Benefits Company

Benefits 101: Communicating with employees

ING Employee Benefits leads the way in explaining choices and value

By Elisabeth Boone, CPCU

With its distinctive lion logo and deep roots in Europe, the ING Group has become a respected name in global insurance and financial services. Based in Amsterdam, ING serves more than 85 million private, corporate, and institutional clients in more than 40 countries. ING is one of the 20 largest financial institutions worldwide and was ranked eighth on the Fortune magazine 2009 Global 500 list.

In the United States, ING serves more than 20 million clients and is a top-three retirement plan provider, as well as the second largest term life insurance provider. A key business unit, ING Employee Benefits, offers both traditional and voluntary products and services for mid-sized to large businesses. With headquarters in Minneapolis, ING Employee Benefits has a nationwide network of sales and service professionals who work with brokers and their clients to design and implement customized benefits plans that meet employer and employee needs.

"Our history as a provider of employee benefits goes back over 80 years," says Heather Lavallee, president of ING Employee Benefits Distribution. "The original insurer was Northwestern National Life, which was a mutual company based here in Minneapolis. In 1995, the policyholders decided to take it public and renamed it ReliaStar Life. ING acquired ReliaStar in 2000, and it and its sister company, ReliaStar Life of New York, underwrite our employee benefits coverages."

Before acquiring ReliaStar in 2000, ING had purchased and renamed several smaller U.S.-based insurers: ING Equitable of Iowa, ING Life of Georgia, and ING Security Life of Denver. ING also acquired Aetna Financial Services and Aetna International, which had a large volume of retirement plan business. All of those businesses were combined under the ING name in 2001.

"On the group side, we offer term life and disability insurance, accidental death and dismemberment, and medical stop loss, which is layered on top of a group health plan and protects against catastrophic claims," Lavallee explains. "We don't write first-dollar group health, but we are building a significant presence in the stop loss segment. We currently have over $400 million in force in group life, over $100 million in disability, and over $500 million in stop loss."

As noted earlier, ING also provides an array of voluntary benefits products. "Very few carriers offer both group and voluntary benefits to the extent that we do," Lavallee comments. "We have five voluntary products: whole life, universal life, disability, accident, and critical illness. We have about $170 million in in-force premium in those products."

On the voluntary side, "Just over 50% of our business is universal and whole life insurance, and the other 50% is the three health-focused products: disability, critical illness, and accident insurance," Lavellee explains. "There's a fairly even mix among those products as well."

Evolving market

Over the 20 years of her career in employee benefits marketing and management, Lavallee has observed fundamental changes in the design and distribution of group insurance products.

"The most significant change we've seen is the shift toward voluntary benefits," Lavallee comments. "We used to talk about innovations in contracts for group disability and other benefits products, and carriers competed on the basis of having the latest and greatest coverage provisions. Today, with employers focused so intently on protecting the bottom line, the emphasis is on voluntary products with employees paying part or all of the cost," Lavallee says.

"Another key trend I've seen is that in the employer-paid products, there's been some price erosion," she adds.

Among the five kinds of voluntary products offered by ING Employee Benefits, which are the most popular with employees?

"We're seeing a big increase in people purchasing whole life and somewhat less interest in investment-linked products like universal life," Lavallee says. "Because of what's been happening in the economy over the past few years, people are becoming more focused on protection and security than on material things. We see this as a major reason that permanent life insurance products are more attractive to employees." Another attractive feature of ING's whole life products, Lavallee notes, is the option to purchase a long-term care rider.

"We're also seeing a big uptick in the sale of our critical illness products," Lavallee continues. "Cancer is typically the first thing people think of when it comes to critical illness, but our policy covers a much wider range of illnesses, such as heart attack, stroke, Alzheimer's, and other catastrophic conditions."

Critical illness policies, Lavallee points out, provide a lump-sum benefit upon either diagnosis or treatment of a covered illness and do not cover hospital, medical, or surgical expenses. The benefit can be spent at the policyholder's discretion and is often used to pay group health deductibles and copays and to defray living expenses.

Growth strategy

Lavallee offers insights into ING's strategy in the employee benefits market. "We've always been a leader in group life, and we anticipate continuing stability in that product line with moderate growth," she says. "Most large employers offer life insurance. When an employee joins a company, the three things he or she looks at in the benefits package are group health, group life, and the retirement plan, and we see an ongoing steady demand for group life.

"Stop loss is one of our key growth engines, and we're selling a substantial amount of that business," Lavallee continues. "Another growth driver is group disability. We offer this product because many employers that buy group life also want to provide group disability, and we can package the two products attractively for those companies."

As the cost of group health insurance continues its relentless upward spiral, employers are exploring ways to control costs and still offer benefits that meet their employees' needs.

"Medical benefits already dominate the expense picture for employers, and that impact will only intensify in the future," Lavallee observes. "Employers will have fewer discretionary dollars to spend on benefits, so we're starting to see more and more voluntary benefits being offered in the workplace. We want to be prepared to capitalize on that trend with a full portfolio of voluntary products.

