Benefits Products & Services

Protecting against the cruellest cut: Loss of income

The role of disability in a P-C agency’s benefits department

By Thomas A. McCoy, CLU

Disability insurance has a lot in common with workers compensation—both coverages compensate workers for lost wages, administer rehab services and promote health and safety. There should be cross-selling opportunities between workers comp and disability, right? Well, maybe in theory. But it’s hard to cross-sell when you have two different sets of buyers within the same company—one for the property/casualty program and another for benefits.

Mark Kendall a partner in Laurus Strategies, an employee benefits consultant based in Chicago, describes the situation. “The HR side of the house handles benefits, while the workers comp is handled on the safety and risk management side.” In extreme situations, he says, “We’ve gone into meetings where these people are meeting for the first time.”

For Laurus—whose benefits clients average 2,500 employees—it’s a client education process “to overcome these barriers and break down these silos of information and coordinate the efforts within the company,” says Kendall.

Renee Mattaliano, a senior consultant at Laurus, adds, “The HR people need to be involved with their safety and risk management partners so they can see how their respective policies and procedures affect each other.” Among the plusses to coordinating disability and workers comp services, she says, is the opportunity to take advantage of common procedures for claims in-take and nurse case management.

The Hartford, as one of the leading writers of both workers comp and disability, is, not surprisingly, a proponent of helping HR departments coordinate services that are common to both coverages. And it hopes that this strategy can create cross-selling opportunities for its agents. Ron Gendreau, executive vice president and director of the Group Benefits Division of Hartford Life, says providing more services to HR departments makes sense because, frankly, they can use the help.

“Employers have had to really skinny down what they expect out of their HR organizations,” Gendreau says. “More and more of the work they used to do is being outsourced. And that applies also to things like ‘leave management.’ So instead of just being a disability provider, we’re operating more like a leave management company that can help them administer not only their disability programs—both short-term and long-term—but also their leave management programs including state leave, military leaves and other leave programs.”

As part of these programs, Gendreau says, “We offer family leave administration, and over the last couple of years our case count on that business has grown by 50%. It’s the fastest growing part of our time loss management programs. It’s a clear indication that companies are struggling with the administration and the compliance requirements.

“As an example, if a woman in California goes on maternity leave, the company has to deal with as many as six leave management programs (either state or federal) to administer that maternity claim.”

Complementing workers comp

What The Hartford wants to do is to provide these administrative services for a single employer’s needs in leave management, disability insurance and workers comp as well. It is piloting a program to do that now.

“We are getting good feedback from that pilot, and we expect to introduce a broader program in the first quarter of 2010,” says Gendreau. “The employer will have a full view of its time loss management needs.

“Workers comp claims management is very different from disability claim management, and we would still apply the right level of expertise to each of them separately; but from a customer perspective we would take away the hurdles that exist between the programs. For instance, today when someone files a workers comp claim there are times when it’s not clear whether it’s work-related. When you have both programs with the same company, it’s not a question of whether the person will get paid; it’s a question of which program it will fall under. So the claimant is not at risk. And it should cut down on litigation costs.

“More and more property/casualty agents are seeking to broaden their portfolios to include benefits,” continues Gendreau. “It’s been tried before but with little success. We think things are different now—for two reasons. First, the HR departments can no longer handle the complex admini­strative support that is required. Second, the leave program management that we offer simplifies and coordinates the management of the programs from workers comp to leave management to disability—unifying those programs. It’s a bridge builder that wasn’t there 10 years ago.”

Another difference from 10 years ago involves client expectations. Both the recession and the rising cost of employee benefits have heightened clients’ awareness of the importance of how their benefit programs are designed and administered. Some mid-sized P-C agencies have responded to these needs by developing in-house benefits departments that provide remarkable sophistication. Some, for example, have hired health care professionals to handle claims and loss prevention services for health insurance and workers comp.

Other P-C agencies obtain the necessary benefits expertise by forming business relationships with sophisticated providers such as Laurus Strategies, giving them access to professionals such as Renee Mattaliano who has a master’s degree in vocational rehabilitation.

But whatever the strategy chosen by a P-C agency’s owners, the pressures from client expectations are moving them toward a more serious commitment to benefits.