Companies and their more highly compensated executives areincreasingly realizing the need for individual disability insurance (IDI) coverage. That means competitionamong insurance carriers for this book of business is also heatingup. With more insurers entering this market, employers as well asbrokers should do their due diligence when it comes to selecting anIDI carrier—one that can truly meet a company’s needs andexpectations.

Although brokers and employers agree on a number of key carrierattributes, there can be a disconnect when it comes to somethingelse that’s important. Research shows that HR decision makers arevery clear in what they need from an IDI carrier. After all, thebuck starts and stops with their departments. Brokers need to makesure they’re in tune with what tools and services resonate mostwith HR, from enrollment to claims services.

Selling the Need is the Easy Part
Numbers don’t lie. There are a myriad of compelling medical andeconomic statistics about disabilities that illustrate the need forhighly compensated executives to have additional protection.Although executives might be covered by the company’s group programfor short-term and long-term disability based on their salary, theyneed something to cover their total compensation.

Since bonus and incentive compensation often comprise a portionof their earnings, management-level executives should realize thatvariable income above salary is not normally protected by groupLTD. Thus, the benefit from an IDI policy: to help fill any or allof these gaps. However, IDI is not just a win for employees.

For employers, IDI enriches benefits packages, helping themattract and retain employees, and it can be offered throughmultiple funding options. The supplemental IDI insurance may alsoreduce the risk for the group plan. Because large group plans areexperience-rated, a highly compensated employee on disability leavecan have a significant impact on group plan rates.

Supplemental IDI can help by transferring that risk to anindividual platform with level premiums. But, once employers buy into the need for IDI, the focus quickly turns to which IDI carrier,among the 10 or so that offer this type of insurance, is bestsuited to meet brokers’ and, most importantly, their customers’needs. Here is where the finer attributes, such as implementation,administration, enrollment and claims service, come into play andcan differentiate quickly one carrier from another.

Claims ServiceImportance
Recent qualitative research conducted by Greenwald and Associateson behalf of Unum examined what both brokers and employers lookedfor in an IDI carrier. Interviews were conducted with brokers whosell IDI and corporate benefits decision makers who either have IDIor are highly aware of the product.

Both brokers and employers seemed to agree on the overall keycarrier attributes that would significantly enhance an IDI program.Both groups see a lot of carriers claiming to provide some of theseattributes, but few go beyond “lip service” to actually deliver onthese attributes.

Here’s a quick snapshot of the key attributes that brokers andemployers look for in a carrier:

Flexibility to work with employers to providetailored solutions to meet their specific needs. A flexible carrieris one willing to design around the employer’s needs; one that hasthe capabilities not only to put the product together, but also toenroll, manage and service it.

Multiple funding options that allow companiesto design the right plan for their employees. Choices shouldinclude employee-paid, employer-paid and shared-funding options.Employers are looking to keep costs stable and predictable. Theywant to know what they’re paying—no hidden costs.

Easy benefits administration, especially duringimplementation. HR departments already are stretched thin, and theysee the roll-out of a new benefits product as very time consuming.In many instances, this is the main roadblock to implementing IDI.A benefits roll-out plan that eases HR’s administrative pressuresduring implementation is viewed as a key attribute.

Strong communications and education foremployees about their benefits. Employers see education andcommunications around benefits as important because, in manyinstances, employees don’t know what they have, or have access to.With a strong communications and education platform, at leastemployees can appreciate the different options and better connectwith their company.

Responsive, high-level service. Offering“exceptional” service resonates very strongly with HRprofessionals. They want to know that someone will handle anyquestion they might have. They expect a response within 24 hours,even if there’s not a resolution or answer. Just knowing thatsomeone will get back to them is of value. Employers also want onepoint of contact—not an 800-number. They want to form a workingrelationship with that one person.

Efficient claimsprocess. This is the crux of what many employers look forin a carrier. In case a claim was to occur, they want theiremployees to have a positive claims experience. They want them,during that trying time, to maximize the best value for whatthey’re paying for in their benefits. Ease of use, efficientprocessing, and a thorough understanding of all the steps needed tomake a claim are seen as crucial to the entire experience.

Claims service is the one area where brokers and employers seemto have a disconnect in terms of where it ranks in importance. Thisparticular research shows that employers often place greaterimportance on the IDI claims experience than brokers. Some brokerscan underestimate the importance employers place on being able totrust the IDI carrier to take care of employees during claimtime.

