Some employers have been offering auto, homeowners and other types of personal property and casualty insurance products to their employees for nearly half a century, but the worksite offerings are really taking off now that employers are broadening their menu of voluntary products to offset reduced health care benefits.

Aon Hewitt has been very active in brokering voluntary auto and home for employers for more than 20 years, but activity in the past five to 10 years has “ratcheted up markedly,” says Frank Fimmano, senior vice president in New York City.

“As more employers change from defined benefits to defined contribution, employees have felt more and more disenfranchised, so more employers are looking for things they can do to help employees through voluntary benefits,” Fimmano says. “Auto and home fits nearly into that definition, as nearly everyone needs auto or home.”

Right now, he says, only three national carriers are in the voluntary home and auto market — Travelers Personal Insurance, MetLife Inc. and Liberty Mutual Insurance. Other carriers that participate are on a regional basis or have alliances with one or more of those three primary carriers to support special needs, such as Progressive Insurance for high-risk drivers.

Liberty Mutual in the 1960s started offering auto and home as “a value-add” voluntary benefit to some of its larger workers' compensation clients, says Mark Parabicoli, managing director of auto and home voluntary benefits at Liberty Mutual in Boston.

The program really started to gain momentum in the 1980s, and by the early 2000s it was substantial enough to build a more formalized structure. Today, Liberty's affinity programs drive roughly 80 percent of new personal lines business, with more than 7,500 employer clients in the voluntary benefits space.

“Voluntary benefits are going to become even more popular in the coming years as health care costs continue to rise,” Parabicoli says. “To keep the best and brightest talent within their ranks, employers are going to have to make a more focused effort to offer additional benefits, and then communicate these more effectively.”

Benefits everyone needs

Liberty's program generally offers a 10 percent discount for auto insurance and a 5 percent discount for homeowners insurance. The pricing is based on the individual, and savings are in addition to standard policy discounts, such as safe driver or low-mileage discounts.

The carrier serves employers with as many as 400,000 employees and as few as 50 employees, customizing the program to different size groups across many industries, Parabicoli says. For employers that allow full marketing, participation rates can be as high as 80 percent. However, some employers limit Liberty's access to their workforce when they feel their employees are “overwhelmed” by offerings, resulting in less participation.

“Those employers typically consider our marketing a solicitation, yet all surveys show that we don't communicate those benefits effectively enough,” Parabicoli says. “This is a highly utilized benefit because home and auto insurance is required for anyone who owns or leases a car, or owns a home or condo, and it is highly recommended for renters to protect their personal belongings. With the economy still sluggish, employees need the additional savings of these benefits for products they already need to purchase.”

Some employers also offer other property and casualty insurance products at the worksite, including watercraft, motorcycle and personal liability umbrella policies—excess policies for people who want additional coverage above the personal liability limit on their homeowner or auto policies, says Rich Reda, executive vice president and producer in the employee benefits division at Lockton Cos. in Kansas City, Mo.

“For example, if somebody drowns in the home swimming pool, the personal liability limits on a homeowner policy may not be sufficient for laws in some states if the person is sued,” Reda says.

Removing barriers

To be sure, there can be problems with participation rates on personal property and casualty insurance lines, says Alan Biller, principal at Creative Worksite Solutions in Mount Pleasant, S.C.

“I think it has to do with the fact that there's too much information they have to gather about their car and home, from documents they may not have kept,” Biller says. “Some carriers have tried to simplify the process by letting employees give all the information over the phone, or by asking for a copy of their current auto or homeowner policy.”

Fimmano concedes underwriting can still be a “process,” but that most of the carriers have been able to streamline it. People have to retrieve their current policy and locate the declaration page to find their coverage limit on their house. For their auto insurance policy, they need to find their liability limit, whether they have collision, and if so, their deductible on that coverage. They can input this online or relay the information to the carrier's customer service rep on the phone to get a quotation.

