2012 forecast: six top trends in workplace benefits

Growth in voluntary benefits, wellness programs lead Colonial Life’s list of what’s coming

COLUMBIA, S.C. (Nov. 9, 2011) — After several years of economic woes and health care reform wrangling, the only certainty in the future of workplace benefits may be continued uncertainty. But insurance brokers who want to be prepared for 2012 should pay attention to several emerging trends. Here are the top six predictions for the coming year, according to experts at Colonial Life & Accident Insurance Company, one of the nation’s leading employee benefit providers:

1. Products: Critical illness insurance will continue to attract new customers.

With the costs of treating cancer, heart attacks and strokes far exceeding most employees‟ major medical coverage, critical illness insurance can provide vital out-of-pocket protection to help with both the medical and nonmedical costs associated with treating and recovering from these diseases. Updated versions of this relatively new product include benefits for multiple occurrences of a critical illness, adding to their value. “One way to think of critical illness insurance is as living life insurance,” says Randy Finn, assistant vice president of supplemental health products at Colonial Life, where critical illness sales increased 24 percent from 2009 to 2010. “If you get a serious illness such as cancer and die, life insurance helps with that. But what if you survive? You’re likely to have years of financially crippling bills to pay.”

2. Sales: Voluntary insurance sales will continue to grow.

Increasing workforce diversity and the need to offer choices to employees with widely varying needs will drive an uptick in sales. Group products will continue to grow as a percentage of voluntary sales, while life insurance sales continue to fall. “There’s a big need for better education of workers about the need to protect their most valuable assets with life and disability coverage,” points out Jeff Koll, Colonial Life’s assistant vice president of life and disability products.

3. Distribution: Brokers will be increasingly involved in the voluntary benefits market as they continue to look for different revenue streams.

Reduced major medical commissions, uncertainty in the market because of health care reform changes and a continued slow economy are forcing brokers to look for new revenue sources. Voluntary benefits will continue to grow as a simple solution. “Brokers are finding they can get in this market with little training and no overhead by partnering with an experienced voluntary benefits carrier,” says Jay Hutchins, Colonial Life’s vice president of broker marketing and sales. The majority of employers — 59 percent — already work with brokers on their employee benefits plans. In a related trend, more brokers will become generalists in an attempt to offer their clients greater value and stave off increasing competition.

4. Services: Wellness programs will become more prevalent as a way for employers to control health care costs and increase productivity and retention.

With no let-up in sight for rising health care costs, employers are increasingly seeing the value of workplace wellness programs as a way to control premium increases and claims costs. Ranging from health screening tools to online nurse services, wellness-related offerings will become a bigger part of benefits providers‟ value-added services. However, the key to seeing a true bottom-line benefit may be as much about employee awareness and engagement as it is about the actual service. “Good communication about wellness programs is essential for them to be effective,” says Steve Bygott, Colonial Life’s assistant vice president of marketing analysis and programs. “Without a focused effort to ensure employees understand the program and its value to them, participation tends to be low.”

5. Technology: Employees will have more options for decision-support tools using online technology.

As employers continue to push benefits decision-making responsibility to their employees, look for a proliferation of websites and interactive tools to help them understand different types of coverage and which ones meet their unique needs. An example is Colonial Life’s Benefits Learning Center website (www.benefitslearningcenter.com), launched last May featuring Youville, an entertaining interactive tool for workers to individualize their benefits education and explore their unique benefits needs.

Research shows most employees don’t actively search for information about their benefits, don’t want frequent communication from their employers about them, and don’t dedicate a significant amount of time to learning more about them.2 Online decision-support tools such as Youville offer employees important benefits information with minimal effort, says Dana Bagwell, Colonial Life’s director of benefits communication and education. “These tools give employees easy access to the information they need to make informed benefits decisions, all in one place.”

6. Economy: Government sector employers will focus on cost containment measures for their benefits plans.

Government employers are strongly feeling the effects of several years of reduced tax revenues, and now find themselves in the unfamiliar position of being forced to reduce benefits or raise their employees‟ share of the costs. A recent survey of public sector human resources managers showed 80 percent of them are looking at ways to reduce the cost of their employee benefits plans, and 58 percent said controlling costs is their top priority for their benefits programs.3

“The good news is there’s a huge opportunity for government employers to control costs by changing their benefits plan design,” says Pat McCullough, Colonial Life’s public sector practice leader. “Government employers have been slower than other industry segments to shift away from the more comprehensive, paternalistic benefits models of the past, but there are solutions to help them offer strong packages and still save money.”

1 Colonial Life Target Model and Larger Case Research, April 2008, and Eastbridge Worksite Market Vision, 2010.
2 Employee Education Qualitative Research, Unum, April 2010.
3 Colonial Life and International Public Management Association for Human Resources online survey, September 2011.

About Colonial Life

Colonial Life & Accident Insurance Company is a market leader in providing financial protection benefits through the workplace, including disability, life, accident, dental, cancer, critical illness and hospital confinement indemnity insurance. The company’s benefit services and education, innovative enrollment technology and personal service support more than 80,000 businesses and organizations, representing more than 3 million of America’s workers and their families. For more information visit www.coloniallife.com or connect with the company at www.facebook.com/coloniallifebenefits, www.twitter.com/coloniallife and www.linkedin.com/company/colonial-life.