Market Update: Disability Insurance

May is Disability Insurance Awareness Month. To help drive awareness of this valuable benefit, we have interviewed a panel of experts to get their guidance on current trends and the future of the marketplace. Here is what Jessica Moser (JM) – VP Workplace Solutions at Aflac’s Premier Life, Absence and Disability; Brad Maddock (BM) - Regional Manager, Mutual of Omaha; Meghan Shea (MS) - VP Head of Strategy and Solutions at New York Life Group Benefit Solutions; and John Labrie (JL) - AVP Product & Market Development, Unum & Colonial Life, had to say.

Some form of disability insurance has been around since the Middle Ages - what is trending in the world of disability insurance today?

MS - We are seeing a few key themes impacting both employers and their people including the increasing prevalence of mental health conditions, the role of technology and the regulatory landscape related to paid leave. In terms of technology, we’re seeing a growing expectation from employers around increased visibility into their disability program, tools that make the claims experience easier for their employees and the ability to access detailed activity and status quickly and seamlessly. Finally, we know the leave landscape is becoming increasingly complex. Historically, employers needed to navigate only a handful of leave programs, but today they are navigating an ever-increasing combination of federal, state, municipal and company-specific leaves that vary from state-to-state.

BM - We are seeing trends toward richer benefit programs in lieu of richer compensation pay due to the competitive job market. Many groups are looking to make employer paid benefits tax free (gross up or tax choice plans) vs. the traditional taxable benefit.

JL – We are seeing a couple of different trends, 1) creating a better digital experience for employers and employees - it is increasingly important that disability providers digitally connect with employers and employees from the time of enrollment to the time of claim. This connection is typically a win-win for all - ease of administration for employers, faster payments for claimants, and higher customer satisfaction and retention. 2) State Paid Leave programs - The increase of states adopting mandated paid leave plans presents an opportunity for disability providers. These state programs are highlighting the importance and need for disability coverage. This increased awareness will grow consumer interest nationally on the value of this coverage, and there are opportunities to provide coverage above and beyond the state mandated plans.

JM – I’ll start with statutory leaves, given the increasing number of various emerging paid statutory leaves, employers are modifying their disability programs and making adjustments in their current offerings to align with what best serves their employees in various states. Next, I would say, tech, tech, tech - no surprise, the increased use and innovation with technology continues to trend. What has changed a bit, is the type of technology and why. First, there’s more of a recognized need for strategic reporting to help employers identify clients’ trends and gaps, and a growing need for true consultative reporting based on carrier analytics. The need for AI continues to grow, particularly for underwriting shops and ease of claims administration, especially in disability, due to its complexity.

JM - Finally, although many carriers and tech platforms have been talking about API’s for years, implementation of true APIs to drive data sharing with multiple HR and ben admin platforms still remains significant. Simplicity is also important, as consumers come to expect simple and personalized solutions, there is an increased focus on education to help empower employees to make better choices, in many cases, through digestible education and getting away from industry jargon and “insurance speak” in the communication provided in plans and policies. Comprehensive, understandable and thoughtful communications is crucial to help people navigate and make informed decisions about their care. Lastly, I would add that value adds must bring value. Insurance carriers or vendors are looking more closely at the tangential services they offer to ensure they are sensibly integrated and attractively embedded to address employer and employee needs and create differentiated solutions. For example, an EAP is critical, but in today’s world, it often falls short in terms of value as a standalone concept. Depending on the employer’s preference and culture, some may find better utilization with a telehealth provider that includes behavioral health options.

Pricing is important today as we fight the effects of inflation and recession, why might cheaper not always be better when it comes to disability insurance?

BM - We all like a fair price for any service, in disability insurance, it is a financial instrument where you don't appreciate the protection until you need it. With average stats of 7 out of 100 employees using STD benefits and 3 out of 1000 insured using LTD benefits, investing in these plans are key.

MS - Among different disability insurance policies, there is often a wide range of what is covered under the policy and these differences may be reflected in the price employers and employees are expected to pay. A cheaper policy may offer less coverage or fewer features, and for employees utilizing this benefit, they may find that the benefit they are eligible to receive does not cover their full need. As employers think about a disability offering, it’s important to work with carriers that provide options for plans that meet the needs of the organization’s workforce with flexible funding options and varying employee/employer contributions. It’s also helpful to educate employees about the value of a buy-up plan, as employees often underestimate the likelihood of experiencing a disabling event.

What do integrations between disability and leave management programs mean for the client and end consumer?

MS - Ultimately, integrating a disability plan with a leave management program means easier, less resource-intensive administration for employers and a simplified, better benefits experience for employees. The demand for paid and unpaid leave is rising and as states continue to launch programs, employers seek to provide consistency in benefits across their populations. As a result of increasing leave legislation and company leaves, employees may now be eligible for FMLA, state leave, and company leave – in addition to disability – and often these various leaves are running concurrently. The combination of leave types and the roles of the employer and employee can be confusing but integrating absence management with one carrier can enable employers to create a more holistic approach and seamless experience for both employers and their people.

