However, Mr Avis said in the future, this could be seen as a boost to group income protection as while the Fit for Work service in no way replaced what group insurers do, the importance of early intervention services and rehabilitation offered by group income protection policies will have been enhanced by the lack of this initial government-led intervention.
"If we recognise there are clearly too few occupationally health trained people in the UK, then the vocational rehabilitation specialists of insurers should be maximised to help anyone with group income protection and employers serious about managing absence", he added.
In Spring 2015, Jelf Employee Benefits (now part of Mercer), carried out a survey of employers, which found two-thirds of employers intended to use the Fit for Work service in some form as a tool to help manage absence.
Out of 140 employers, 6 per cent said they would use the service fully, 42 per cent intended to use it based on individual cases, and a further 20 per cent said they would use it for research.
Some 49 per cent of respondents at the time said they would adapt their formal sickness and absence policies to incorporate access to the Fit for Work service.
Katharine Moxham, spokesman for Group Risk Development, agreed group income protection providers could be given a boost by the closure of this service, as employers and employees look for alternatives.
She said: "I hope this leads to a greater focus on income protection.
"We've always said the Fit for Work service was great in as far as it went, but group protection could do far more.
"The closure of the occupational health referral and assessment service brings us back to the question - what is there for smaller employers? At the moment, there seems to be nothing.
"I would see this closure as an opportunity. While we are not occupational health specialists per se, we specialise in vocational rehabilitation and as an industry, group income protection individuals deliver what we think excellence looks like."
Ms Moxham added it was a "big shame that such a flagship programmes" had not been successful, saying: "The reality is either employers did not see the value of the services or did not know about it but for us as an industry it does give a greater focus on what we can offer."
A spokesman for the Department for Work & Pensions said: "We’re committed to helping companies support their employees to return to work promptly from sickness absence.
"That is why we are retaining the Fit for Work advice helpline, website and web chats and we are appointing a group of experts to shape future policy on occupational health.
"A thorough consultation with stakeholders, including the insurance industry, found that the complexity of group income protection products can limit take-up, which is why we are encouraging the industry to consider developing a product which addresses this."
