Adding Home and Auto Can Transform Voluntary Offerings

Given the significant spend associated with medical insurance (fee for family health plans average $16,800[1]), and the annual increase in cost (5.1% per year 2003-10 and 4.1% per year 2010-13[2]), it’s no surprise that any employee benefits conversation is dominated by the medical space. Even more so when you consider the regulatory changes both carriers and employers have had to manage over the last two years.

Protecting an employee's health and the health of his or her family should of course be of paramount importance when creating benefit programs, but what about after that? Where should attention turn then? Would providing protection for an employee's shelter and his or her ability to earn a living be a close second? 

When you evaluate the non-medical space and the products with the greatest level of applicability to an employee, although traditionally considered largely "voluntary" and "non-core" products, auto and home insurance provide significant protection, comfort, and well-being to an employee and his or her family.

Almost all employees have, or have a need for, protection of their homes, apartments, or vehicles. All employees go home at night to a house or apartment, and the fact is that in our commuter economy, 86.2% of employees drive to work[3], and the car remains one of the most important tools to ensure continued employment and productivity. Combine that with the average mortgage size in the USA rising to $280,500[4], and 71.5% of the coverage amounts for home policies being written for between $50,000 and $300,000,[5]and the need for comprehensive protection of both an employee's house and vehicle is key.

The employer can play a pivotal role in providing this protection to its employees and creating a simplified method for benefit communication and solution delivery. Offering auto and home protection on a group basis to employees has several distinct advantages to both the employer and employee:

  • The savings generated on behalf of the employee by offering the protection on a group chassis can go some way to offset the increasing demand for employee contributions for health coverage. This is a very real benefit to an employee, and one the employer can rightfully claim credit for.
  • The employer can offer payroll deduction for the coverage. This not only makes the process easier for the employee and generates potential additional savings, but also ensures participation level continuity and eliminates the risk of missed payments and lapsed coverage, providing yet more guaranteed protection of the employee's key assets.

From an employer standpoint, the ability to offer auto and home protection to employees is getting easier with a number of avenues available to add the protection into the suite of employee benefits offered:

  • Working with an insurer: Working directly with a carrier that offers group auto and home is the simplest way to add the coverage for employees. Unlike traditional group products, auto and home policies are individually priced and underwritten, negating the value of full competitive bid process. This allows for the quickest implementation and has minimal additional administrative requirements.
  • Working through a voluntary benefits broker: Working through an existing broker who has expertise in voluntary benefits is another method to add the coverage. This does increase the lead time to implement the product, but does allow for some competitive comparison to test the marketplace.
  • Utilize a private exchange: Working through a private exchange provides the greatest level of flexibility for both the employer and employee, and could be used as a litmus test for employers thinking of joining an exchange for their provision of their core benefits. Many of the larger broker-driven exchanges are now offering voluntary products and would enable the employer to competitively bid the offering and create choice for the employee through a multi-carrier solution.

The efficient protection of employees’ assets, productivity, and livelihood should be a key consideration in any employee benefits discussion. The inclusion of auto and home protection as central to the employer offering deserves greater consideration in the overall benefits conversation and can be a true win-win for both the employer and employee.

[1] Kaiser Family Foundation, 2014 Employer Health Benefits Survey

[2] The Commonwealth Fund, National Trends in the Cost of Employer Healthcare Insurance Coverage, 2002 - 2013

[3] U.S. Census Bureau, American Community Survey, 2008–2012

[4] Mortgage Bankers Association, April 2014

[5] National Association of Insurance Commissioners - Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owners Insurance: Data for 2012 (Published January 2015)

This article was originally published on April 20, 2015, in Employee Benefit News.

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