Disability Cover Rebooted
Decisions for risk cover in the workplace are often made short-sightedly, usually solely around cost with annual risk rate reviews, and the only insurer/employer touch point is at claim stage where only marginal value can be added.
If the relationship between the insurer and the employer or pension fund can be one of genuine partnership then productivity, and profitability, will be increased within the organisation.
The MMI Effective Employee Index demonstrates that 60% of SA companies have excessive lost productive work time so tackling this issue should be a priority for every manager. The delivery of an effective holistic employee benefits programme is a key route to that goal.
Way beyond the efficient and cost effective processing of claims, there should be a far more important goal of healthier employees who work more productively, make fewer claims and, when they are incapacitated in any way, are incentivised to return to health and to work as quickly as possible.
Employers or funds should be engaging an insurer who can demonstrate pro-active risk management, gain an understanding of the workplace wellness environment and design interventions to improve it.
As an example, proper analysis of sick leave data allows us to understand wellness trends and to advise accordingly. If we are seeing a marked spike in claims based on unnatural causes, then there might well be a work safety issue which can be mitigated by utilising an occupational health solution. Alternatively, a growth in natural cause claims might suggest that you are hiring unhealthier people in the first place and need to review your interview processes or that there are potential wellness issues in your business that are increasing disability costs, sick leave costs and lost productivity.
A different example lies in the mental space of workers who might be at work but, because of worries about their debt burden, are functioning well below their capacity – an increasing phenomenon known as ‘presenteeism’. Further investigation by the service provider can reveal the extent of this problem and the delivery of educational financial wellness solutions can have a remarkable impact on productivity. Constantly communicating benefits to staff in ways that they can understand also plays a role in relieving stress about the future.
On disability claims there are several moving parts which need close attention.
Trustees/employers should partner with service providers who are strong in the rehab space, who have expert medical practitioners in their claims assessment teams and hence can expedite effective rehab interventions. A short notification period for a claim for disability is an important part of this as it allows for early engagement which often leads to a faster return to work. The reverse applies to waiting periods. A short interval will drive higher claim rates of full disability, while a longer one can encourage a return to work.
Rewards or incentive programmes (like MMI’s Multiply) are another vital link in the chain. The best ones align interests and drive the right behavior change. These must be tailored to your workforce and be focused on promoting healthy living.
And, very obviously, getting the right mix of cover between temporary total disability (TTD), lump sum disability (PHI) and permanent total disability (PTD) for your workforce also matters. The solution chosen should match the employee needs and there should be little or no cross subsidy between benefits.
Some of these measures can lead to an increased cost for the employer in benefit provision. However, this should be viewed as an investment which can reap massive rewards in terms of productivity, lower sick leave costs and potential recruitment and skilling costs.
In short, the relationship between insurer and employer (or fund) should be a social contract to improve financial, physical and mental wellness for all employees as much as it is as a legal one with commitments on cost-effective service delivery.
