Early intervention – why wait until it becomes a claim?

A recent post by The Professional Insurance Brokers Association (PIBA) entitled “Income Protection & getting back to work” detailed some reasons why Income Protection (IP) planning/policies should be discussed with a Financial Advisor both at the new business and claim stages.

The post rightly highlighted the features and benefits of IP and in particular of rehabilitation and a speedy Return to Work (RTW) and referred to the value of early intervention from the client, provider and indeed the Advisor perspectives.

Current best practice by providers focuses on the value of early intervention and the danger of over medicalisation of the reasons for claims.

Appropriate early intervention is a win for all and of late providers and Reinsurers are recognising the benefits of early intervention and the development of realistic RTW or partial RTW plans.

New Ireland Assurance’s IP claims statistics for 2014 make interesting reading:

•  New Ireland Assurance paid €8.2m in income protection claims (out of a total of 504 claims)
• 38% of claims paid out for more than €20,000
• 77% of new claimants were female
• The highest percentage of claims were for psychiatric conditions at 26%, followed by back injury/musculoskeletal at 25% and cancer at 15%
• 66% of claimants were under 49 years old.  The highest percentage of claimants were aged between 30-39 (36%)

These are undoubtedly impressive but why wait until it becomes a claim?  I believe that it makes sense for all IP insurers to be acting in the deferred period, getting people back to work and eliminating the emotional and financial stress of long-term absence.  Early intervention is the key to making IP function as one of the “must have” components of financial planning.

Of course we must not forget that as the PIBA post highlighted the primary challenge is to convince clients (and Advisors) of the real value of effecting IP policies in the first place and recognise the barriers and drivers so as to convince all that IP is a vital part of the financial planning landscape