Disability insurers need to communicate better with consumers and brokers or face a bleak future.

Speakers delivered that message here at the latest yearly disability insurance seminar sponsored by JHA, Portland, Maine.

Today, “it’s too difficult to go to market” with disability products, said Edward O’Malley, a senior vice president in the benefits unit at National Financial Partners Corp., New York, a large financial services distributor, during the first seminar general session. “It’s got to be simpler.”

The overall mood at the JHA seminar was cautiously optimistic, many participants agreed. The 2006 seminar attracted 350 participants, up from 289 in 2005. JHA, a disability insurance consulting and reinsurance firm, is reporting that disability sales are holding their own and that profits are increasing.

In the past year, disability insurers have started the Council of Disability Insurers, Portland, Maine, a disability insurance awareness group, and brokers and others have started the International DI Society, Seal Beach, Calif., a group that is trying to improve communication between all players in the disability insurance market.

The JHA seminar traditionally has appealed mainly to disability insurance company executives, but W. Harold Petersen, a well-known Valencia, Calif., disability insurance broker who serves as president of the International DI Society, appeared at the 2006 seminar to promote the society, and a number of other brokers and consultants also attended.

One of the brokers in the crowd was Glenn Dorr, a vice president at HCC Specialty Underwriters, Boston, who brokers disability coverage for entertainers, executives and other individuals who need unusually large amounts of disability coverage.

The players in the disability market seem to be excited about the market, Dorr said in an interview at the seminar.

Although client and broker awareness of the kind of coverage Dorr brokers is lower than Dorr would like, “it’s trending in the right direction,” Dorr said.

But other brokers and consultants in attendance talked about running into employers who are reacting to skyrocketing health insurance rates by cutting employer-paid disability programs.

JHA President Drew King warned during his introductory speech against just accepting modest increases in profitability.

“We’re not getting there fast enough,” King said, noting that companies need to generate high returns on disability insurance operations because the operations require large amounts of capital.

JHA brought in O’Malley to kick off the seminar to remind disability insurance manufacturers of the challenges their products continue to face in the market.

O’Malley reported that NFP sees strength in demand for group disability insurance.

“We do disability, frankly, because our clients make us,” O’Malley said.

But O’Malley told the carrier executives in the audience that they need to do a better job of coordinating group and individual disability sales to sell more individual coverage to executives and that they had better develop more worker-oriented messages for the employee benefits market or face the prospect of losing ground to other, easier-to-explain products.

“I didn’t buy disability insurance myself until last year,” O’Malley said.

O’Malley said he did not buy his own disability coverage because he felt he did not understand the contracts.

O’Malley contrasted the arcane buzzwords popular with disability insurers, such as “own occ” and “residual disability,” with the straightforward goals expressed by individuals, such as protecting their lifestyles and insuring their mortgage payments.

Disability insurers must do a better job of appealing to young producers as well as to customers, O’Malley said, noting that about 80% of NFP’s major disability producers are old enough to retire in the next 10 years.

In addition to simplifying products and messages, disability insurers should be trying to play more of a role in holding down major medical costs, O’Malley said.

“The cost of health care is the biggest problem facing the United States today other than terrorism,” O’Malley said.

As employers and health insurers turn to “consumer-driven health plans” to rein in costs, disability insurers will have more opportunities to appeal directly to workers and more responsibility to help those workers improve their health, O’Malley predicted.

JHA’s King, speaking earlier about the consumer-driven health plan movement, predicted that the CDHP companies will soon introduce CDHPs that incorporate some kind of disability benefits.