Principles for Disability Risk Management

Through disability risk management, Varma aims to prevent the risk of disability pension for employees insured through Varma while also managing Varma’s insurance risk. The Principles for Disability Risk Management guide Varma’s risk management activities related to disability risk. The purpose of the Disability Risk Management Principles is to ensure that our operations are risk-based. The principles also outline the scope of activities related to disability risk management. The principles are based on legislation and compliant with guidance provided by the Financial Supervisory Authority.

Disability risk management

The framework for disability risk management consists of

  • the principles for disability risk management
  • a model for predicting the disability risks of customer companies
  • risk management measures and
  • monitoring and reporting.

Principles for disability risk management

  • Varma’s approach to disability risk management is risk-based. We direct risk mitigation measures at companies that have higher disability risks and where the risks can be effectively reduced. Measures mean both financial support for disability risk management and Varma’s own actions.
  • Risk management is based on a prediction forecasting model for disability risk, which indicates the customers’ needs for disability risk management. The prediction forecasting model is complemented by enriching data from external sources and by reviewing the situation with the help of tools designed for risk assessment.
  • In risk assessment and the planning of risk management, we utilise scientific research data and insurance medicine expertise related to the background factors for disability, prevention of disability and effective measures.
  • Varma is constantly developing its tools for disability risk management. Our objective is to efficiently identify and predict disability risks and to take effective measures.
  • Varma’s disability risk management function is responsible for the management of disability risk.

Forecasting model for disability risk

Risk management is based on a prediction forecasting model that indicates the customer companies’ need for disability risk management.

The prediction forecasting model utilises Varma’s data on rehabilitation and pension benefits and it is enriched with data obtained from partners and other public sources and with tools designed for this purpose. The prediction forecasting model indicates the level and nature of disability risk at the company level.

We utilise the prediction forecasting model when focusing measures for disability risk management based on risks.

Measures related to disability risk management

Measures for disability risk management include

  • advice and guidance for customer companies in matters related to work ability and
  • financial support for customers.

We help customers understand the causes of disability risks and discuss the most efficient risk mitigation measures. We utilise Varma’s digital services in this work.

We can also provide our customers with financial support for disability risk management. We direct financial support at customers who have been proven to have disability risks, with the risks being such that planned measures can be used to reduce them. Financial support is not the primary measure. The primary measures are actions independently taken by the customer and measures taken in cooperation with occupational health care.

We finance the financial support with the administrative cost component for disability risk that is included in the pension contribution. In addition to Varma’s investment, we require the customer to make a financial investment of at least similar magnitude, with the work contribution of the customer’s employees not deemed to be such an investment.

The administrative component of the pension contribution is also used to finance Varma’s own development projects, the purpose of which is to increase the efficiency and effectiveness of disability risk management.

Decisions on the use of financial support and Varma’s professional services for disability risk management are made by the disability risk management function.

Monitoring and supervision of disability risk management

We review the implementation of risk-based approach through annual, independent inspections carried out by Varma’s medical and insurance technique functions. Internal control is used to monitor compliance with disability risk management processes and the feasibility of the measures in relation to the customer’s risk situation.

The efficiency of measures is monitored through customer surveys and customers’ assessments concerning the efficiency of measures.

We submit reports on our financial support to the Financial Supervisory Authority in accordance with the applicable instructions.