Loukas

The innocuously-titled Welfare Reform Bill received Royal Assent on the 3rd of May, 2007. The Labour government has sold it as 'helping those who have not been helped before',[1] but claimants are worried that this is simply a drive to 'help' the ill off benefits in order to force them into low paid jobs, which many of them are too ill to perform.

One indication of the aims of UK government welfare reform is the way they have involved insurance company executives in the formation of policy in this area. The giant US firm Unum (formerly UnumProvident) has been involved in advising the UK government since at least 1994, when the Conservative government hired its Vice President to advise on 'claims management'.[2] This relationship has continued, with Unum sponsoring meetings at the 2003 and 2005 Labour Party conferences, titled 'The missing million: disability and pathways to work'[3], and 'Welfare Reform: The way forward', respectively[4].

Although Unum claims to be 'the UK’s market leader in the provision of Group Income Protection', with over two million people covered by their policies[5], the USA is still where UnumProvident has most of its business – it covers over 25 millions Americans[6] and is reported to be the world's largest disability insurance company. However, the history of Unum's treatment of its US clients does not bode well for its close involvement in UK welfare restructuring. Unum was recently forced by state regulators to reopen 290,000 disability insurance claims that had been rejected, including a case where 'Unum insisted that a man who had quintuple bypass surgery was fit to go back to his job at a stock brokerage firm, even though his doctors said the stress might kill him' and where Unum 'refused benefits to a man who had had multiple heart attacks'[7]. This behaviour caused California Insurance Commissioner John Garamendi to state that 'UnumProvident is an outlaw company. It is a company that for years has operated in an illegal fashion.'[8] A Yale University research paper commented that, with regards to Employee Retirement Income Security Act (ERISA) and other cases, Unum was, 'engaged in a program of deliberate bad faith denial of meritorious claims';[9] yet this is the company admired by both Conservative and Labour parties as a leader in dealing with incapacity claims.

There is a worrying possibility – that the cooperation between the UK government and Unum stems from a community of interest between them, with both the company and the government wishing to reduce the amount of people who are able to claim incapacity through sickness; the government so it can pay less in benefits and the insurance company so it can contest or refuse more insurance claims.

References
[1]'UK economy takes employment hit,' ClickAJob News, 18/04/2007, www.clickajob.co.uk/news/uk-economy-takes-employment-hit-5645.html
[2]'New Labour and the end of welfare by Jonathan Rutherford, Compass, 25/04/07 www.compassonline.org.uk/article.asp?n=563#comments
[3]'Fringe benefits', Natalie Toms,Guardian, 29/0903 http://politics.guardian.co.uk/labour2003/story/0,,1052135,00.html
[4]'Papworth Trust points the way forward at Labour Party Conference, Cambridge Network, 07/10/05, www.cambridgenetwork.co.uk/news/article/default.aspx?objid=12932
[5]Unum UK, 'CEO's Welcome', www.unum.co.uk/Home/Corporate_Information/CEOs_Welcome.htm
[6]Unum, 'About Us', www.unumprovident.com/aboutus/
[7]'Case reviews fall short for hurt workers' Daniel Yi, LA Times, 12/0407www.latimes.com/business/la-fi-disability12apr12,0,4832505.story
[8]'State Fines Insurer, Orders Reforms in Disability Cases', Peter G. Gosselin, LA Times, 3/10/05, www.insurance.ca.gov/0400-news/0100-press-releases/0080-2005/release089-05.cfm
[9]'Trust Law as Regulatory Law: The Unum/Provident Scandal and Judicial Review of Benefit Denials under ERISA' JOHN H. LANGBEIN Yale Law & Economics Research Paper No. 329, Northwestern University Law Review, Vol. 101, 2007,http://papers.ssrn.com/sol3/papers.cfm?abstract_id=917610