Cost to corporate clients of failing to address mental health

According to figures from charity Mind, one in four of us will experience a mental health issue each year. 

Moreover, the 2017 Stevenson-Farmer Review, Thriving at Work, suggested the UK economy is affected negatively each year by mental health absence and by a lack of productivity when employees are present but unable to function to their fullest capability - the so-called 'presenteeism' effect.

It discovered a huge cost to businesses, the National Health Service and the overall economy as a result directly or indirectly because of mental ill health in the workplace.

The review found:

• 300,000 people with a long-term mental health condition lose their jobs each year.
• Approximately 15 per cent of people at work have symptoms of an existing mental health condition.
• There is a large annual cost to employers of between £33bn and £42bn, with more than half of this coming from 'presenteeism'.
• The cost of poor mental health to the economy is between £74bn and £99bn a year.

The 84-page review stated: "The UK is facing a mental health challenge at work that is much larger than we had thought.

"Not only is there a big human costs of poor mental health at work; there are knock-on effects for society, the economy and government.

"Employers are losing billions of pounds because employees are less productive, less effective, or off sick."

The infographic below, taken from the Stevenson-Farmer review, shows how the figures stack up to a billion-pound problem.

Nicola Mohns, head of intermediary and corporate marketing for Axa PPP Healthcare, says: "This is in addition to lost output, costing the economy £37bn to £52bn, and reduced tax intake, NHS treatment costs and ill-health related welfare payments, costing the government £25bn.

"Then there is the human cost. Individuals with long-term mental health disorders are less likely to find work, and the problem is growing."

She cites figures from the 2017 Labour Force Survey, which estimated the number of days taken sick as a result of mental ill health rose from 13 million in 2019 to 15.8 million in 2016.

Brett Hill, managing director of The Health Insurance Group, says the message is stark: "Mental health is one of the biggest issues that businesses face today".

Raluca Borolanu-Omura, assistant director and head of health and protection for the Association of British Insurers (ABI), has welcomed the report, as it has "pointed the way to developing a more integrated approach", which is "morally and commercially the right thing to do".

She says: "The scale and impact of mental ill health in the workplace is unacceptable."

Awareness

The figures are stark - but has there been enough awareness and acceptance of mental health conditions to provide the necessary help to those who need it?

Rob Harvey, independent protection expert for Drewberry, says: "There is now a greater awareness of mental health issues, thanks to various campaigns and celebrities backing for the cause, which makes an issue that has historically been prevalent become more commonly spoken about.

"However, although it is becoming more acceptable to discuss the issue, research from Mind has revealed just 5 per cent of people who had requested time off work due to mental illness actually admitted this was the reason for their absence, so there is still work to do."

Employers still struggle with how to manage this proactively instead of reactively. This is where partnering with a provider who specialises in mental health can make a difference. Ambika Fraser

Ambika Fraser, head of proposition at Unum UK, comments: "Mental health has always been a big issue but often ignored because of the perceived stigma."

Table: Types of common mental ill-health 

Source: Canada Life

While she agrees more work has been done recently to shed light on the high costs for businesses that do not properly protect the mental health of employees, there is still more ground to cover.

Ms Fraser adds: "The business case is clear for return on investment into mental health support, and how this can translate into happy, healthy and productive workers. 

"But employers still struggle with how to manage this proactively instead of reactively. This is where partnering with a provider who specialises in mental health can make a difference."

So there needs to be a greater, more concerted effort to help those who are suffering from mental illness, and to encourage the use of employee support programmes and other measures to promote wellbeing.

Duty of insurers

As far as Ms Borolanu-Omura is concerned, insurers have already taken great strides to "helping employers to improve the mental health of their workforce through preventative support and early intervention services.

"The industry wants to do more, and we are keen to see more employees have access to this kind of provision."

There have been signs that insurance providers are doing more to help pay out on mental ill health claims.

Data from the Association of British Insurers (ABI) and Group Risk Development (Grid) reveals for individual income protection and individual critical illness cover, mental ill health claims are being paid out.

Figure 1: Individual income protection claims payout

Source: ABI/Grid

According to Scott Cadger, head of underwriting and claims strategy at Scottish Widows: "We all have mental health, just as we have our physical health, and companies are now beginning to deal with it in the same way."

Duty of employers

Ms Borolanu-Omura believes far more needs to be done not just to encourage employers to provide insurance cover and associated benefits, but also to increase employee take-up.

She says: "As the [Stevenson-Farmer] report points out, employer action on mental ill health is intrinsically measureable.

"We want to see employers provide their staff with an annual protection statement outlining their current entitlements to sick pay and state benefits to help them better understand their financial resilience if absent due to mental ill health."

Axa PPP Healthcare's Ms Mohns highlights the fact that protecting employee's mental health is "part of an employer's duty of care.

"While some make support for employee mental health an integral part of their people management strategy, others still have much to do.

"To build a healthy, engaged and productive working environment, it is imperative that UK businesses support mental wellbeing and not just physical wellbeing", adds The Health Insurance Group's Mr Hill.

Duty of advisers

Where advisers have corporate clients with workplace benefits plans, it behooves the adviser to make sure the employer client knows the full benefits associated with the insurance package, whether this is a group private medical insurance or income protection scheme.

Often these schemes come with apps, tools, helpline, independent nursing and other support, which can be made more available to employees - but only if the employer knows about them in the first place and can properly signpost these to their staff.

For example, Canada Life Group Insurance - and others - provide guides online and for download, which employees and employers can use, such as the Mental Health Matters guide to help people suffering mental ill health while still at work.

Axa PPP Healthcare's Ms Mohns adds: "It is important to create a positive, supportive workplace culture. One where all employees understand the importance of good mental health, and where managers are trained and supported to identify and help employees affected by mental health issues.

"Creating such an environment should help give employees confidence to seek support for their mental health as and when they need it."

Duty of government

In 2016, the Department of Health and the Department for Work & Pensions published an 88-page Green Paper on how to tackle ill health and improve the provision of income protection in the workplace.

It suggested, among other things, that insurers should do more to make policies cheap enough for employers - which the industry countered by showing the exceptionally low cost of existing policies as part of an overall payroll.

Insurers also suggested the government could do more by incentivising employers through tax breaks, such as offsetting employer National Insurance contributions to allow some form of quasi auto-enrolment into a workplace protection scheme. 

The ABI's Ms Borolanu-Omura says: "Tax incentives to encourage greater take up would help extend the safety net for the most vulnerable".

Perhaps the government will take this on board instead of continuing to hike insurance premium tax on certain workplace policies. 

simoney.kyriakou@ft.com