Making Sense Of Attacks On Insurance

For instance, in a 2005 study of firms with 100 or fewer employees (no owner-only firms), LIMRA International found that 52% offered at least one group insurance benefit–down from 73% in 2000. Only 36% offered pension or retirement savings plans–down from 43% five years earlier.

By line, LIMRA found that only 9% of the firms offered defined benefit plans, 29% defined contribution plans, 22% vision plans, 21% long-term disability plans, 22% short-term disability plans, 26% group life, and 26% group dental. Medical insurance fared better–LIMRA found 50% of small businesses firms offered it in 2005. (The Henry J. Kaiser Family Foundation found 59% of firms with 1-199 employees offered health insurance in 2005.)

Such numbers are sobering, since small business employs about 50.6% of the private sector workforce, according to the U.S. Small Business Administration, June 2006. (Note: The SBA defines small business as under 500 employees, so the workforce percentage is bound to be lower than 50% if considering under-100 firms.)

It goes without saying that such numbers spell opportunity for those interested in expanding insurance sales. However, in view of the recent spate of negative news, such expansion efforts will likely encounter plenty of skepticism among buyers.

Many industry critics charge that the industry’s problems are so systemic as to be intractable. Therefore, they keep saying the government has to fix it.

Oh really? The industry has legions of talented product and sales experts who are quite able to come up with solutions for problems that virtually everyone agrees need addressing. These are people who run the products and know what to do. Even better, they are used to working collaboratively with multiple stakeholders.

What they need is a commitment–in dollars and sense–from their respective firms to dig into the problems. In certain areas, their efforts may call for an alliance with government, but that doesn’t mean the government will have to take over.

Recent examples include the rollout, in the health insurance sector, of basic and/or limited benefit plans that could help some of the uninsured obtain affordable coverage. Something similar is happening with LTC products. Furthermore, LTC partnership programs are now expanding, complete with training requirements for advisors–this in tandem with government.

Granted, such steps are incremental. But that can help take the edge off–and still leave room for big picture innovation.

When attacks on insurance are unmerited or have glaring inaccuracies, it’s good to note them, even to point them out. But, the industry still needs to deal with whatever is not working. It needs to respond–with visible, targeted and appropriate action. That won’t be easy, but the alternative is worse.