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PMI schemes are expanding to include nursing services that guide employees through the stressful period of receiving treatment, and benefits are increasing to include further cover such as dental insurance and extra services such as absence and disease management. These additional services increase corporate productivity by returning absent employees to work more quickly and by preventing staff absenteeism in the first place.

PMI is widely recognised by employers and employees alike as an attractive benefit. Indeed, because of its well-established presence in remuneration packages, the scope of the benefits provided by PMI can be overlooked. The traditional view that PMI is only about providing access to quick, effective treatment no longer holds up to scrutiny. Nowadays employers’ interest is shifting towards providing a benefit that is valued by employees while helping to increase their productivity. New initiatives are therefore being developed by PMI providers that go further towards balancing the needs of the employee and the needs of the employer. While PMI is viewed as a key management tool for achieving wider corporate objectives, companies are interested in purchasing PMI in order to get staff back to work quickly and to reduce sickness absence.

The recent Work Foundation survey shows that 2002 absence rates rose by more than 40 per cent – equivalent to nine  days per employee per year and the highest rate since The Work Foundation started monitoring absence. Whilst many employers believe most absence is caused by sickness, other causes including home and family responsibilities, low workplace morale and stress also contribute. Yet despite the scale of the problem, much more could be done to minimise absence, starting with proper recording so that levels and patterns can be investigated.
 
Whilst most employers recognise there are costs associated with sickness absence, many do not realise the extent of these costs. A recent employee absence survey conducted by the Chartered Institute of Personnel & Development (CIPD), showed that most companies classed the cost of sickness absence as either ‘significant’ or ‘very significant’ with only 9 per cent classing it as ‘insignificant’. However the Work Foundation survey found that nearly two-thirds of employers are unable to attribute an actual cost to absence, indicating a lack of monitoring or data.

In its annual Absence and Labour Turnover survey, The CBI (Confederation of British Industry) has estimated the average cost of absence based on a survey of 550 UK employers. They estimate that for a typical UK employer, staff absence is costing business nearly £500 per employee in direct costs alone. If this figure were projected across the whole UK workforce, the cost to British economy would be £11.8 billion. This excludes all the associated indirect costs, which typically add to at least £200 per employee.

There is much research highlighting the problems and issues of sickness absence, but less is written on the solutions and how best to tackle it. Dedicated absence management programmes have been developed to help employers understand the causes of absence and identify and manage the risks involved, ultimately saving costs and increasing productivity. These programmes can be tailored to suit an organisation’s needs whilst ensuring they complement current HR policies and can be developed to also provide an integrated health solution working along-side PMI and long-term disability providers.

CIGNA Healthcare’s absence management service, for example, uses highly qualified nurses who provide an independent, personal interface. Rather than being intimidating for the employee, this type of contact can actually be preferable to the employee. By implementing a policy of early intervention the service can effectively reduce the cost and duration of the absence, as well as offering support to the line managers in managing the absence, enabling consistency in management of absence across the organisation and providing information to identify trends and problem areas.

Employers should be encouraged to implement effective absence policies and provide vital training in order to stem the rising cost of absence in turn offering further services to their employees. While the interest in managing employee absence is increasing, many employers still shy away from it as it is often viewed as a delicate issue, nevertheless effective management can deliver significant cost savings and even increased employee satisfaction.
 
New initiatives are being developed within PMI that go further towards supporting the employee and meeting the needs of the employer. Developments such as Disease Management, which provides a coaching service to sufferers of chronic conditions like diabetes, are an example of this. The purpose of such a service is to encourage the employees to help themselves and to provide line managers with an advisory service. Providing information and support, the Disease Management nurse regularly speaks to the employee to ensure they are meeting personal goals, are remaining informed about their condition and are generally managing their health effectively. Such a service promotes the wellbeing of the employee, while the health impacts help to minimise absence and prevent potential claims under the PMI policy by reducing the risk of acute flare-ups. Again both the employee and the employer have a beneficial outcome.

Disease Management services are currently available as a stand-alone product or as an add-on to a PMI policy within the large corporate segment of the market. Other possible enhancements to PMI include: the addition of primary care cover (enabling patients to see a GP quickly, minimising the time from work and helping to lead to early diagnosis of conditions); dental cover and even a critical illness benefit that generates a lump sum payment to employees whose cancer claim is no longer covered under the PMI policy by virtue of it becoming chronic. Although these developments are currently taking place mainly within the large corporate sector, it is only a matter of time before they start to be offered to smaller employers too.

As a result of its established status, PMI is sometimes viewed as a standard, core benefit and as a result, not much energy goes into the choice of PMI provider. This ignores recent developments with the product. By looking a little further into how the various products function, employers may find innovative ways to look after their staff while controlling expenditure and absence. PMI has been evolving from a simple indemnity insurance product to a multi-faceted service orientated benefit with insurance at its core.

(This article was originally published in Director of Finance 2004 edition)