Making The Case For Integrated Disability Management
The direct costs of employer time-off and disability programs averaged an astounding 14.3% of payroll in 1999, according to a study released by Mercer and Marsh in 2001.
Couple this hefty cost with the current unstable economic conditions, and it’s not surprising that employers are urgently seeking new methods to reduce disability costs, improve employee productivity, and streamline benefits administration.
In my view, integrated disability management is an excellent solution that insurance agents, brokers, and consultants can offer. IDM is a product that combines workers’ compensation with short- and long-term disability into one program, the goal being to coordinate management of all occupational and non-occupational disabilities.
In this age where clients are looking for value, such a program offers an extremely powerful way to create and solidify stronger long-term relationships. Moreover, the industry has found that persistency and client retention are strong among clients using the IDM approach.
Even so, and despite their need for this solution, not all employers have rushed to buy the product. A key reason, it appears, is lack of opportunity. Simply put, many employers have never been offered IDM. Also, misperceptions exist about the product, and often its benefits are not effectively communicated.
To overcome this resistance, focus on these four key steps:
1) If your practice employs both employee benefits and workers’ compensation producers, team up with a colleague from the other specialty, so you can prospect/consult for IDM in pairs.
This teaming approach will enable you to address the differing buyer motivations of the clients Human Resources and Risk Management Departments. Typically, risk managers focus on financial returns, return to work and claims analysis to reduce costs. Human resource executives are more likely to focus on offering a good benefits package to attract and retain employees.
2) Present a strong case about the benefits of IDM.
For instance, point out these attributes:
–Litigation by employees regarding benefits decreases. Research suggests that, when IDM is implemented, litigation rates can drop by as much as 50%, directly impacting claims costs. According to a 1998 Lou Harris Study, the average disability claim takes 12 weeks to resolve; however, claims with attorney involvement take 41 weeks on average to resolve.
–Employee satisfaction with the disability benefits program improves. According to a study reported in the June 1998 edition of the Sedgwick Case Management Integrated Benefits Newsletter, 78% of respondents reported increased employee satisfaction as a benefit of IDM.
–Disability costs decrease. Case studies indicate that IDM can reduce the total cost of disability from 30% to 50%.
–Benefits administration becomes more streamlined. Some IDM clients say the administrative efficiencies have enabled them to reallocate internal headcount to more productive activities.
3) Address your clients’ concerns about IDM implementation.
Such concerns typically prove to be unfounded. For instance, 91% of respondents to a 2001 study of IDM clients of our company said IDM was easy to install and almost three-fourths reported low implementation costs.
4) Ensure that you are offering an excellent IDM program from a reputable company.
Check out the company’s experience with IDM. How many accounts has it written? Ask if the companys IDM program integration is fully integrated or pieced together from several companies under the umbrella of integration. Explore whether the company has experience with returning employees to work.
To learn more about IDM, check out the non-profit Integrated Benefits Institute, at www.ibiweb.org.
Leo D. Tinkham Jr., CEBS, is vice president-integrated disability management at The PMA Insurance Group, a Blue Bell, Pa. property-casualty insurer
specializing in workers compensation and integrated disability management. He can be reached via e-mail at Leo_Tinkham@pmagroup.com.
Reproduced from National Underwriter Life & Health/Financial Services Edition, May 13, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.