Benefits Company

Big benefits for smaller employers

Assurant helps P-C agents market voluntary and non-medical benefits

By Elisabeth Boone, CPCU

Even the most confident and successful property/casualty producers may be daunted by the prospect of becoming involved in the employee benefits area, and they may be reluctant to put a toe in these uncharted waters. What’s more, many agents who are already offering group health insurance programs to their commercial clients may not be aware of the array of products available in the non-medical and voluntary benefits markets.

Standing ready to help these agents gain the product knowledge and comfort level they need to build a successful niche in these markets is Assurant Employee Benefits. Based in Kansas City, Missouri, with 36 branch offices located throughout the country, Assurant Employee Benefits is a national provider of non-medical employee benefits, including long-term and short-term disability, life and accidental death and dismemberment insurance, dental coverage, and disability reinsurance management services. All of the company’s products are available on both a voluntary and an employer-paid platform.

Assurant Employee Benefits is a subsidiary of Assurant, Inc., a Fortune 500 company whose other business units are Assurant Solutions, Assurant Specialty Property, and Assurant Health. The products and services offered by Assurant Employee Benefits are underwritten or provided by Union Security Insurance Company, Union Security Life Insurance Company of New York, or an affiliated prepaid dental company. In terms of master contracts in force, Assurant Employee Benefits ranks fourth in dental, fourth in long-term disability, fifth in life, and fourth overall.

Assurant Employee Benefits targets small to mid-sized businesses with 10 to 500 employees, which makes it an excellent partner for local and regional property/casualty agencies.

“We offer the full spectrum of products to our market, but beyond products we have services and programs that are tailored for that market,” says Joseph Sevcik, senior vice president of marketing.

“As we develop new products and services, we’re always looking at small to mid-sized employers and the brokers who serve them. Our goal is not to be all things to all people,” Sevcik asserts. “We want to specialize in the under-500 employee group.”

A season of change

The design of insurance products and services is constantly evolving to keep pace with changing social and economic trends, and this is particularly true in the areas of voluntary and non-medical employee benefits. Sevcik describes what he sees as the most significant changes that have taken place in his company’s markets over the last several years.

“First is product proliferation and specialization,” he says. “Over the last 10 years, a lot of carriers, including ourselves, have come out with new contracts and enhancements to existing policies in all of our product areas. Both we and our competitors are moving toward a higher degree of specialization.”

Pointing to another trend, Sevcik says, “We’re experiencing extreme price competition. The term we use is ‘acquisition pricing,’ which is the equivalent of cash flow underwriting in property/casualty insurance. There are so many carriers involved in a market that’s become so competitive that this acquisition pricing is driving down average rates on new contracts,” he observes.

Citing yet another significant development, Sevcik says, “We are beginning to reach market saturation. Over the last 10 to 15 years there were a lot of opportunities, especially on the disability side, to acquire companies that perhaps in the past hadn’t offered voluntary and non-medical products. Although there’s still some activity in that area, it’s much less prevalent now than it was, so a lot of new business today is takeover business,” he explains.

Cost pressures

“The double-digit increases we’ve seen in medical insurance premiums over the past decade or more are really driving activity in the voluntary market,” asserts Kevin Murphy, second vice president of channel development. “The cost of group health insurance is an ever-increasing burden on both the employer and the employee, and I think that accounts for a great deal of the current interest in the voluntary market.”

What’s more, Murphy observes, “Over the last five years or so, employees have become more accustomed to purchasing coverages through payroll deduction, like dental insurance or critical illness insurance. More and more products are being offered on a voluntary basis, and employees are becoming more comfortable having those products offered at the workplace.”

Adds Sevcik, “I’m hearing more small business owners say, ‘I want my employees to be able to buy and tailor the coverages they want; I don’t want to have to make that decision for them.’ By offering benefits products on a voluntary basis, the employer can let employees choose what’s most important to them without being forced to take coverages they don’t need or want.”

Overall, Sevcik says, “Our highest growth rate over the last couple of years is clearly on the voluntary side; all of our voluntary lines are showing growth.” He points out that, although employees pay a greater share of the cost for voluntary benefits, “These products are group rated, so employees still enjoy a significant saving over what they would pay for the coverage on an individual basis. Also, they have the convenience of payroll deduction of premiums.”

