Editor’s Note: To access your SHRM credits for listening to this podcast episode, click here.
Welcome to This Week in Benefits, a new biweekly podcast from Mployer Advisor, the company that is changing the way employers search, evaluate, and select insurance advisors online.
In each episode, our team will bring you the latest news and industry updates in the world of employee benefits. We will break down top headlines, bring you interviews with industry insiders, and highlight market trends and stories we’re following.
In case you missed Episode 16, click here to listen and to access the show notes.
Date: November 30, 2022
Episode Season and Number: Season 1, Episode 17
Episode Title: In this week's episode, Abbey Dean and friend-of-the-pod Jeff Reinke (Editorial Director for Industrial Equipment News) discuss Ford’s decision to offer longtime employees with performance issues the option to voluntarily leave the company with a severance package rather than go through a performance enhancement plan.
To listen to Episode 17 of This Week in Benefits, click here.
Ford Offers Easy Exit to Underperforming Workers, SHRM
Ford Gives Underperforming Employees Option to Take Severance Package, The Detroit News
Abbey Dean: Hi everyone, and welcome to this week's episode of This Week in Benefits, a podcast from the team at Mployer Advisor where we discuss all things in employee benefits. I hope everyone had a wonderful Thanksgiving. We're still getting out of the post Thanksgiving haze, but to help me do that, we have back on the podcast today, my friend and former boss, Jeff Reinke of IEN. And we are going to be discussing an interesting new policy that Ford Motor Company announced earlier this, well, I guess it was a few weeks ago now, but it started November 1st. So we are going to look back at that headline, dig into the kind of meat of the story, and Jeff is going to give some interesting perspectives on what this might mean and also what it could indicate for the larger manufacturing industry. So stay tuned and take a listen to my conversation with Jeff.
Hi everyone, and welcome to another episode of This Week in Benefits. We have a return friend of the podcast on today, Jeff Reinke of IEN. Thanks for coming on again, Jeff.
Jeff Reinke: My pleasure, Abbey. Thanks for having me.
Abbey Dean: Of course, always. Again, just any sort of excuse to talk to you. So <laugh>,
Jeff Reinke: Just trying to relive this Wisconsin weather from South Tennessee.
Abbey Dean: You know, I honestly am so it's a win-win for me.
Jeff Reinke: Well, hey, a couple months we can go ice fishing if you really want to get back into it.
Abbey Dean: Jeff, I never went ice fishing even when I lived there.
Jeff Reinke: Well see. There you go.
Abbey Dean: Would you actually take me?
Jeff Reinke: If you would make the track up here to do it, I would definitely take you on the ice, I think especially because you would last maybe 90 minutes and we'd be done. So <laugh>,
Abbey Dean: Okay, so this is recorded so you can't back out.
Jeff Reinke: I'm in, I'm in.
Abbey Dean: Okay, awesome. So anyway, aside from ice fishing, today, what we are talking about is some news that came out of Ford a few weeks ago. Basically what the news is, is that Ford is giving long-time employees with job performance issues, the option to voluntarily leave the company under a policy update that went into effect officially on November 1st. So what it's doing is it's altering its approach to addressing white collar employees, of which they have around 30,000 who are deemed under performers. And they're telling managers that some of those workers must choose between severance, or a performance enhancement program, and that's internally known as the performance enhancement plan, or PEP. So there's sort of like Jeff, we talked about this a little bit before, but this isn't a new type of plan. There's a lot of sort of structures out there that are similar.
But what is different about this is that the plan before has been in place for U.S. salaried workers with at least eight years of service experience at Ford? So I'm, I'm just very interested in this. Basically, Ford is giving white collar workers who have been flagged for underperformance the option to have weekly check-ins with managers and have new objectives over a six week-ish period. Or they can just go ahead and say, hey, you know, I don't think this is working out for me and take a severance check. So it's very interesting, and I wanna touch on this a little bit but Jeff, when you first heard this news, what was your reaction?
Jeff Reinke: Well, Ford's had a lot of interesting developments going on internally with the way that they're structuring or restructuring their company. And a lot of this, and they're not alone, is based on the fact of just the impact of the electric vehicle market. Earlier this year, I wanna say it was March, they came out with an announcement basically saying they were going to split the company into what they're describing as two interdependent companies.
