Taking disability to a whole new level
Disability cover is one of the most important covers sold by advisers. This cover has increased in popularity as the growing middle class are becoming more interested in protecting themselves and their families.
What are the trends in the disability industry? We are living in a world where stress is fast becoming unmanageable and according to the recently launched Old Mutual Corporate Disability Monitor, this is an industry wrecking ball that is waiting to be unleased.
Changing the game
The world is in the midst of the Fourth Industrial Revolution where technology based jobs are becoming more appealing than menial activity based jobs. Does this mean that disability claims are decreasing?
Clement Chinaka, MD of Old Mutual Corporate, said that claims are not decreasing, but are changing in nature.
“The Disability Monitor was a survey done on 100 corporates and 35 intermediaries, among others. Forty three percent of respondents said that the nature of claims has changed. This was a common observation from insurers and intermediaries,” said Chinaka.
Common causes
So, we are aware that there is a shift in the nature of disability claims; therefore, insurers and advisers need to get to the root causes so that effective plans of action to manage claims can be put in place.
According to the monitor, some of the major causes include:
- Poor lifestyle which is driven by too little exercise, unhealthy diets, smoking, substance abuse and obesity. This contributed towards 70% of claims;
- General stress contributed towards 54% of claims;
- Psychological issues contributed towards 39% of claims; and
- Physical injuries only contributed towards 30% of claims.
“We can really see the shift towards stress and psychological contributors when we consider that physical injuries were major contributors towards disability claims in the past, and now it only contributed towards 30% of claims,” said Chinaka.
Economic contributor
Unsurprisingly, the Monitor reports that the state of the economy is one of the major contributors to the increase in disability claims.
“It is interesting to note that 70% of respondents stated that the economy has had an impact on the number of disability claims. When asked why members are more likely to claim during a poor economy, 41% of respondents said that financial stress leads to physiological stress which then results in physical problems,” said Chinaka.
It is not only workers who are feeling the ill effects of the economy, employers are also under significant pressure, and this is feeding down to employees.
The Monitor points out that stress around loss of jobs and retrenchments contributes towards 38% of disability claims. Reinsurers also mentioned that not receiving bonuses negatively affects employee’s mindsets. This is particularly rife among workers who are part of the sandwich generation and support not only their own families but extended families.
Increased claims may unfortunately open the door for increased instances of fraudulent claims, particularly among clients who are on the borderline of being able to claim and not being able to claim.
“This is definitely an issue,” said Chinaka, “Old Mutual has beefed up its claims assessing processes in order to circumvent this. We find that there are a lot more clients who are making enquiries about being able to claim, this makes us very vigilant. And South Africa is not alone in this, world-wide studies show that 5% of all disability claims in the world are fradulant. While this is low, one fraudulent claim is one to may,” said Chinaka.
Talent retention
While the economy is having a significant impact on employers, they are also eager to retain talented staff as skills is a major concern in every industry in the country. A growing way to retain these skills is to beef up their employee benefits.
“More and more corporates are starting to realise that the best way to manage disability claims among staff members is to be proactive. They have realised that they need to help employees avoid lodging a claim in the first place. Additionally, if an employee has a claim, employers are eager to help get staff back to work as soon as possible to minimise the financial impact on the company,” said Chinaka.
If this is the case, are employers putting into action what they are saying? According to the Monitor, 79% of corporates said that they do have employee wellness programmes in place; however, the emphasis is on the kind that is implemented by medical schemes. These are limited in their approach as they tend to only focus on physical wellness markers such as eyesight, weight, blood pressure and heart rates. These programmes don’t focus on issues such as mental, lifestyle and skeletal health, and maybe it’s time for more focus on these issues otherwise we might not win this battle.
Editor’s Thoughts:
There is an increased awareness on disability insurance and the value that it can provide. The statistics mentioned above are interesting, but it must be pointed out that they are specific to the sample set within the survey. Are you finding that these are the issues that your clients are experiencing? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
