In July 2013 Prudential Group Insurance partnered with market research firm Greenwald & Associates to survey more than 600 larger employers that offered either short- or long-term disability benefits, or both. The companies ranged in size from 100 to over 10,000 employees. The goal was to gain a greater understanding of how employers are approaching employee disability challenges with:

  • Benefit solutions;
  • Partners and services;
  • The type of disability benefits employers currently offer their employees;
  • The types of vendors they use; and
  • What services affect their carrier selection decisions.

The result was a better view of the carrier selection criteria larger employers have adopted.

Buying Behavior

The survey identified several distinct clusters among respondents based on their criteria for selecting a disability carrier. The three most significant clusters, which Prudential labels as “Already Theres,” “Aspirers” and “Laissez-Faires,” differ considerably from each other as the following highlights illustrate. 

Cluster

Key Features

Already Theres

  • Strongest focus on workforce productivity and leave management. Most advanced in absence management practices. Already Theres are 63 percent more likely than Aspirers to have implemented absence management programs.
  • Over half consider a carrier’s ability to offer a suite of return to work services as critical or important compared to only 1 in 5 in the Laissez Faire cluster.
  • Nearly half of the companies surveyed with 10,000 or more employees are in this cluster. Only a third of companies with 1,000 to 9,999 employees and 28 percent of those with 100-999 employees are “Already Theres.”

Aspirers

  • Have high aspirations for what they want from a carrier but have not made as much progress in absence management and return-to-work practices as the “Already Theres”
  • Aspirers rate themselves 4 points lower than “Already Theres” in absence management advancement and 3 points lower in RTW.
  • Seventy-one percent of Aspirers consider a broad suite of RTW capabilities critical or very important but less than a third have those services in place compared to 41 percent of Already Theres.
  • Smaller companies are more likely than others to be in this cluster. Only 16 percent of Aspirers have more than 10,000 lives.

Laissez-Faires

  • Report below average achievement levels in absence management and RTW efforts.
  • Over half of the Laissez Faire employers reported that they use only internal resources to administer their return-to work programs.
  • Laissez Faires are half as likely as Aspirers to look to a carrier to help them improve workforce management.
  • Larger employers are less likely to be Laissez-Faires. Only 14 percent of Laissez Faire employers have more than 10,000 employees, compared to 48 percent of Already Theres.

Business Opportunities

Many employers know that a robust benefits package can help attract and retain valued employees, which is critical for managing productivity and maximizing human capital. At the same time, though, companies must control benefit costs. Recognizing a company’s cluster profile can provide insight into its goals and likely buying behavior and add value to a consultative relationship. Additionally, the information can indicate possible approaches to meet both the benefits-quality and cost-control goals that companies attempt to balance.

The survey results highlighted that employers often experience a gap between their absence management and RTW goals and their actual capabilities in those areas. Producers and consultants can help groups close those gaps.

Absence Management

Prudential defines “total absence management” as a comprehensive, integrated approach that incorporates formal absence management and RTW programs, streamlined reporting and administration of absences and claims, and compliance documentation. The practice of total absence management is twice as common with larger employers compared to small business. Larger companies’ goals in this area are also more aggressive.

While employers of all sizes express some degree of need for absence management, the survey found a large divide between small and large employers. Small employers are not planning on adding many of the services available for total absence management. Large employers, by contrast, show a greater percentage of those who have implemented these services, plan to add these services and find these services critical in carrier selection.

Overall, fully half of organizations (55 percent) with disability benefits rate their level of total absence management as 4 or below on a scale of 0 to 10. On average, the largest companies (10,000+) are more advanced (they rate themselves 5.7 out of 10) versus the smallest companies (4.0 out of 10). This area offers substantial opportunity for advice and consultation since half of companies have a goal of improving their absence management programs within three to five years, with one-quarter seeking significant change.