“The goal of these programs is to minimize declinations— employers don't want programs with high declination rates,” he says. “A very big point of these programs is that even if premiums don't change, it's just the convenience of a payroll deduction.”

Participation rates are a function of maintaining awareness, Fimmano adds. The goal is to get 10 percent to 15 percent participation over a three-year period, but sometimes rates can be as low as 2 percent if the employer support is lacking and the population is not kept aware.

Employers should make sure members are alerted about the program 30 to 45 days before the next renewal, Fimmano says. At the very least, carriers should contact them with two or three home mailings each year, and provide other reminders throughout the year via email blasts or posters in lunch rooms. Word of mouth among employees is also very important.

Getting the word out

While the process may still be more involved than for other types of voluntary benefit products, the automated platforms that carriers and aggregators have put in place have made the administrative process much easier than it was 10 years ago, Reda says.

Moreover, technology has improved, such as payroll systems that have the ability to interact with carriers' administrative platforms.

“This has enabled some of the carriers to go downstream, so employers with less than 250 employees can start a program,” he says.

The two main benefits of a voluntary auto and home insurance offering are special program rates not available to the general public and easy premium payments through automatic payroll deductions, says Peter Crichton, vice president of business development for Travelers Personal Insurance in Hartford, Conn.

“Additional advantages of this program are a dedicated enrollment center that has licensed insurance representatives to help employees choose the coverage that meets their needs,” he says. “Employees can also compare rates through co-branded websites. The websites also provide education information, such as safety tips to help prepare and prevent damages.”

To increase participation, Travelers encourages its employer clients to have an ongoing communication strategy throughout the year, particularly since employees face differing renewal times for their auto and home policies.

Enrollment kits mailed to employees' homes are one of the most effective communication vehicles, Crichton says, as they allows employees to review the benefit information at their leisure.

“Some employees may not be the decision-maker, and it's a great way to get the program information into the right hands,” he says. “We cover the cost to communicate the program and work closely with employers to develop the communication plan that's right for them.”

Supplemental program announcement and reminder vehicles can include content for Intranets, benefit guides, newsletters, emails and posters.

“As health care changes, we think companies will be taking a closer look at voluntary benefits and choosing experienced and financially secure providers,” Crichton says. “It's important for employers to have a solid voluntary offering, and auto and home really are key voluntary products that will remain popular and can support employee attraction and retention at no cost to the employer.”

Stand out from the crowd

Many brokers still don't realize home and auto can be a voluntary benefit, Parabicoli says.

“I'm often explaining our program and its benefits for the first time to brokers who are new to the voluntary P&C space, as well as to established voluntary benefit brokers looking to diversify their portfolio,” he says. “Regarding the impact of the new health care laws on broker commissions, including the MLR ruling, I typically ask if they see this really a crisis or an opportunity to truly diversify their portfolio and revenue streams to differentiate themselves among their competitors.”

Parabicoli explains to brokers interested in this market that it's not as hard to launch a voluntary auto and home program as they may think. Brokers need to first obtain a property and casualty license in the states in which they conduct business.

Then they should identify which clients have a need for these products and cross-sell the auto and home concepts with an executive summary. Lastly, brokers should engage carriers like Liberty Mutual to assist with the close and set up the marketing plan.

The worksite landscape should change significantly within five to 10 years, as more employers begin to offer a wider variety of voluntary benefits to supplement their core programs, he says.

Some employers will continue to offer traditional health and voluntary benefits focusing on wellness to control costs. Many others will provide a defined contribution and navigate to private exchanges that are being created by brokers and benefits consultants. And still others might choose not to offer health coverage to their employees, forcing them to the state-run public exchanges.

“No matter the model, I foresee voluntary benefits playing a major role in helping employers attract, retain and engage their best and brightest talent,” Parabicoli says. “We plan to be integrated within any format so auto and home will be available any way the employee wishes to purchase.”

Illustration by Sarah Hanson.

Katie Kuehner-Hebert is a freelance journalist in Running Springs, Calif. She can be reached at katie.hebert78@gmail.com.

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