Amy Friedrich has admitted to glimpsing something benefits market players have been dreaming about for years: signs that the job market is strong enough that employers are at least talking about adding group disability benefits.
Friedrich, the president of the U.S. insurance solutions unit at Principal Financial Group Inc., talked about group disability demand sighting today, during a conference call Principal held with securities analysts.
“Post-tax reform, we are in a market that is near full employment,” Friedrich said. “We see small employers asking us about interesting new benefits more than they have.”
Many of the employers are talking about products such as dental insurance, accident insurance and critical illness insurance, Friedrich said.
Those employers “are also asking questions about short-term disability and long-term disability, when they previously maybe hadn’t looked at some of those coverages before,” Friedrich said.
In the markets Principal serves, the employment growth rate at employers with fewer than 200 employees has been about 2.3%. To keep growing at that pace in today’s economy, employers need an attractive benefits package, Friedrich said.
Principal held the conference call to discuss its first-quarter earnings.
The company as a whole is reporting $402 million in net income for the quarter on $2.9 billion in revenue, up from $354 million in net income on $3 billion in revenue for the first quarter of 2017.
Revenue at the retirement and income solutions unit fell to to $1.2 billion, from $1.5 billion, and commission expense at that unit fell to $63 million, from $82 million.
But revenue from products that generate steady fees, rather than earnings based on the company’s investment earnings, increased to $460 million, from $450 million, and commissions for those products held steady at $53 million.
Revenue from U.S. life insurance increased to $447 million, from $428 million, and commission spending there increased to $28 million, from $26 million.
Revenue at the U.S. specialty benefits insurance unit, which sells products such as disability insurance, increased to $566 million, from $528 million. Specialty benefits commission spending increased to $57 million, from $51 million.
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