By Cyril Tuohy
Senior insurance executives report strong demand and firm pricing in the voluntary benefits (VB) category as more Americans have access to major medical coverage due to health reform and look to VB coverage to fill in the gaps.
Core voluntary benefits products typically encompass life and disability coverage but can also include hospital indemnity coverage along with supplemental coverage such as hospital accident protection, such as recently introduced by Securian Financial.
VB policies help cover high out-of-pocket expenses or unexpected health expenses not covered by major medical plans.
“Participation rates in voluntary benefits have been quite high” aided by the shift from employer-paid to employee-paid benefits, Kevin McCarthy, executive vice president and chief operating officer of Unum, said in an earnings conference call with analysts last week.
First quarter premium income for supplementary and voluntary benefits lines of business was $282.9 million, up 2 percent from the prior year, Unum reported.
Randy Horn, president and chief executive officer of Unum subsidiary Colonial Life, spoke of the “robust opportunities” for sellers of voluntary benefits products and services. There are plenty of new opportunities for companies looking to sell more VB products and generate new communications outreach programs to illustrate why employers need to offer a suite of policies, he said.
Colonial Life reported first quarter premium income of $307.1 million, up 3.6 percent from the year-ago period.
According to benefits consultants, many employers have not offered much in the way of voluntary policies simply because no one has discussed the products with employers. That will change, however, as reform upends the health care business model and a new market opens for supplemental coverage.
In addition, employers have a vested interest in offering voluntary benefits as employees offered such benefits report higher levels of satisfaction with their benefits package as well as higher levels of satisfaction with the employer, according to a 2010 survey from Unum.
Dennis R. Glass, president and chief executive officer of Lincoln Financial Group, said he expects the voluntary benefits market to grow and pricing to firm, particularly in disability insurance lines.
“We will remain diligent in our focus on new sales,” he told analysts in a conference call last week.
Lincoln Financial reported first quarter net income of $239 million, down 1.6 percent from the year-ago quarter, on revenues $2.84 billion, up from $2.71 billion in the year-ago period.
“The voluntary market grew by 61 percent,” Glass said.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].
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