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Absence and sensibility

Many employers and some advisers view group income protection simply as a way of offsetting the cost of paying a long-term absentee. But it is worth bearing in mind that the probability of becoming seriously ill or disabled increases with age and employers will need to address this.

This market will offer potential to IFAs as companies seek to ensure they have a healthy workforce prior to retirement. We predict that many companies will take a far more paternalistic interest in their staff.

The UK&#39s workforce is ageing, with a 25 per cent increase in people aged between 45 and 59 forecast between 2000 and 2011. It is hardly surprising that we have seen a significant rise in sales of group income protection as employers develop a more proactive approach to managing sickness absence and return to work programmes.

There will be more emphasis on the provision of absence and rehabilitation management to help sick, temporarily disabled or even permanently disabled staff to return to work as quickly and enthusiastically as possible. Employers will have to keep more accurate records of staff absenteeism.

However, the employment of older employees carries many advantages, as already discovered by some businesses. There is a much higher incidence of casual sickness by younger staff. DIY retailer B&Q has an active policy of recruiting people over 50 and has seen profits rise, staff turnover fall and a noticeable improvement in customer service.

Recent research showed that four out of five people believe that employing older people is good for a company&#39s image, with 75 per cent believing that they tend to be more honest in the advice they offer.

Success for employers is increasingly coming down to finding an able and willing workforce, regardless of age, and keeping them healthy and in work. Group income protection has a key role to play here, so it is right for providers and IFAs to place greater focus on absence management and return to work in its promotion.

There is clearly already a need to help employers in this area as we estimate the cost of sickness absence among today&#39s workforce to be more than £20bn a year, with many employers having poor understanding of how it affects them or even how to calculate it.

This lack of absence management procedures is evidenced by the fact that 12 per cent of employers do not include occupational sick pay when collecting information concerning costs related to sickness absence and 39 per cent ignore additional overtime expenses. It is little wonder that the cost of sickness absence can be as high as 16 per cent of a salary bill.

Many employers do not realise this problem could be tackled through a good group income protection policy. But they should be warned that not all policies are the same. Generally, IFAs should be encouraging them to choose ones where the provider works in partnership with the employer to reduce absenteeism. This allows the insurer to assess quickly when or whether an employee can return to work and establish a tailored rehabilitation programme to help them on the road to recovery.

A good policy should provide expert advice on the rehabilitation of staff after sickness. In a society that is becoming increasingly litigious, it should also provide guidance on legal matters such as the Disability Discrimination Act, an area where many employers have little knowledge. As state support reduces, income protection becomes increasingly attractive to help employers recruit and retain the best people.

It will up to product providers to ensure they offer good sickness absence and rehabilitation services and that they and IFAs place a much greater focus on this when promoting the product.

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