This becomes even more critical when highly-compensated,high-level employees go out on claim, and the experience turns outto be less than favorable. If that happens, the first call is tothe HR department—not the broker—usually demanding that “someone dosomething about this.”

Due Diligence key
In addition to the more standard, product-related questions aroundpricing, plan design and underwriting, brokers and employers alikeshould conduct a thorough due diligence around the key serviceareas of implementation, administration, enrollment and claimsassistance to get a holistic picture of what a carrier can trulyoffer. It’s all about having the right support and tools in placeto handle an IDI program, from enrolling employees to handlingtheir claims—and getting them back to work when the time is right.Below are some key questions to ask:

Implementation
Successfully launching a new IDI program involves developing theright strategy execution with the right tools and support based onemployee demographics and industry.

• Is there a dedicated account manager?
• How do you coordinate enrollment strategy?
• What billing cycle and remittance requirements are needed?
• Do you have scheduled case reviews to verify preferences,update contact information, and discuss enhanced serviceoptions?

Administration
Comprehensive administration services reduce administrative costsand maximize IDI program effectiveness and satisfaction.

• Is there one point-of-access for the plan administrator?
• Is there a call center for employee support?
• Are electronic deduction change files available?
• Do you require a paper bill? What type of billing method isrequired?
• Who handles reconciliation?
• How can payments be made (i.e. paper check or wiretransfer)?

Enrollment
Enrolling highly compensated executives in IDI cases presents achallenge: The executives simply don’t have time or inclination toparticipate in traditional enrollment methods. Effectivecommunications and enrollment help employees make the rightbenefits choices and easily enroll.

• What type of emphasis do you place on communicating the valueof the benefits package?
• What are your promotion and education strategies?
• Do you offer customized enrollment options from which thesebusy executives can choose to meet their needs?
• How secure is the collected and stored data?
• Would employees appreciate a wide range of customizedenrollment options, whether online, on the phone orpaper-based?

Because claims service is so important to employers, specialattention should be given to this area. A thorough review of thepeople, processes and protections associated with claims service iscertainly warranted.

ClaimS: More Than an Afterthought
When brokers are “selling” IDI, they’re covering guaranteed issue,enrollment capabilities, etc. However, claims service doesn’talways get the emphasis it deserves. While in some cases brokersconsider a fair claims process to be “table stakes,” others cantreat it almost as an afterthought. “And, oh by the way, there’sgreat claims service.” Regardless, companies are obviously startingto pay close attention to what an IDI carrier has to offer in thisarea.

And brokers should, too. All in all, companies should expect afair, thorough and responsive review of all claims. It’s as simpleas that. An IDI carrier’s representatives should understand that adisabling illness or injury creates emotional, physical andfinancial challenges. Each claims decision should be fact-based andhandled with care and sensitivity.

Additionally, there should be consistent and fair approaches inplace to help ensure that accurate and unbiased decisions are madeon each claim in a timely manner and communicated clearly. Thereare three key areas you should focus on when evaluating IDIcarriers’ claims service: people, processes and protections.

The following attributes are good indicatorsthat an IDI carrier is committed to offering exemplary claimsservice:

People

• A rigorous selection process, intensive training and ongoingmentoring of benefit specialists.
• Low claim volume and management span of control.
• Relationships developed with insureds to provide the bestpossible claims experience and outcome.

Processes

• No single person can approve or deny any claim.
• Medical records are reviewed by a staff physician whosespecialty is appropriate to the customer’s claim.
• Customer assistance to help claimants provide proof of loss ifthey’re having trouble getting medical records or otherinformation.
• If an Independent Medical Exam is needed, the carrier contractswith practicing physicians directly.
• Licensed rehabilitation counselors and nurses are on staff toassist with stay-at-work and return-to-work options forcustomers.

Protections

• A number of independent audits and quality reviews areconducted to ensure that the highest standards are being met.
• Insureds always have the right to appeal a decision.

A number of carriers provide the right product at a competitiveprice. However, you should look for a carrier that can tailor asupplemental long-term disability solution for your more highlycompensated employees that best complements your group LTDdisability offering—and can back that up with other strong serviceattributes that include implementation, administration, andenrollment with a keen focus on superior claims service.

Branden Pierson is the national sales leader of executivebenefits for Unum and is based in Portland, Maine. He can bereached at [email protected].