Companies and their more highly compensated executives are increasingly realizing the need for individual disability insurance (IDI) coverage. That means competition among insurance carriers for this book of business is also heating up. With more insurers entering this market, employers as well as brokers should do their due diligence when it comes to selecting an IDI carrier—one that can truly meet a company’s needs and expectations.

Although brokers and employers agree on a number of key carrier attributes, there can be a disconnect when it comes to something else that’s important. Research shows that HR decision makers are very clear in what they need from an IDI carrier. After all, the buck starts and stops with their departments. Brokers need to make sure they’re in tune with what tools and services resonate most with HR, from enrollment to claims services.

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

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

For employers, IDI enriches benefits packages, helping them attract and retain employees, and it can be offered through multiple funding options. The supplemental IDI insurance may also reduce the risk for the group plan. Because large group plans are experience-rated, a highly compensated employee on disability leave can have a significant impact on group plan rates.

Supplemental IDI can help by transferring that risk to an individual platform with level premiums. But, once employers buy in to the need for IDI, the focus quickly turns to which IDI carrier, among the 10 or so that offer this type of insurance, is best suited 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 and can differentiate quickly one carrier from another.

Claims Service Importance
Recent qualitative research conducted by Greenwald and Associates on behalf of Unum examined what both brokers and employers looked for in an IDI carrier. Interviews were conducted with brokers who sell IDI and corporate benefits decision makers who either have IDI or are highly aware of the product.

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

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

Flexibility to work with employers to provide tailored solutions to meet their specific needs. A flexible carrier is one willing to design around the employer’s needs; one that has the capabilities not only to put the product together, but also to enroll, manage and service it.

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

Easy benefits administration, especially during implementation. HR departments already are stretched thin, and they see 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 pressures during implementation is viewed as a key attribute.

Strong communications and education for employees about their benefits. Employers see education and communications around benefits as important because, in many instances, employees don’t know what they have, or have access to. With a strong communications and education platform, at least employees can appreciate the different options and better connect with their company.

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

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

Claims service is the one area where brokers and employers seem to have a disconnect in terms of where it ranks in importance. This particular research shows that employers often place greater importance on the IDI claims experience than brokers. Some brokers can underestimate the importance employers place on being able to trust the IDI carrier to take care of employees during claim time.

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

Due Diligence key
In addition to the more standard, product-related questions around pricing, plan design and underwriting, brokers and employers alike should conduct a thorough due diligence around the key service areas of implementation, administration, enrollment and claims assistance to get a holistic picture of what a carrier can truly offer. It’s all about having the right support and tools in place to handle an IDI program, from enrolling employees to handling their 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 the right strategy execution with the right tools and support based on employee 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 service options?

Administration
Comprehensive administration services reduce administrative costs and 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 is required?
Who handles reconciliation?
How can payments be made (i.e. paper check or wire transfer)?

Enrollment
Enrolling highly compensated executives in IDI cases presents a challenge: The executives simply don’t have time or inclination to participate in traditional enrollment methods. Effective communications and enrollment help employees make the right benefits choices and easily enroll.

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

Because claims service is so important to employers, special attention should be given to this area. A thorough review of the people, processes and protections associated with claims service is certainly warranted.

ClaimS: More Than an Afterthought
When brokers are “selling” IDI, they’re covering guaranteed issue, enrollment capabilities, etc. However, claims service doesn’t always get the emphasis it deserves. While in some cases brokers consider a fair claims process to be “table stakes,” others can treat it almost as an afterthought. “And, oh by the way, there’s great claims service.” Regardless, companies are obviously starting to pay close attention to what an IDI carrier has to offer in this area.

And brokers should, too. All in all, companies should expect a fair, thorough and responsive review of all claims. It’s as simple as that. An IDI carrier’s representatives should understand that a disabling illness or injury creates emotional, physical and financial challenges. Each claims decision should be fact-based and handled with care and sensitivity.

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

The following attributes are good indicators that an IDI carrier is committed to offering exemplary claims service:

People

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

Processes

No single person can approve or deny any claim.
Medical records are reviewed by a staff physician whose specialty is appropriate to the customer’s claim.
Customer assistance to help claimants provide proof of loss if they’re having trouble getting medical records or other information.
If an Independent Medical Exam is needed, the carrier contracts with practicing physicians directly.
Licensed rehabilitation counselors and nurses are on staff to assist with stay-at-work and return-to-work options for customers.

Protections

A number of independent audits and quality reviews are conducted 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 competitive price. However, you should look for a carrier that can tailor a supplemental long-term disability solution for your more highly compensated employees that best complements your group LTD disability offering—and can back that up with other strong service attributes that include implementation, administration, and enrollment with a keen focus on superior claims service.

Branden Pierson is the national sales leader of executive benefits for Unum and is based in Portland, Maine. He can be reached at bpierson@unum.com.

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What you should expect in an IDI Carrier

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