Health and protection insurers produced the equivalent of £6.1 billion a year in benefits, across businesses (£2.6 billion), the wider economy (£2 billion), and the Exchequer (£1.5 billion) in 2021, by reducing the number of days employees needed to take as sick leave.
The Futureproofing Workplace Health research, commissioned by the Association of British Insurers (ABI) and carried out by WPI Economics, shows that health and protection insurance are boosting the UK’s productivity and economic growth.
With the number of people out of work due to long-term sickness at a record high*, the research demonstrates how insurance services support people to stay healthy and in work. In 2021, services provided by insurers prevented 14 million sick days and helped 12,500 full-time workers to stay in work rather than leave their jobs due to ill health. Through insurance, employees accessed services including vocational rehabilitation, timely mental health support and speedy access to diagnosis and treatment. With fewer people off work, businesses were £2.6 billion better off, and the wider economy saved £2 billion.
A record 4.4 million people are now covered by health insurance through their employer and 1 million claims have been made over the past year.** 3 million workers are also covered by Group Income Protection through their employer.*** We believe all employers would benefit from using workplace health solutions, including insurance. Not only would this support employees to stay in control of their health and wellbeing, it would also benefit the business through reducing sickness absence. In turn, this provides tangible fiscal benefits to the economy.
Cut the rate of IPT to further boost health and the economy
By keeping people healthy and in work in 2021, health and protection insurers saved the Exchequer £1.5 billion as people continued to pay taxes and did not claim social security benefits.
As the Autumn Statement approaches, we continue to call on the government to cut the rate of Insurance Premium Tax (IPT) on health insurance to help widen access for employers and individuals and help boost workplace health.
Supporting the NHS
The research also estimates savings to the NHS of £1 billion in 2021 which could be reinvested to improve public health and social care services. These findings show that health and protection insurance complements the NHS by reducing financial strain and suggest a positive impact on longer-term financial sustainability.
Harnessing the power of health and protection insurance for the long-term
The report outlines a number of recommendations that government should take forward to improve workplace health. These include:
- Reform Statutory Sick Pay (SSP) so that it provides better and more flexible financial support for employees and encourages employers to provide effective and proactive sickness absence management.
- Any new incentives flowing from the recent government consultations must allow employers to offer workplace health benefits in the way that works best for them, and also apply to insurance.
- Reform the interaction between social security benefits and insurance to make sure people are not penalised for purchasing an income protection policy should they fall out of work and subsequently need to claim Universal Credit.
- A move towards mandating firms to disclose information on how well they support the health and wellbeing of their staff. In the longer-term this could help to incentivise more companies to play an even greater role in supporting healthy working lives.
By bringing in these measures, we think the Government would enable a much larger group of people to benefit from health and protection insurance. Increasing the number of employers who offer this support to their employees would improve health and wellbeing across the nation, as well as provide benefits to business, the Exchequer and the wider economy. If the number of people with these benefits doubled, it would be worth £800 million to businesses, the economy and Exchequer in the first year alone.
We estimate that, by the fifth year, this would equate to 165,000 more people in work and 28 million days of sickness absence avoided. Combined with the existing impact of insurer-provided services, the total benefits could be as high as £12.2 billion per year.
Yvonne Braun, Director of Policy, Health and Protection, ABI, said:
“These striking figures show that health and protection insurance is vital for the health of UK plc. Our sector provides services which have a material positive impact on people’s health and financial resilience, while also supporting businesses and the productivity of the UK economy. By helping employers to invest in the health and wellbeing of their employees, insurers also complement the vital work of the NHS. Government must include insurance in its plans to tackle the record levels of economic inactivity.”
Joe Ahern, Head of Policy, WPI Economics:
“With the health of the nation at the top of the agenda in recent years, it’s more important than ever that we look at all options for healthcare, including the role of workplace health solutions. Our research has shown that health and protection insurers can provide significant support to the health and the wealth of the nation.”
Notes to Editors
*Office for National Statistics (ONS): Sickness absence in the UK labour market 2022
**ABI: Huge growth in employees benefitting from workplace health insurance
***Swiss Re Group Watch 2023
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