Group income protection (GIP) products may soon see a boost, as the government seeks to reform welfare, particularly around long-term sickness and economic activity, according to consultancy WTW.
Chris Beardshall, head of expatriate benefits solutions UK at the firm told Health & Protection: “This shift could lead to a growing emphasis on workplace wellbeing initiatives and protection products, such as income protection insurance, mental health support programs, and flexible working arrangements.”
WTW argues that services already embedded in group income protection (GIP) products, such as rehabilitation and early intervention, can help bridge the gap and support government goals.
In March the government announced what it said were the largest welfare reforms for a generation.
Prime minister Keir Starmer said: “We’re not prepared to stand back and do nothing while millions of people – especially young people – who have potential to work and live independent lives, instead become trapped out of work and abandoned by the system.”
The government said that its welfare reform package was expected to save more than £5bn in 2029 to 2030.
On the government’s push to address long-term sickness in the UK, Mark Simmonds, director at WTW, told Health & Protection that: “It really seems like the government is seeking the help of the insurance industry for ideas and advice on this, and action needs to be taken to help with that.”
Simmonds pointed out that long-term sick leave was on the rise, which was beginning to put a strain on both businesses and the government.
“What’s really interesting at the moment is the government is obviously looking to take measures to try and help tackle that long-term sickness in the UK. We’ve got about 2.8 million people now who are off long-term sick, and the trend is that number’s increasing,” Simmonds said.
He added that while the government had been trying to reduce its welfare bill, it was also conducting consultations and independent reviews that aimed to address the rising number of long-term sick leave cases.
These reviews are exploring how employers can better support employees and help them remain in work.
Simmonds noted: “That is seeking ideas around what can we do in the UK that would really make a difference for employers to help with their employees staying in work and having that wellbeing at work.
“When you look at the language of that review and their remit, it is really looking at things we believe are already provided by many employers through group income protection.”
The government has been working on a green paper seeking views and ideas about how to tackle long-term sickness. Furthermore, the Department of Work and Pensions, in collaboration with the Department for Business and Trade, has commissioned an independent review titled Keep Britain Working.
Simmonds also referenced HM Treasury’s financial inclusion committee, on which he is a subcommittee member, which is addressing financial inclusion issues for individuals with disabilities and those who struggle to access insurance products.
“One of the big things that we are looking at is income protection, because it’s recognised that it is a product that helps,” Simmonds added.
Self-imposed obstacles
Meanwhile, Simmonds argued many of the challenges faced by the group income protection industry are actually self-imposed, .
“There’s a lot of received wisdom that steers people down the wrong path with group income protection, and that’s probably the industry’s fault because it’s not the most straightforward thing to understand,” he said.
He noted there is a common misconception that GIP is only relevant for large companies.
“We have situations where people believe it’s only for large companies, and it’s only ever going to be of interest to the FTSE 100 or that type of thing.
“In fact, most policies are actually in the small medium enterprise (SME) world, and they get a lot out of that policy – not just the safety net of an income should someone not be able to work, but also rehabilitation and all the therapies and treatments that are possible with the added value services.”
Simmonds believes this provides a potential answer to the government’s challenge of supporting employers in their efforts to help employees stay in work and maintain their wellbeing.
“So we think that’s where the government is pushing potentially towards employers,” he said.
Wellbeing strategy development
According to Beth Husted, associate director for health, wellbeing, and equity at WTW, while there is significant opportunity to build prevention and wellbeing strategies, there was a risk employers may fall into a “tick box” mentality if there was no clear strategy.
“The concept of wellbeing and the concept of being healthy can feel quite overwhelming for employers,” Husted said.
“That can turn into a kind of tick-box approach which results in no return on investment, as there is no clear strategy and the employees don’t get what they should be getting out of it.”
Husted said that the government’s aim was to reduce the impact on welfare, encouraging employers to take a more proactive approach in supporting their employees’ wellbeing.
However, many employers may not fully understand the benefits already embedded in their GIP policies.
“Many employers may not know what they’ve got, how to use it, or how to build it out in an effective way,” Husted explained.
Husted also highlighted the increasing demands being placed on employers.
“We’ve seen it all before where the government pushes employers to do more stuff – but it’s always been quite specific – such as the mental health commitment and standards that businesses needed to be meeting from years ago.
“But now what they’re saying is we’ve got to be prepared as employers to have that kind of inclusive, thriving good work – and so the employers have got more potential challenges.”
Employers are now expected to think more deeply about how they are creating healthy and inclusive workplaces.
Husted concluded: “They need to be thinking about how they’re creating those healthy, inclusive workplaces more than ever, because it’s going to be expected – so there will be even more expectation.”
