GUAA Risk Review

Spring 1999

Life Committee Sessions

by Kathy Laws,
CIGNA

The Life Committee sponsored five workshops at the November meeting with great membership participation:

Trend Spotting and Product Innovation in Our Brave New World

Joe Mondy and Darlene Riquier from CIGNA Reinsurance reviewed key trends impacting employee benefits and the new market needs created by these trends. Joe shared some statistics from recent CIGNA research, and described employee benefits as being the convergence of three trends:

Longevity - Consequences of people living longer, such as inadequate savings for retirement and the rehire of older workers, have created new insurance needs and accumulation products. New concepts and solutions include embedding insurance in accumulation products and providing coverage to fill gaps.
Health Care - Medical technology advances have turned deadly illnesses into chronic illnesses. Difficult to navigate, managed care plans are structured for the young and healthy. As premiums and expenses increase, employees share in the cost of their health plans. These factors create a need for health plans with moderate costs and flexibility, including caregiving and support benefits.
Devolution - Control of benefits is moving from the employer to the employee, creating a need for employee-defined benefits.
Enrollment of Voluntary Products

A panel representing different facets of the voluntary market explored approaches to enrolling voluntary benefits:

Erick Piper, AIG Life, gave an overview of current methods of enrollment, including the use of Human Resources staff, employee mailings, outside enrollment firms and electronic media. AIG Life is an example of a carrier in the voluntary market who outsources enrollment and administration. Erick noted that as underwriters, we walk a tightrope between pricing and participation. The best way to increase margin is to increase participation.

Fringe Benefits Management Company is a Third Party Administrator (TPA) who provides plan design and administration services for voluntary plans. Rich Ledson, Case Management Coordinator at FBMC, stated that the primary factor for a successful voluntary program is employer commitment and access to employees; this creates the basic working conditions for a good enrollment.

Michael K. Parrott from Benefit Communications, Inc., a national enrollment firm, described value-added services that can help make the sale to the employer and improve participation and persistency. Carriers, TPAs and enrollment firms can address an employer's communication problems, including language barriers, literacy barriers and logistical problems like multiple locations. Services which are valued by both employers and employees include: providing employee benefit orientation, forms completion, benefit statements showing the "hidden paycheck" and the use of technology, such as interactive voice response, Internet enrollment and personalized presentations on laptops.

Richard H. Flores, CIGNA Group Insurance wrapped up by describing criteria to help us be more selective in choosing opportunities with the highest participation potential. CIGNA, who provides both voluntary products and enrollment and administration services, has begun to quantify factors, such as employer support, basic plan coverage level and average employee salary, that will impact participation.

GUAA members attending this session responded to a survey on their experience with voluntary products, a summary of which is enclosed. We plan to provide more information from this survey at the next meeting.
Let's Talk Shop

Again, this session proved to be a popular session with our members. Highlights from the session are:

Our members are split on the issue for portability of term life; some offer it, some don't. Several members believe the pressure for portability of term life comes from producers, not end users. One member's company is considering offering portability on basic term life.
Requests for waiving actively at work - Under competitive pressure, many of us agree to waive actively at work. Best quote of this session: "There is rarely a good reason to waive actively at work...[this is] a language problem...producers say 'actively at work' when the mean 'provide continuity of coverage.'"
Linda Cochran, Vice President, John P. Woods Co. presented a session on defining roles of MGU's and TPA's. In addition to outlining the similarities and differences between these two types of businesses, Linda described how MGU's and TPA's can provide benefits to carriers, including additional product distribution, premium and fee income and enhanced ROE.
John P. Woods Co. presented a session on Defining Roles of MGU's and TPA's. In addition to outlining the similarities and differences between these two types of businesses, Linda described how MGU's and TPA's can provide benefits to carriers, including additional product distribution, premium and fee income and enhanced ROE.

Life and AD&D Product Survey

by Kathy Laws and Joe Kaseta, CIGNA

The survey was designed to provide an understanding of some factors influencing voluntary product participation rates. There was a wide range of responses regarding key questions asked. The following points stand out:

Participation assumptions and outcomes are most influenced by product and group size. Industry and geographic location have less influence.
Persistency assumptions and outcomes are most influenced by product, group size, industry, and geographic location.
Criteria associated with the employer's role are clearly perceived as critical to a successful employee participation result. Product plan design, plan features and presence of competing plan alternatives are also important. Tactical enrollment execution efforts are less important.

The top five criteria ranked as the most important in positively influencing employee participation are:

employer support for the product offered
takeover versus Virgin case
mandatory enrollment meetings
competing plans, e.g. basic, voluntary and supplemental offering
employer/employee relationship.

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