A blind spot on stress

STRESS, the plague of white-collar workers, is already causing a rise in insurance claims. But stress itself is rarely covered, only its physical manifestations: a heart attack under a private medical insurance policy, for example.

This has raised questions over whether insurers should be looking at stress more directly, therefore helping to reduce it and more serious problems linked with it. However the failure of insurers to get to grips fully with the issue can also work to your advantage - if, for example, you are in a stressful job that might increase the likelihood of an insurance claim, you are not necessarily discriminated against in terms of higher premiums.

Malcolm Tarling, the spokesman for the Association of British Insurers (ABI), said: "The majority of companies regard this as an issue that 'will become more important in the future'. In reality it is already having an effect on claims levels generally, but because stress is not so easy to identify in terms of an 'event' such as a broken leg or a diagnosis of a clinically testable illness, the industry is largely unsure what to do about it."

Stress claims now contribute significantly to overall statistics but are rarely logged under such a specific title. For example, when a critical illness policy pays out a lump sum in respect of a heart attack or stroke it is only the physical manifestation of the condition that triggers the payment, not the underlying cause. Similarly, an increasing number of payouts on permanent health insurance (PHI) are known to be caused by stress but go down as instances where the policyholder's doctor merely decreed "general unfitness to work".

Early retirement because of ill health is increasingly being attributed to stress, particularly in occupations such as dentistry and selling. Teachers are also in the vanguard of the emotionally overwrought. However, in order to receive financial compensation through an employer's liability insurance policy, the onus is on the employee to prove beyond doubt that negligence by the employer caused the problem.

Derek Howie, of Eagle Star, highlighted the individual's plight. He said: "Employers' liability cover is getting a fair hammering in some quarters as a result of firms losing claims against ex-employees who have had to retire for health reasons. On the other hand, whereas private cover such as permanent health insurance will pay out more readily, company liability cover requires a legal judgment against the employer before it kicks in. From the claimant's point of view, how many genuinely ill people are likely to see through a courtroom drama, let alone win it?"

One person who did run the gauntlet of litigation, and won, was John Walker, a Northumberland social worker. Last year he was awarded pounds 200,000 in the High Court after his employer put him back into a position in which stress from his job had already caused him health problems.

Cary Cooper, the Professor of Organisational Psychology at University of Manchester Institute of Science and Technology, explained: "One of the key issues here was the element of foreseeability. The claimant had already been through the mill and it was not hard to imagine that putting him back into exactly the same situation would produce the same result. Whatever they say I know the insurance industry is worried about the implications of this case."

Mr Howie is not so sure, however. "This ruling was supposed to open the floodgates to claims, but despite the fact that there are 130 or so outstanding cases. the majority cannot prove employers' clear fault. For example, one of the rescuers involved in the Piper Alpha disaster, who claimed for post-traumatic stress disorder, failed because a court ruled the Occidental Oil Company [as it then was] did not owe a 'duty of care' to a rescuer in the same way as to a regular employee. Similarly, in the case of two men working on the Forth bridge, when one was blown off the structure and into the river, the other one claimed traumatisation. I am sure he was indeed very traumatised but again it was deemed that to take the job in the first place involved a requirement to have at least 'ordinary fortitude'. In truth the only way to get close to a guarantee of compensation in the event of such a case is to insure privately through something like a permanent health insurance contract, which I call '1st person cover'. Court proceedings resulting in a company policy paying out is very much '3rd person cover'. A further problem with relying on company policies is that however stressed out an employee may be, who is to say that the stress did not at least partly originate from home pressures such as a creaking marriage?"

Permanent health insurance policies, also known as income protection, pay you an income if you cannot work. The last Budget made their proceeds entirely tax-free, arguably increasing their attractions.

Similarly, private medical insurance policies tend to be geared towards paying for the treatment of other physical manifestations of stress, such as a heart attack, rather than stress itself.

Some "Rolls Royce" employer-provided policies will cover stress counselling but it is unusual, for example, for a cash benefit to be available if you cannot work because of stress.

Ronnie Martin, the individual risk manager at Sun Alliance, said: "Stress itself is not really an issue for the industry in a direct way. It is what it leads to: for example, increased alcohol consumption, smoking, heart murmurs etc. Take money brokers. Everyone thinks of them as highly stressed people, like air traffic controllers, but they will not be automatically 'rated' on premiums for life assurance. It will depend more on individual underwriting criteria like weight, health record, drink consumption and smoking. Remember, the risk being assessed in life insurance is only that of death. Of course, it does make a difference to the risk of accident, which is why permanent health insurance rates are divided by occupational category as well as individual underwriting.

"Critical illness policies, which cover you for serious medical conditions, come somewhere in the middle. In both cases, however, insurers take note of what the policyholder's doctor says, and pay out if the policy conditions are satisfied. It is as simple as that," he said.