury or damage caused by goods manufactured, repaired or supplied
  • Professional indemnity. This provides the cover to defend a claim and to pay damages if the homeworker is found liable after a client or other party suffers financial loss as a result of negligence, error or omission. This is for anyone providing advice, designs or similar services.

    Business interruption
    Protection can be arranged to cover a reduction in gross profit or to pay for additional expenditure to enable the business to continue (for example, the hire of temporary equipment and premises).

    Personal accident, sickness and critical illness
    Self-employed homeworkers may have to fund their own sick pay should they fall ill or have an accident. Personal accident and sickness insurance provides a weekly benefit while they are unable to work.

    Motor vehicle insurance
    Homeworkers should check with motor insurers that their vehicles are adequately insured for the purposes for which they are being used. Even if vehicles are not being used for business, insurers need to be informed of any change in occupation (including details of any part-time work).

    You may have a right to work at home
    The Telework Association has told its members that working from home could be a basic right.

    This follows the case last year in which a employment appeal tribunal ruled that a female accountant's request to work from home was conceptually similar to a request to work part time at the employer's workplace.

    The case involved a Mrs Lockwood who returned from work from maternity leave to work full time as an accountant.

    Her childcare arrangements involved her mother. Three months into the arrangement her mother, for health reasons, became unable to look after the baby.

    Mrs Lockwood put forward two alternative arrangements to her employer, one of which was to work from home.

    The employer offered her a period of two weeks leave but on condition that she should come back to work full time. She resigned.

    The tribunal's ruling means that unless the employer could put forward reasoned objective arguments for an employee to work full time at the workplace, this could amount to indirect sex discrimination.