What are the current trends in today’s worksite marketplace?
For one thing, life insurance continues to be one of the most popular voluntary benefits. In fact, at Unum, a Chattanooga, Tenn. insurer that has been in the voluntary market for 25 years, voluntary life is the top seller, said Debra K. Cecil, Unum’s director of marketing and product development.
Still, the voluntary market–and Unum also–has now expanded into many other product lines as well, Cecil told a breakout session here at the 6th annual life insurance conference of LIMRA International, LOMA, Society of Actuaries and American Counsel of Life Insurers.
Chris Morris, marketing consultant with Benefit Consultants, Inc., Nashville, Tenn., agreed. “The worksite market is not just life insurance anymore,” he said. Now there are 30 voluntary products and services available to fill gaps in coverage, depending on needs of the employer.
LIMRA’s list of voluntary products supports that. It identifies these voluntary products: cancer, accident, supplemental medical, short term disability, dental, critical illness, accidental death and dismemberment, long term disability, supplemental life, vision, life, prescription drug, LTD buy-up, mini-medical and hospitalization/medical.
Furthermore, voluntary market penetration is increasing, according to LIMRA. Overall, 83% of employers with 10+ employees offer one or more voluntary benefits, said a background sheet distributed by LIMRA at the session.
And employee participation rates now range from 15% (for worksite CI insurance) to as high as 50% (for worksite prescription drug), LIMRA figures show.
“Insurance agents have moved to upscale markets, so the mid-market has become the sweet spot for firms in voluntary sales,” said Morris, in explaining reasons for this market expansion.
Another factor is the impact of the rising cost of medical insurance benefits on group benefits, indicated Cecil.
So is rising awareness about worksite products, said Cecil. She gave a competitor, AFLAC, credit for helping get the word about what voluntary benefits mean.
Public awareness is such that employees now go to the employer actually asking for voluntary products they’ve heard about, said Morris. They’ll say, “I want one of those policies” advertised on TV, he said.
Distribution is a factor too, said Cecil. Today’s channels include not only career agents who specialize in the voluntary market, she said, but also independent agents, direct response and banks.
“In the last 5 years, employee benefit specialists or true consultants have become active in the market, too,” said Morris.
These worksite consultants sit down with the employer and work together on what products to offer, how to communicate them, when and how to do the offering, etc. Communication like this is critical to successful offerings, he indicated.
So are plan parameters. For instance, Morris said his firm requires access to the employees and buy-in from the employer. Specifically, “we look for 85% access to the employees … and we look for things we can explain and do to help the access along–perhaps offering to help employees on updating beneficiary forms.”
But if there is high turnover, or if the firm doesn’t think it will get the access or strong employer endorsement, “we will walk away,” he said.
A new trend is that product chassis are starting to change in a way that helps improve administration, said Cecil. For instance, Unum has started using a group hybrid chassis.
Up to this year, she noted, Unum had only used the individual policy chassis, meaning the insurer had to file its products in multiple states for accounts with multiple state locations. The hybrid chassis will simplify this and make for other administrative improvements, she indicated.
In the worksite market, she said, “it’s all about the administration.”
Worksite insurers also offer toll-free 800 numbers for claims, billing, etc., and sometimes a dedicated 800 number.
“There are a lot of people to work with when doing a worksite program,” Cecil added, citing the employer, carrier, sales rep, enrollment firm and broker as examples.
Therefore, “communication is so important.”
Coordination is very important too, said Morris.
Voluntary product design needs to be simple, both panelists agreed. That is especially helpful if the product is offered guaranteed issue, said Morris.
Worksite life probably isn’t cheaper than, say, term insurance purchased in the retail market, allowed Cecil. But employees won’t get guaranteed issue in the retail market, she countered. “Besides, most (employees who buy voluntary products) aren’t being called on by financial advisors anyhow,” she said.
And employees don’t get payroll deduction at retail either, said Morris.