Memorandum submitted by the Association
of British Insurers after the publication of the Welfare Reform
1.1 This is the Association of British Insurers'
(ABI) response to the House of Commons' Work and Pensions Select
Committee inquiry into the reform of incapacity benefits and the
Pathways to Work pilots. The ABI will also send this submission
to the Department of Work and Pensions as its formal response
to the Incapacity Benefit Green Paper.
1.2 The ABI represents the collective interests
of the UK's insurance industry. The Association has around 400
member companies. Between them, they provide 94 per cent of domestic
insurance services sold in the UK.
1.3 In 2003, ABI members paid out £4.5
billion in compensation for personal injuries sustained either
on the road, in the workplace or in public places. In addition,
6.5 million people are insured by their employers to meet their
care, rehabilitation and income replacement needs and, in 2004,
over £3 billion was paid to replace lost income and meet
1.4 The ABI welcomes the Government's proposals
to reform Incapacity Benefit and roll out the Pathways to Work
pilots, but further measures are needed to deliver a step change
in the UK's return to work rate. The Government needs to deliver
additional reforms, including a system of accreditation for rehabilitation
qualifications, the removal of tax disincentives, and the introduction
of tax credits for employers purchasing occupational health services.
These measures would allow the rehabilitation market to grow,
helping more people back to health and back to work more quickly.
1.5 In December 2005, the ABI launched its
proposals to improve the personal injury compensation system and
foster a return to work culture through increased provision of
rehabilitation and occupational health schemes. This document,
entitled `Care and Compensation', can be found at www.abi.org.uk/careandcompensation.
2. PATHWAYS TO
2.1 The ABI supports the Government's desire
to connect health and work policies, reflected in the "Health,
Work and Wellbeing" strategy, the Pathways to Work pilots,
the impending appointment of a National Director for Occupational
Health, and the Incapacity Benefit Green Paper.
2.2 The Pathways to Work pilots and the
proposals in the Green Paper show a welcome commitment from the
Department for Work and Pensions to provide incentives through
the payment of benefits, support for claimants to return to work,
and help for GPs to help people back to work. However, to foster
a return to work culture, the Government needs to go further,
and increase the provision of rehabilitation and occupational
2.3 To do this, the Government needs to
harness the work of the many relevant stakeholders: the state,
insurers, employers, and employees. The mutual interest of these
stakeholders should be a powerful force for change. However, occupational
health suffers from a classic market failure: its benefits are
spread widely but the responsibility for its provision and the
costs fall on only one of the potential beneficiaries. The Government
must therefore improve the work of its own agencies, and provide
incentives for other stakeholders to take up rehabilitation and
occupational health services.
3.1 The DWP's commitment needs to be matched
by other government departments and agencies with a role to play
in keeping people in work, or helping them back to work. The new
National Director for Occupational Health will play an important
part in coordinating all relevant agencies to deliver more effective
3.2 The National Health Service has a disappointing
record in delivering rehabilitation services and its role in promoting
occupational health is not sufficiently recognised. The public
health white paper, `Choosing Health', and the new willingness
to purchase services from beyond the National Health Service,
provide a real opportunity to overcome this tendency.
3.3 In addition to the proposals in the
Incapacity Benefit Green Paper for GPs to provide more robust
fitness-for-work advice, and for greater education for doctors
about health and work, the ABI proposes that:
the Department of Health should share
the Health and Safety Executive's PSA target to reduce the number
of days lost due to injuries and ill health by nine per cent by
2007-08. This would ensure a more balanced approach, recognising
the role of rehabilitation in reducing absence as well as accident
the NHS should introduce return to
work programmes, advising its patients on how they should approach
their return to the workplace.
3.4 The Health and Safety Executive also
has a key role to play. Its remit should be expanded beyond the
management of risk in the workplace, to include the promotion
of best practice in responding to injuries and illnesses. The
ABI proposes that:
the Health and Safety at Work Act
should be amended to put more responsibility onto employers to
provide care and rehabilitation for their employees, and to increase
the Health and Safety Executive's activities in this area, for
example by requiring employers to report on how they respond to
injuries at work and manage sickness absence;
the health and safety authorities
and the Employment Medical Advisory Service should have new remits
to help promote care and rehabilitation and produce return to
work plans for employers.
4.1 Those companies that purchase occupational
health insurance for their employees do so because there is a
rational business case for it. In the last five years, the number
of corporate subscribers has increased by almost twenty per cent.
The ABI advocates a partnership approach where the NHS delivers
what it can (for example promoting a return to work culture) and
employers and insurers deliver what they can (for example the
purchase of occupational health and rehabilitation).
4.2 The insurance industry will work in
partnership with employers to develop insurance products to promote
care and rehabilitation. In this regard, we welcome the DWP's
commitment in the Green Paper to "work closely with the insurance
industry, together with employers and trade unions, to encourage
the development of products which help maximise the chance of
a speedy return to work". We would like to see a similar
commitment from the Department of Health in relation to their
public health strategy.
4.3 For these products to have an impact,
the occupational health market needs to be better developed. The
Government should encourage employers to provide care for their
employees by clarifying and reforming the tax system to promote
rehabilitation and occupational health treatments. Where an employer
provides rehabilitation cover for its workforce regardless of
where the injury occurs, this should not be counted as a taxable
benefit for employees and should qualify for tax relief for employers.
A rehabilitation tax credit should also be established to subsidise
employers providing rehabilitation to their staff directly or
through the purchase of insurance.
4.4 Measures to ensure the quality and quantity
of rehabilitation and occupational health providers are also necessary.
In the short term, all stakeholders should play their part in
providing financial sponsorship to deliver the specialists that
will be needed. There should also be a transparent accreditation
system for rehabilitation qualifications, overseen by an industry-wide
rehabilitation group, and supported as appropriate by the Healthcare
4.5 Rehabilitation also needs to play a
greater role within the personal injury compensation system. At
the moment, the adversarial nature of the system, and the unnecessary
delays within it, mean that rehabilitation is not provided as
often as it could be. The Government should implement the ABI's
proposals for reform, also set out in `Care and Compensation',
that would speed up the compensation process and therefore increase
the potential effectiveness of rehabilitation. There should also
be a new requirement in the personal injury compensation system
for the claimant to receive and undergo rehabilitation where there
is a clinical need to do so.
4.6 In addition to these fundamental changes,
other measures can improve the UK's "return to work culture".
The ABI is working with employer and employee organisations to
promote a new code of best practice to improve responses to accidents
and ill health in the work place. The Government should also take
a leadership role by promoting care and rehabilitation to reduce
the number of days lost to sickness absence in the public sector.
With regards the medium and longer term, the Government should
also coordinate further research to identify how best to rehabilitate
victims of accidents and ill health.
Association of British Insurers