The income protection market presents challenges depending on whether the IFA is dealing with individual or corporate cover.To help boost cover in the individual market, claim incidences are a valuable tool and for the corporate market careful scheme design is essential. But whatever sub-section of the market the adviser is in, there are two challenges if they are to tackle the lack of income protection cover for individual and employer clients. The first and it seems perennial challenge is to make sure that employers and staff look at income protection not as a potential income for life but as an temporary income until they return to work. The second challenge is making sure all clients have cover either in their own right or through their employer and recognising how fused the two means of cover have become. Ensuring that some kind of cover is taken out in the first place should become more difficult to avoid now the industry is regulated. Norwich Union income protection product manager Nick Homer says: “Regulation is positive in highlighting the benefits of income protection. IFAs will have to talk about it now and not gloss over it.” The fusion that the market is seeing between individual and corporate income protection cover arises because, even where a client has individual cover, it is as likely that their employer, if they have one, will be bought into the rehabilitation process as if the cover they have was through their employer. This is because the causes of claims very often have their route in the workplace. The majority of claims are made by individuals in occupational class one – office workers – with 45 per cent of claims coming from this class, according to Norwich Union. Occupational class three accounts for 26 per cent of claims, with 18 per cent from class two and 11 per cent from class four. When it comes to why people claim, the key causes are psychiatric conditions and malignant disease. Stress, anxiety and depression are some of the main reasons for psychiatric claims. Cancers are predominant in malignant diseases. Around 65 per cent of psychiatric claims are from class one and 58 per cent of malignant disease are from class one claimants. Professional or admin workers dominate the nature of claim statistics for neurological, rheumatological and cardiovascular complaints. Only for orthopaedic complaints do class three staff make more claims. Homer says: “There is an increasing trend in stress-related claims and the industry is not really addressing the issue. We still seek to engage with the employer if we felt there was an issue there. It is difficult on an individual policy because, at least with a corporate policy the employer is the policyholder and is engaged with us and it is in their interest to support the person back to work.” It just might be easier in the long run for all income protection, where an individual is employed, to be on a corporate basis. But only 15 per cent of the working population has group income protection cover. The problem has been where absent staff could potentially remain on the payroll for the rest of their working lives and employers faced litigation if they tried to terminate the service of the long-term sick employee. The key is to focus on rehabilitation and return to work initiatives. The attitude should not be to take out income protection to pay salaries to ill staff for the long-term but to try to ensure that long-term illness is avoided. Watson Wyatt healthcare and risk consultant, Jamie Winter says: “Employers moving from final-salary to defined-contribution pension schemes have lost the ill health/early retirement option available under final-salary schemes whereby they could pay out the pension and move on. Now we have employers saying ‘we do not want these people staying on the payroll for ever but we want to support them during the period when they might statistically recover and come back to work’.” The answer is limited term income protection policies, which pay for a maximum period, usually two, three or five years. Winter says: “This means during the period of disability that the claims’ manager can look at rehabilitation and return to work options.If they cannot achieve those during the limited term period, then service is terminated at the end of that period. As long as you do that consistently in each and every case, then the employer is still doing more than most employers who are not doing anything.” Winter admits that while the incidence of long-term claims is fairly low, the value of those claims is significant. He estimates that there is probably about three long-term disabilities per 1,000 employees per annum.”But they can be big-value expenses, especially if your eligibility for insurance is not established correctly,” he says.