JL - Coordinating disability and leave management programs has become complex for employers and employees. The future management of these programs will require a strong integrated connection from enrollment to the time a claim is filed. This integration will be enabled by the growing suite of digital solutions being adopted by many disability providers. The result of a strong digital integration experience will create simplification and improvements for employers, while providing a better claims experience for employees.

JM - Bottom line, integrations allow for true coordinated leave and disability management. For both the employer and the employee, this can often mean saving time and effort, which reduces cost while increasing satisfaction. More specifically, since there is one carrier managing both disability and leaves, there’s no room for finger pointing should something go wrong. There is one source of truth for data, which leads to smoother customer experience when it comes to general questions as well as claims. Importantly, when these kinds of programs are integrated, employers can apply a holistic lens to identify trends as well as gaps that their employees may be experiencing, enabling them to provide the best and most appropriate benefits.

What does the future hold for the disability marketplace? What impact will state leave programs have?

JL - We will continue to see advancements in the digital experience, increased awareness of the need for disability coverage and new benefits that support behavioral health issues. The introduction of new state PFML laws will continue to impact the types of solutions we present to the customer. Many of these state programs have high income ratios for employees who earn less than ~$75,000. The impact will be a reduction in premium for some sectors of the disability industry. The good news is there will be opportunities and a need for additional disability coverage in these states with longer duration plans or income replacement above the state plan. The growing recognition of Paid Leave insurance as this new category of insurance is exciting. This helps expand the disability and leave market and recognizes the insurance needs for the modern-day employer and employee.

MS - Issues like the increasing prevalence of chronic conditions, rising healthcare costs and an aging workforce are all likely to impact the disability marketplace in the future. As more states implement paid leave programs, and more employees expect paid leave to be part of a standard benefits package, we should anticipate utilization of these benefits – and the potential burden on employers to stay up-to-date and ensure compliance – to increase.

BM - I believe non-integrated disability plans that pay on top of state disability/PFML plans will get more popular over time.

JM - Innovation must continue to be the future of the disability marketplace because new and creative solutions will help the industry to effectively create and price products for diverse customer needs in a consistently evolving and complex regulatory environment. An increase in remote and hybrid work environments has led to employees looking for more flexible policies that address their individual circumstances. That means that carriers must stay ahead of these trends and changes to create the right solutions. For example, studies have shown that those who work-from-home or telework often lead a more sedentary lifestyle compared to their in-office peers, which could lead to an increase on musculoskeletal conditions. As these types of trends continue to develop, carriers will need to determine how to best address them.

JM - When it comes to the impact that more widescale leave programs will have, carriers will have to figure out how to quickly enable applicable state leave programs effectively, while employers will need to be aware of the ongoing changes in order to make the most appropriate adjustments to their current disability offerings. This landscape continues to increase in complexity for employers, including compatibility or new integrations, impacts of various state paid leave laws on various demographics, and differences between mandatory and voluntary statutory paid leave programs. There are many ways carriers can continue to help with this ongoing education. Overall, the disability marketplace must continue to evolve to focus on the needs of people with disabilities. I recognize that seems like a simple idea, but with innovation as the how and consumers as the why for our north star, the future will be bright.

As you can see, disability insurance is growing in complexity as states adapt leave programs, and carriers are already adapting to the evolving legislative landscape to fill gaps in coverage and provide value to members. It is our job to ensure that members understand these valuable benefits and purchase adequate coverage for their needs, and that our clients receive the guidance they need to administer these programs effectively for their employees.

John Labrie

John Labrie, Assistant Vice President of Product & Market Development, Unum & Colonial Life - John is an innovative insurance leader with expertise in product development and risk management. He has U.S. and international insurance experience in Life, Disability, Paid Leave, and Supplemental Health products.

Jessica Moser

Jessica Moser, Vice President, Workplace Solutions at Aflac’s Premier Life, Absence and Disability organization – Jessica Moser leads Workplace Solutions, with accountability for strategic creation and implementation of new Group Life and Disability solutions within Aflac. Focused on the customer, she is responsible for developing innovative strategies, driving results and expanding to new markets.

Brad Maddock

Brad Maddock, Regional Manager & National Practice Leader – Voluntary Enrollment Strategy - in his role with Mutual of Omaha, he has achieved national individual and team success that includes being a multi-year winner of Rep of the Year, Voluntary Rep of the Year, Most New Customers Award, Nationwide MVP, and Office of the Year. In Brad’s new role of “National Practice Leader – Voluntary Strategy”, he is working hard with his new STEPS team to create the largest enrollment ecosystem in the country, already servicing over 1,200 group enrollments in 2022 alone.

Maghan Shea

Meghan Shea, Vice President and Head of Strategy and Solutions at New York Life Group Benefit Solutions - Meghann oversees the Product & Experience, Marketing, Project Management, and Learning & Development teams. She is responsible for the long-term vision, short-term strategy, and timely delivery of all products and connected experiences to drive value for NYL GBS clients, customers, and brokers.