Insurance Product Innovation

INSURANCE PRODUCT INNOVATION
CORPORATE ABSENCE MANAGEMENT INSURANCE

Author: Michel Ruggaber, Managing Director Assithèque GmbH and Chairman of the Board Moving Minds Psychological Management and Rehabilitation.

Absence Management Survey

Corporations of whatever size have to face increasing absence rates during the lowest parts of the economical cycle. Absences have a negative impact on results and shareholding values: decreasing productivity, absence management costs and higher insurance premiums to name but few.

Absences can be classified as short-term or long-term. Early intervention by professional rehabilitation specialists after a dedicated triage can reduce the frequency of long-term absence. For a long time, musculo-skeletal complaints were the most frequent causes for long-term absences. However, a recent UK survey has demonstrated that psychological or mental health causes have overtaken musculo-skeletal complaints and are now the most common cause for long-term absences. Stress, depression, anxiety, burn-out and other mental health disorders are commonly diagnosed by GPs and result in the patient/employee being regarded as unfit for work. Results tend to vary between public and private sectors and non-profit organizations; manual and non-manual work occupations and company size. The consensus across the board is that mental health problems are the most important and costly reason for long-term absence from work.

Findings

• On average an employee is absent from work for 7.7 days a year
• 1/3rd of the recorded absences are classified as long-term
• The median cost of absence is £600 per employee per year
• Over 38% of  employers recorded an increase in reported  mental-illness related absences, such as stress and depression
• Organizations that have had or were planning redundancies are more likely to report absences due to mental health problems.

The top causes of stress at work are workload, external relationships, organizational change/restructuring and management style. Overall, sixty-one per cent of organizations are taking steps to identify and reduce stress in the workplace, a figure that increases to 81% in the public sector.

Response of Absence Managers

The most effective approaches to manage long-term (but in most of the cases also short-term) absences are in order of effectiveness according to employers:

• Occupational health involvement provided by occupational health professionals
• Return to work interviews
• Trigger mechanisms to review attendance
• Rehabilitation programsChange to working patterns and environment
• Restricting in sick payFlexible working
• Training of managers in absence handling

All of these strategies have additional cost implications, sometimes not budgeted for and can for certain cases exceed the real costs of long-term absences. Some strategies may additionally have a negative impact on the company’s reputation and working atmosphere.

The Insurance approach to absence management

Nowadays public and private insurance schemes provide benefits in the area of absence management. Schemes usually cover sick day payments, income replacement, disability/sickness benefits and occasionally extended absence management programs within a general risk management program.

However, there is no insurance benefit to cover the loss of productivity and the related replacement costs following staff absence, especially long-term absences.  Why is this so?  Because this loss of productivity is difficult to measure and an indemnity scheme is thus difficult to put in place.

Corporate Absence Management Insurance by RMG Insurance Solutions and Moving Minds

RMG Insurance Solutions is a new insurance product/underwriting platform offering innovative insurance solutions within niche markets. Moving Minds Psychological Management and Rehabilitation is a UK provider of psychological treatment.

RMG and Moving Minds have developed an insurance product providing access to Moving Minds psychological services against the payment of an annual premium. The Insurance product can be sold on a stand-alone basis or as a rider to an existing Absence Management Insurance Scheme. Target clients are Human Resources departments in the UK – and later Continental – Corporations that are motivated to decrease their long-term absence rates. The product, distributed online, by brokers and through affinities, will give access to an early telephone triage assessment to determine reason for absence and identify presence and severity of mental health complaints. Such early intervention has the benefit of prevention of long term absence. An intervention/treatment pathway may include a certain number of CBT (Cognitive Behavior Therapy) telephone or face to face sessions -or telephone counseling sessions for mild complaints.

Staff members of insured corporations that have been absent for at least 5 working days for assumed mental health reasons, will be referred by Human Resources to Moving Minds, who will call the person for the triage. Depending upon the result of the triage, treatment may or may not be deemed necessary. Such early intervention significantly increases the probability that the employee will return to work within 3 to 10 sessions.

Referrals will have the benefit of governance from a physical health specialist in cases where there is uncertainty about diagnosis.

The corporation will pay a premium to the Insurance Company depending on specific risk factors such as type of industry, geography, number of employees, turnover, age structure, female vs. male staff, public vs. private sector and past absence history and past mental health history.

Self-insurance and bonus-malus models can be designed in order to embed the insurance product in an incentivizing absence management scheme.

The insurance product will be launched in the UK, with other continental European countries to follow, based on developing local psychological networks with the expertise and experience of Moving Minds.
The insurance product could also include a musculo-skeletal element in order to cover the full range of causes for absence.
References:

• RMG Insurance Solutions: http://www.assitheque.com/RMG-Insurance-Solutions.html
• Moving Minds Psychological Management and Rehabilitation: www.moving-minds.org
• Absence Management 2010: Chartered Institute of Personnel and Development www.cipd.co.uk and Simplyhealth www.simplyhealth.co.uk
• FIRSTCARE®  www.firstcare.eu

Article Comments

No comments added, be the first to add a comment!