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Voluntary Benefits Special Report

Liberty Mutual's affinity program leads the way in worksite marketing

By Elisabeth Boone, CPCU

Faced with ever-increasing group health costs, tight budgets, and the complexities of the Affordable Care Act, more and more employers are offering an array of voluntary benefits to help ease the strain on employees.

Among the popular voluntary products are life insurance, disability income, critical illness, vision, and dental coverage. Less common, but extremely well received, are personal auto and homeowners coverage at discounted group rates.

Enter Liberty Mutual, which operates the largest sponsored auto and home insurance program in the United States. With more than 40 years' experience in the affinity market, the insurer understands the dynamics of sponsored programs and has partnered with more than 8,800 companies and organizations.

"Being in the affinity group business for over 40 years, we've had the opportunity to hone our product offerings to meet the changing needs of both employers and employees," says Mark Parabicoli, assistant vice president and managing director of auto and home voluntary benefits. "Our first program started as a result of our workers comp clients asking us if we could also handle their employees' auto and home needs. So we began to offer these voluntary benefits almost as a courtesy to our larger commercial clients," he explains. "Then, as we continued to grow the auto and home book, customize our offerings, and acquire more clients, we realized that this was becoming a sound business model for us. In the early 2000s we reorganized our affinity marketing structure into three business distinct units: employers, alumni associations, and professional and trade associations."

Especially in times of economic uncertainty, stability is a rare and prized commodity. "Our auto and home program for employers is independent of upswings or downswings in the economy," Parabicoli comments. "It's essentially recession proof. When I assumed my current position in 2008, the economy was in turmoil, and employers were making very difficult decisions about furloughs, salary freezes, downsizing, and other issues that affect employees' financial well being. During that time, our auto and home offering actually experienced an increase in demand. It's free to the employer and offers preferred, discounted rates to employees for products that they already need to buy," he says.

"Our program continues to evolve as the Baby Boom generation begins to retire and younger workers come on board," Parabicoli says. "Our marketing specialists conduct ongoing research to make sure that we're marketing our product in the way each generation prefers to be approached, whether it be direct mail, e-mail, social media, mobile communication, or

face to face."

"It's a win-win because we can build a profitable book of business and at the same time create a stable revenue stream for the broker." —Mark Parabicoli Assistant Vice President and Managing Director, Affinity Marketing, Liberty Mutual Insurance.

Broad market

As the third largest writer of property and casualty insurance in the country, Liberty Mutual serves virtually all industries with its commercial lines and workers compensation products, and the voluntary auto and home program is available to all employers the carrier insures. "We can customize our program for employers with as few as 50 employees, and we have insureds with over 400,000 employees," Parabicoli says. "Our 40 years of experience in this market allows us to tailor our program for groups of all sizes and for all industries. We work with each employer's HR staff to customize the program and communicate it to employees in the way that's most appropriate for them. We have tried- and -true methods to drive awareness and participation in the program for each employer group, but we always defer to the HR manager's preferences."

In addition to auto and homeowners coverage, employees also can purchase condo and renters insurance, motorcycle insurance, and personal umbrella protection. Underwriting criteria for the program are similar to those used for traditional personal lines products.

The voluntary auto and home program is distributed through multiple channels, including two national sales call centers, a strong online presence, and more than 2,400 Liberty Mutual sales representatives in over 350 local offices. The voluntary auto and home unit accepts business from brokers, Parabicoli explains, noting, "We have more than 400 broker partners nationwide, with whom we have great working relationships. We're committed to being the partner of choice for our agents and brokers."

The Liberty Mutual voluntary auto and home program, Parabicoli says, is completely turnkey with no out-of-pocket costs to the employer. Implementation is simple, and administration, service, and communication are handled by a dedicated account management team. Optional educational seminars address such topics as auto insurance basics, home fire safety, and identity theft prevention.

"We handle everything, from enrollment to claims administration, and all we ask of the broker is access to his or her employer clients so we can tailor a campaign to create awareness about the auto and home program," Parabicoli explains. "It's a win-win because we can build a profitable book of business and at the same time create a stable revenue stream for the broker and help the broker differentiate him- or herself with additional product offerings that can improve retention. As implementation of the Affordable Care Act proceeds and group health commissions decline, more brokers have been reaching out to us to help them achieve that differentiation and develop those additional revenue streams.

"And of course the employer benefits because it is able to offer employees the opportunity to buy high-quality auto and home products that they would have to buy anyway, at attractive group rates and with the convenience of payroll deduction," Parabicoli adds.

Employees who purchase personal auto coverage under the voluntary program can take advantage of standard policy discounts for safe driving, anti-theft devices and alarm systems, and anti-lock braking systems; and a multi-policy discount is available for employees who purchase both auto and home coverages.

"In addition, because of the exclusive relationship we have through the employer, we also pass on additional savings that aren't available to the retail community," Parabicoli explains. "These generally range from about 10% for auto and up to 5% for the home, in addition to the multi-policy discount. An additional 5% discount can be offered if the employer chooses to install a payroll deduction system. We make it possible for the employer to provide a competitive, robust benefits package that helps attract and retain an engaged, productive work force."

Favorable response

"We conduct both internal and external surveys to check the pulse of what our clients' employees are saying about the program, and the response is highly favorable," Parabicoli observes. "They appreciate the convenience of having benefits offered through their employer. They know that we as the carrier, as well as the products, have been vetted by their employer and that they're being offered competitive products and services.

"Increasingly we're finding that as younger workers become a greater proportion of the work force, they're actually relying more on their employer than the Boomers to provide a robust suite of products," he says. "This creates a big opportunity for corporate benefits managers and for carriers that support the voluntary model because HR managers are tasked with managing their budgets. Many of them now have to work hand in hand with their CFO to ensure the most efficient use of available funds. The voluntary products, which add no cost to the employer, are becoming more and more attractive," he asserts.

For more information:

Liberty Mutual Insurance

Auto & Home Programs

Web site: www.libertymutual.com/affinity-program

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