By Scott Sheefel
The employee benefits landscape has changed dramatically over the past several years and will continue to evolve as more elements of Health Care Reform (PPACA) are implemented. As the traditional employer-paid packages shift to new markets such as exchanges, employees will increasingly turn to voluntary benefits to enhance their employer-paid offerings. As the providers of these benefits, many insurance carriers are responding with innovative plan designs, underwriting, pricing, and marketing initiatives.
Although there are numerous worksite benefits available in the market, voluntary benefits are not well known. At their essence, voluntary worksite benefits are simply insurance products that provide added value to an employer’s core benefits. Health, group life, dental and vision products are often considered the core benefits. Typical voluntary products include permanent life, disability, critical illness, cancer and accident. Employers are embracing the increased popularity of voluntary worksite benefits as a robust insurance offering that can help attract and retain workers. Employees enjoy the ease and simplicity of shopping for additional protection while at work as well as being able to conveniently pay premiums through payroll deduction.
According to a recent study by Eastbridge Consulting Group, there is an estimated $26 billion of annualized voluntary premium in force, up from $15- to 20-billion in 2007. Eastbridge predicts that the recent changes in health care law will likely increase the importance of voluntary products as producers look for additional compensation and as employees of smaller companies begin purchasing their major medical health plans through the state exchanges.
Carriers offering worksite voluntary benefits can capitalize on these emerging trends. We recently have reached out to subject matter experts to help understand this continually growing market. To learn more about the developing trends in the voluntary worksite market, MaD recently spoke with industry experts Steve Worley, TJ Gibb, and Lyle Griffin.
Steve R. Worley is vice president and head of Sales & Marketing at Texas Life, a leading writer of voluntary permanent life products in the United States. Mr. Worley has been involved in the worksite market since 1984.
TJ Gibb is vice president & national practice leader for Humana Specialty Benefits. Humana Specialty Benefits includes voluntary benefits, dental, vision, life and disability product lines for Humana, a market leader in major medical insurance.
Lyle Griffin is president of Selerix Systems Inc. Selerix Systems produces software (BenSelect) that facilitates communication, enrollment and administration for both core and voluntary insurance products. The software is licensed and used by carriers, brokers and employers.
Question: Why has Worksite Voluntary Insurance become such a hot topic recently?
From the perspective of a carrier who only sells permanent life insurance through a worksite distribution strategy, voluntary insurance has been a hot topic for years. In recent years, we’ve seen increased attention from traditional group health brokers as their primary relationship with the employer is changing. Anticipated changes in group health plans and related commissions have highlighted opportunities to provide for the post-employment, portable coverage needs of employees.
In addition, with 10,000 baby boomers reaching retirement age every day for the next decade, carriers have a significant opportunity to help employees address the life insurance purchases they have delayed for most of their working years.
Many carriers are seeing voluntary insurance as a new revenue stream in a changing marketplace, and they are able to leverage existing distribution partnerships as well as employer clients to offer these benefits.
As the employee benefits business moves from defined benefit to more of a defined contribution marketplace, consumers will have more choices and will need to better understand their own protection needs. This increased responsibility creates a tremendous need for communication surrounding coverage gaps for employees and their families. A comprehensive communication and engagement process allows carriers and producers to meet consumer needs by educating them on all of their benefit plans, regardless of the funding mechanism, as well as important company initiatives like wellness, financial fitness and work/life balance. Educated employees can make informed decisions on the proper levels of risk protection and appropriate lifestyle choices. An additional advantage of the education process is increased employee engagement. Many studies show that engaged employees are more productive and their employers tend to be more profitable. Employers can realize this enhanced engagement by educating the employee to make informed decisions, offering choice of benefits to personal needs and increasing awareness and usage of wellness programs and other employee services.
Question: How has Voluntary Worksite Insurance traditionally been sold? What are the methods for enrollment?
Worksite products have been delivered to employees in a number of ways. The most predictive method as it relates to high participation has included employer supported, face-to-face enrollment sessions with each eligible employee. Other methods including enrolling via call centers, in group meetings, through the mail, and self-service on-line systems are increasing in popularity. However, for permanent life insurance these methods are less predictive.
In each of these scenarios, group life plans have wide adoption and high “take-rates.” However, the termination provisions and absence of post-employment options are not clearly understood by employees. Therefore, a voluntary coverage, in addition to the group plan, could be important for the employee.
Insurance providers are using several methods to communicate to their current and future customers. These items include:
- Personalized enrollment meetings with highly trained benefit counselors: These communication sessions can be completed at the employer’s workplace or via a call center. The benefit counselors can be from a professional benefit communication or from a carrier representative.
- Web-based enrollment, with or without other benefit plans: Web-based enrollment platforms allow for ease of data management and ongoing benefit administration.
- Cost-effective tools: Many employers can maximize cost-effective electronic tools such as email messaging, benefit portals, and company specific social media sites that allow for blogs, chat rooms, Twitter and LinkedIn accounts.
Question: What have been some of the pitfalls of the traditional sales process?
