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

Aon Hewitt has been very active in brokering voluntary auto andhome for employers for more than 20 years, but activity in the pastfive 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 definedcontribution, employees have felt more and more disenfranchised, somore employers are looking for things they can do to help employeesthrough voluntary benefits,” Fimmano says. “Auto and home fitsnearly into that definition, as nearly everyone needs auto orhome.”

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

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

The program really started to gain momentum in the 1980s, and bythe early 2000s it was substantial enough to build a moreformalized structure. Today, Liberty's affinity programs driveroughly 80 percent of new personal lines business, with more than7,500 employer clients in the voluntary benefits space.

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

Benefits everyone needs

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

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

“Those employers typically consider our marketing asolicitation, yet all surveys show that we don't communicate thosebenefits effectively enough,” Parabicoli says. “This is a highlyutilized benefit because home and auto insurance is required foranyone who owns or leases a car, or owns a home or condo, and it ishighly recommended for renters to protect their personalbelongings. With the economy still sluggish, employees need theadditional savings of these benefits for products they already needto purchase.”

Some employers also offer other property and casualty insuranceproducts at the worksite, including watercraft, motorcycle andpersonal liability umbrella policies—excess policies for people whowant additional coverage above the personal liability limit ontheir homeowner or auto policies, says Rich Reda, executive vicepresident and producer in the employee benefits division at LocktonCos. in Kansas City, Mo.

“For example, if somebody drowns in the home swimming pool, thepersonal liability limits on a homeowner policy may not besufficient for laws in some states if the person is sued,” Redasays.

Removing barriers

To be sure, there can be problems with participation rates onpersonal 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 muchinformation they have to gather about their car and home, fromdocuments they may not have kept,” Biller says. “Some carriers havetried to simplify the process by letting employees give all theinformation over the phone, or by asking for a copy of theircurrent auto or homeowner policy.”

Fimmano concedes underwriting can still be a “process,” but thatmost of the carriers have been able to streamline it. People haveto retrieve their current policy and locate the declaration page tofind their coverage limit on their house. For their auto insurancepolicy, they need to find their liability limit, whether they havecollision, and if so, their deductible on that coverage. They caninput this online or relay the information to the carrier'scustomer 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,” hesays. “A very big point of these programs is that even if premiumsdon't change, it's just the convenience of a payrolldeduction.”

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

Employers should make sure members are alerted about the program30 to 45 days before the next renewal, Fimmano says. At the veryleast, carriers should contact them with two or three home mailingseach year, and provide other reminders throughout the year viaemail blasts or posters in lunch rooms. Word of mouth amongemployees is also very important.

Getting the word out

While the process may still be more involved than for othertypes of voluntary benefit products, the automated platforms thatcarriers and aggregators have put in place have made theadministrative process much easier than it was 10 years ago, Redasays.

Moreover, technology has improved, such as payroll systems thathave the ability to interact with carriers' administrativeplatforms.

“This has enabled some of the carriers to go downstream, soemployers with less than 250 employees can start a program,” hesays.

The two main benefits of a voluntary auto and home insuranceoffering are special program rates not available to the generalpublic and easy premium payments through automatic payrolldeductions, says Peter Crichton, vice president of businessdevelopment for Travelers Personal Insurance in Hartford, Conn.

“Additional advantages of this program are a dedicatedenrollment center that has licensed insurance representatives tohelp employees choose the coverage that meets their needs,” hesays. “Employees can also compare rates through co-brandedwebsites. The websites also provide education information, such assafety tips to help prepare and prevent damages.”

To increase participation, Travelers encourages its employerclients to have an ongoing communication strategy throughout theyear, particularly since employees face differing renewal times fortheir auto and home policies.

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

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

Supplemental program announcement and reminder vehicles caninclude content for Intranets, benefit guides, newsletters, emailsand posters.

“As health care changes, we think companies will be taking acloser look at voluntary benefits and choosing experienced andfinancially secure providers,” Crichton says. “It's important foremployers to have a solid voluntary offering, and auto and homereally are key voluntary products that will remain popular and cansupport employee attraction and retention at no cost to theemployer.”

Stand out from the crowd

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

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

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

Then they should identify which clients have a need for theseproducts and cross-sell the auto and home concepts with anexecutive summary. Lastly, brokers should engage carriers likeLiberty Mutual to assist with the close and set up the marketingplan.

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

Some employers will continue to offer traditional health andvoluntary benefits focusing on wellness to controlcosts. Many others will provide a defined contribution andnavigate to private exchanges that are being created by brokers andbenefits consultants. And still others might choose not tooffer health coverage to their employees, forcing them to thestate-run public exchanges.

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

Illustration by Sarah Hanson.

Katie Kuehner-Hebert is a freelance journalist in RunningSprings, Calif. She can be reached [email protected].