The top group disability story for the coming year may be that 2006 will be another great year for companies that want to protect employees against crippling illnesses and injuries.
Unlike the group health market, where competition is dwindling and rates continue to soar, the group disability market “is increasingly competitive,” says Kevin Roller, president of Roller Consulting Company Inc., Conshohocken, Pa. “We try to renew with the same carriers, but we always have to keep a watchful eye on the marketplace.”
The group disability market will continue to be a difficult one for the insurers in the market, says Stacy Varney, a vice president at JHA, Portland, Maine, a disability consulting and risk management firm.
“Expect a continued challenging sales and earnings environment due to lack of organic growth, low interest rates and rising claim costs,” Varney says.
But disability carriers have formed the Council of Disability Insurers, Portland, Maine, to promote disability insurance, and disability brokers and others have formed the International Disability Insurance Society, Houston, to create education and networking opportunities for disability insurance producers as well as to promote awareness of the product among consumers.
In 2006, insurers and producers could start to make a serious effort to improve the image of the disability insurance industry among consumers and employers, according to Varney.
Here are some other group disability topics that could make news in 2006.
2. Regulatory battles. New York Attorney General Eliot Spitzer shook up the group disability industry in 2005 with an investigation of contingent commissions, or commissions based on the performance of entire blocks of business. Some disability carriers had been promoting the use of contingent commissions as a strategy to encourage disability brokers to bring them high-quality accounts that would stay on the books.
Meanwhile, California Insurance Commissioner John Garamendi has made headlines by trying to turn guidance from court disability rulings into minimum standards for new–and existing–disability insurance policies. Garamendi even has threatened to withdraw approval for disability forms already in the market.
Ron Cohen, a Houston disability broker who helped the International DI Society and now serves as its treasurer, says he hopes everyone keeps the best interests of the insureds in mind.
Today, because of regulatory red tape, “the products available in California are not the same products available elsewhere,” Cohen says. “The consumers in California really are lacking choice.”
Roller disagrees with the idea that most problems with claims stem from problems with contract language. Most of the time, he says, disputes have more to do with the nature of the insurer standing behind the policy than the policy itself.
“You get what you pay for,” Roller says.
3. Cross-selling. In 2005, many carriers started selling group life, employee assistance plans and other products once typically sold with group disability insurance.
4. A continuing shift to employee-paid programs. Most employers who have group disability programs are keeping them, but some are reducing the amount of employer-paid coverage, and many employers that want to help increase employee coverage are using voluntary, employee-paid programs to do so, brokers and insurer executives say.
5. Soldiers coming home from Iraq with permanent disabilities. Thousands of members of the Guard, the Reserve and regular military units are returning to the United States with a variety of disabilities, such as paralysis and loss of sight. Hartford Financial Services Group Inc., Hartford, drew attention to the role that private disability insurers might be able to play in assisting with rehabilitation in December at the Hartford Ski Spectacular in Breckenridge, Colo.
The attendees included 75 U.S. soldiers who had been injured in conflict abroad.
Members of the U.S. Paralympic Team, which includes Olympic-level skiers with serious physical disabilities, skied alongside the veterans and counseled them about finding ways to live active lives with disabilities, according to Hartford.
‘Expect a continued challenging sales and earnings environment due to lack of organic growth, low interest rates and rising claim costs’