"I think we'll see voluntary offerings become increasingly popular as more and more products are moved to that platform," Lavallee continues. "On the group side, I also think we'll see more employers wanting stop loss coverage. Under health care reform, the elimination of the lifetime maximum cap on group health coverage will cause many employers that have had limits on their self-insured plans to be exposed to costs associated with expensive catastrophic medical claims. Purchasing stop loss coverage will protect their medical plans from the impact of such catastrophic claims.

"For these reasons, I expect more employers to be looking for catastrophic coverage, and we anticipate continuing growth in the markets for both stop loss and voluntary products," Lavallee explains. "We believe we're well positioned in all of our product lines to deliver solutions for the employers and employees in our target market."

Sweet spot

ING Employee Benefits serves businesses with 200 to more than 100,000 employees, says Marc Lower, head of voluntary strategy and distribution. "Our sweet spot is the 500- to 10,000-employee market. From a worksite or voluntary benefits perspective, our target market is employees who make between $20,000 and $100,000 a year. There are plenty of financial planners who work with affluent clients, but we focus on the rank and file employees who don't have access to those resources and appreciate having them available in the workplace," Lower says.

"As a kid, I remember my parents purchasing life insurance at the kitchen table," he remarks. "I come from a working class family, and today we would never hear of that happening. With the cost of term life decreasing over the past decade or more, agents aren't compensated well enough to visit the home of someone who is buying a $50,000 term life policy. Today people are buying that insurance at the workplace or online."

Squeezed by the ever-rising cost of group health insurance, employers like the idea of offering products at the worksite with employees paying the premium via payroll deduction. How do employees feel about the trend toward voluntary benefits?

"The reception has been very favorable," Lower says. "I think most employees understand that the employer cannot afford to provide all of their benefits at the employer's expense, and that the employee has to contribute to that cost. Not everybody needs the same benefits, so we're seeing a positive response to the choices being offered on the voluntary side."

Going beyond the product sale, Lower remarks, "I believe the real opportunity lies in benefits communication. As benefits become more complex and costs continue to rise, there is enormous value to employers in helping employees understand their benefit plan, as well as understand the costs involved from the employer's perspective—the so-called 'hidden paycheck.'

"If you survey employees and ask them how much they think their employer pays for their health insurance, you'll find that most employees significantly underestimate the cost of those benefits," Lower says. "If the employer can help employees understand and appreciate how much the company is really doing for them, that can improve retention and enhance the employer's ability to attract desirable new hires. So communication becomes one of the tools and value-added services we can provide the employer to help facilitate the voluntary sale.

"When management can see that there's value to the company in offering these products, they feel comfortable giving us access to their employees," Lower continues. "Benefits communication services allow us to achieve better penetration within the group by making sure employees understand their options, and this helps us from a risk standpoint. For all these reasons, I believe that communication represents a big opportunity in today's marketplace," he declares.

Boon for P-C brokers

With their built-in base of commercial clients, property/casualty agencies and brokerages are ideally positioned to profit from the delivery of employee benefits products, Lower believes, and ING Employee Benefits is enthusiastic about working with the principals of P-C firms to capitalize on this opportunity.

"From a voluntary benefits perspective, a huge advantage for property/casualty agencies is the relationship they have with their clients, particularly the chief financial officer," Lower says. "Typically, the employee benefits broker who is our traditional distributor has a relationship with the head of human resources as the decision maker. CFOs understand the value of attracting and retaining quality employees, and they also appreciate the value of effective employee benefits communication. That creates a tremendous opportunity for the property/casualty agency to deliver a value-added service to the employer that goes straight to the bottom line," he asserts.

"To provide employee benefits communication and enrollment services to employers, we partner with providers that specialize in this field while we serve as the product 'manufacturer' and risk taker," Lower explains.

"Helping employees understand their benefit options is both time intensive and labor intensive," he points out. "Obviously, an employer can't afford to give us access to each of its employees for an hour or two during normal work hours, so the education and enrollment process has to be very streamlined. On average, a benefits counselor spends between 20 and 30 minutes with each employee, which means he or she can see 15 to 20 employees in any given day."

Equally as important as communicating benefit options and costs to employees, and obtaining accurate information about their choices, is providing the employer an efficient means of enrolling employees at the worksite. Among the factors that affect the enrollment process are the number of employees, their locations, and the products being offered. ING Employee Benefits works with the employer to understand its enrollment needs and help it select the best option for its particular situation. ING's enrollment system offers a single platform that supports a variety of enrollment options. Electronic billing is available for voluntary products, and online billing is available for both group and voluntary products.

At ING Employee Benefits, the focus clearly is on helping employers communicate the value of benefits to their employees, and on helping rank and file employees understand their options and choose the products that best meet their needs. Says Lower: "Our goal, in conjunction with our benefits communication partners, is to be the employee benefits counselors for middle America and the providers of quality insurance at the workplace."

For more information:

ING Employee Benefits

Web site: www.ingemployeebenefits-us.com