Educating employees

Especially in the under-500 market served by Assurant Employee Benefits, Sevcik comments, “There’s a definite trend for employers and their brokers to have employees become much more engaged in the benefits selection process. A lot of benefits that were employer-paid just a few years ago are now being offered on a voluntary basis. As a result, employers and brokers are using the annual enrollment period as an opportunity to educate employees about their options so they can make informed choices.”

Brad Bakerink, a market analyst and channel development specialist, adds, “We’re also seeing a greater effort on the part of employers and brokers to educate employees about the benefits they’re already receiving and for which their employer is paying a significant share of the cost. For example, each employee might be given a total compensation statement that shows the dollar value of each benefit in their employer-provided package.”

Along with the trend toward voluntary benefits, Bakerink observes, “We’re seeing brokers being asked by employers to play a more active role. Brokers are no longer just insurance salespeople; they’re being asked to serve as advisors and consultants not only for employee benefits but also on the human resources side, helping employers manage their benefits budget and resources.”

Employers’ desire for brokers to expand their role, Sevcik explains, is particularly strong in the under-500 market. “Often an employee was originally hired to manage the payroll and then was given additional responsibilities in HR and employee benefits,” he says. “This is where we see the broker’s role becoming even more critical.”

Size matters

The under-500 benefits market differs from that for larger employers in some significant ways, Sevcik says.

First, he explains, “In a smaller group, employers are more likely to know their employees, so they’re not just names on a payroll. The employer tends to be more interested in the plan design and the finer points of the contract. The employer wants to know about the carrier’s reputation, its claims philosophy, and in general how the carrier will treat the employees,” Sevcik says. “A lot of smaller companies have a paternalistic attitude toward their employees. They feel they need to protect them and make sure that they’re getting the best deal.”

Citing another point of differentiation, Sevcik says, “Many employers in the under-500 market are professional firms like attorneys, accountants, and physicians. These firms are very interested in ancillary benefits that are particularly suited to their profession. For example,” he says, “we offer a long-term disability contract that has what we call the ‘or’ definition. This means that you can receive benefits either if you are unable to perform one or more material duties of your profession or if you’re not able to make at least 80% of your pre-disability income. For attorneys who experience a reduction in billable hours after recovering from a disability, or for doctors who must rebuild their patient roster after an extended time away from work, this can be a powerful contract distinction that is uncommon in our industry,” Sevcik asserts.

Working with agents

To complement its menu of voluntary and non-medical benefits choices, Assurant Employee Benefits offers comprehensive service and support to agents and brokers, from making an initial presentation through employee education, enrollment, and program administration. Specialists in Assurant’s branches around the country make regular visits to workplaces to ensure that the program is operating smoothly and to answer employees’ questions.

Assurant Employee Benefits will work with the agent or broker to tailor a presentation that addresses an employer’s specific needs, Bakerink says. “The employer and the broker know what life stages the employees are in, what responsibilities they have outside of the workplace, and what kinds of issues and concerns they have about benefits. We can match our products to those needs and present them as solutions for that particular group,” he says.

A big piece of the benefits pie is enrollment. Even for smaller employers, it’s a complex and time-consuming process, and Assurant Employee Benefits strives to make it simple and painless.

“Employers and brokers alike appreciate the tools we provide to support the enrollment process,” Bakerink asserts. “We prepare personalized enrollment kits so the employee knows exactly what each option will cost him or her. This is especially important for products that are age banded, where rates aren’t the same for all employees,” he notes.

Once a benefits program is in place, the focus is on administration. For smaller companies, especially those with fewer than 100 employees that may not have a full-time HR manager, ease of administration is critical, Sevcik declares. “For example, in larger companies, employees probably are more comfortable with IVR (interactive voice response) phone systems. That’s less likely to be true in our target market, so during business hours we have live operators to assist employees,” he explains. “This takes pressure off the employer’s in-house HR person and provides service at a level where both the employer and employees are comfortable.”

As the market for voluntary and non-medical benefits continues to expand, Murphy says, opportunities abound for property/casualty agents and brokers who already work with smaller employers.

“The smaller firm looks to the broker and trusts him or her to present appropriate recommen-dations,” he says. “That trust already exists when the broker handles the employer’s property/casualty business, and the employer is more likely to have confidence in the broker’s ability to offer solid employee benefits solutions with a partner like Assurant Employee Benefits.”

For more information:
Assurant Employee Benefits
Web site: www.assurant.com