Logistics of the enrollment process and limited access to the employees (for face to face or call center enrollment) have been among one of the largest impediments to a successful voluntary benefit program. Additionally, there is a perception by the employer and/or broker that employees do not need these types of coverage. This sentiment that these benefits are not needed is far from the reality, as employees are living paycheck-to-paycheck and need protection from an unexpected loss. Additionally, their deductible and out-of-pocket amounts on medical plans have increased over the years. It is important to offer products that can cover these gaps.
The traditional face-to-face enrollment sales process has the potential of introducing significant conflicts between the implementation team and the employers’ business objectives. Time away from work can be disruptive. To mitigate the “lost productivity” outcome, traditional enrollments must address specific employer objectives and provide ample evidence that the objectives were addressed and achieved during the face-to-face process.
While face-to-face implementation will produce predictable participation, carriers should consider developing alternate solutions. Distributors and carriers must focus on delivering the products in a fashion that educates and enhances understanding and participation while satisfying compliance and application requirements. The evolution of web-based, platform-assisted tools, coupled with topical awareness campaigns, have the potential to provide an alternative to the traditional face-to-face sales process. Distributors who perfect the “science” of delivering products with effective, new tools, will be those selected by employers for benefit support.
Another recent trend among insurers has been to offer voluntary benefits through different Benefit Administration Platforms (Ben Admin). Lyle Griffin, provided insights into the capabilities of the platform and the benefits for distribution.
Question: What is a Ben Admin platform?
Benefit Administration platforms are web-based systems that provide several essential services:
- Benefit Enrollment—a place for employees to log in, with or without agent assistance, and enroll in benefits.
- Record keeping—maintaining detailed historical records of changes to benefits and providing a way for administrative users to access the information easily.
- Communication—educational content and decision support tools to guide employees through selection of their benefits.
- Electronic Data Interchange (EDI)—a means for setting up and scheduling delivery of electronic files and reports to carriers, third party administrators (TPAs), payroll companies, and other stakeholders that provide services to the group.
- Year-round support—allows employees to change benefits for new hires, terminations, and qualifying life events year round.
- Reporting—a way to create and run reports on all aspects of employee benefits.
In marketing voluntary benefits, it is essential that the Ben Admin platform integrates the enrollment of voluntary products into the overall enrollment process. Because the underwriting of many voluntary products is more complicated, Ben Admin platforms must accommodate complex underwriting questions, present required forms and documents, and guarantee that electronic signatures comply with accepted standards. By integrating the marketing of voluntary benefits into the overall benefit enrollment process, Ben Admin systems help producers achieve much higher participation rates than conventional marketing strategies.
Question: What information can a Benefit Administrator provide to insurance companies to increase sales?
In developing their Benefit Administration System strategy, one client company has been deliberate in the design of the benefit offering and enrollment experiences to leverage information from the system in order to better predict participation and experience. Some of the items clients expect a Ben Admin partner to provide are:
- Historical election information: When combined with an understanding of how benefits have been marketed and enrolled in previous years, this information can be vital to understanding which offerings will make sense to an employee population.
- Consistent and accurate demographic information: By having this information prior to enrollment, carriers can tailor programs to an employee during the enrollment process.
- Demographic information for those who did not apply for coverage: By leveraging this information, carriers can adapt a product offering or marketing materials for the next enrollment period to help bolster participation statistics.
- Operating efficiencies: By receiving EDI (electronic data interface or election information) for numerous employer groups all in the same format, efficiencies and lowered operating costs can be realized.
- QLE (qualified life event) enrollments are key to creating an ongoing enrollment and revenue stream: Ben Admin systems help put carriers’ products in front of employees when something has changed in their life and, if done right, a carrier can present focused communication specific to the life event that has occurred and potentially increase sales.
Question: What information can a Benefit Administrator provide to companies in order to better manage risks?
We realize there is probably innate data in the benefit administration systems that can help actuaries manage risk. Benefit Administration systems have the ability to:
- Produce thorough enrollment statistics across multiple clients, not just on employees who elect coverage, but also on those who did not elect coverage. With a full understanding of an employee population and which employees did not elect coverage, what communications did those employees see, at what point in the enrollment process did they decide to decline coverage, we may be able to find a correlation and determine some aspect of our risk selections.
- Prior to enrollment we can analyze what types of employees exist in a specific population. For example, we could answer the following:
- What is an accurate turnover rate?
- Of the known turnover, what percentage of the population had benefits and for how long?
- How many employees are going on and off of leave status and what types of leave statuses are these?
- What type of QLE’s should we expect during an enrollment year and how will this affect our product and/or underwriting offerings?
- When QLE’s occur in this population, what type of benefit changes occur in conjunction?
Scott Sheefel, FSA, MAAA, vice president, Wilton Re Services Inc. He can be contacted at firstname.lastname@example.org.
Steve R. Worley, vice president and head of Sales & Marketing, Texas Life. He can be contacted at email@example.com.
TJ Gibb, vice president & national practice leader, Humana Specialty Benefits. He can be contacted at firstname.lastname@example.org.
Lyle Griffin, president, Selerix Systems Inc. He can be contacted at email@example.com.