You're going to have Ford Blue, which is the internal combustion engine production focused vehicle company, and then you're also going to have Ford Model E, which is obviously focused on the production of electric vehicles. So to me, when I first saw this, it seemed like they were taking additional steps to get their company the right size and with the right people to move forward with really going after the electric vehicle market. They've also made announcements by hopefully having, I think 16 electric vehicles within the next three or four years out on the market, which is very aggressive, especially cause right now they're nowhere near that. So a lot of, I think this just to me it reading between the lines, even though they didn't say anything specific, this was another move focused on electric vehicle development
Abbey Dean: Right and then a lot of the coverage I saw surrounding this, they were very clear that this is not I think there was some rumors going around that they might announce another round of layoffs. And so when this news came out, they were like, no, no, no, no, we're actually <laugh> trying to make sure we have the best people in the business who want to be here. And so it's kind of an interesting approach. Actually, the Wall Street Journal they interviewed someone named Liz Weber who's a management consultant, and she said quote, she's "never come across an approach to performance management like Ford's new policy." She also called it "impressive and very gracious, and a move that demonstrates Ford's commitment to supporting underperformers within its white collar ranks." So I don't know about all of that, but it is a very interesting approach.
Jeff Reinke: I think she's being very gracioU.S.there. I think this is kind of a half glass full approach. Basically, Ford is weeding out some of their underperformers, because the dynamic with producing marketing servicing electric vehicles is very different. Now, the supply chain is similar in many respects, but you've got a customer that's going to have to take on a real paradigm shift. You've got different design specifications, you've got just completely different production processes and models. Those models really depend on a little bit more automation fewer hands on the vehicle while it's being made potentially, and leveraging a lot of these new production technologies. So when you're looking at really refocusing so many elements of your internal operation, there's no way that can impact the folks working in the front office who are involved with designing those vehicles, marketing those vehicles, selling those vehicles, dealing with dealerships, dealing with customers.
All of those things are going to be impacted as well, especially because Ford has also taken steps in with their supply chain in terms of developing a lot of their own battery factories especially in the southeastern part of the country. So when you look at an internal combustion engine versU.S.a battery pack, the number of suppliers is less, the design elements are less. So that's going to impact things in the front office as well. And again, I think that's where a lot of this is coming from, identifying these underperformers and getting people in there that are going to be better suited to their EV business.
Abbey Dean: I should also say that I could not find any numbers anywhere about how many underperformers Ford usually has in this existing program too. So I don't know how big of a program this is or how big of a change but it is an interesting policy. Jeff, do you know of other automakers or manufacturers who do have similar programs or initiatives like this?
Jeff Reinke: Well, I mean, the buyout dynamic is not new. We've seen that a lot. But typically it was related to sort of time at the company, maybe certain positions that were being eliminated as opposed to them transferring somebody to a different job. They gave them the option of a buyout. So when it was downsizing or again, letting people retire early, essentially those things are not new for it to be directly tied to a performance program or a performance, for lack of a better word, rating program or ranking program. Yeah, that's very different. Typically, you would see automakers maybe being a little more aggressive depending on the type of job we're talking about now we're talking about front office folks as opposed to UAW workers on the plant floor. So that's a different dynamic too. But again, typically it'll be more about weeding them out more I think in a more democratic way. This is unique to look at performance.
Abbey Dean: Ford also clarified that the updated policy allows, they kind of clarified what you're talking about, what the actual severance payouts would be based on, and apparently it's based on, as you kind of said, length of employment, continuation of benefits, and then also career transition services. I don't know what that part means. Honestly, I think there's, yeah, I know. Yeah, and maybe or maybe there is a position, maybe you could move up elsewhere. I don't know. Maybe that's a different part of this that they didn't go into as much too but the process they say would remain unchanged for those who opt to go into a PAP program rather than leave. So they could be subject determination without severance if they fail to turn around their performance. So I mean it is it an interesting carrot they're putting out there?
Jeff Reinke: Well, it also allows them to move more rapidly. Hopefully we can get these folks essentially off the books. Part of this may also be trying to leverage the fact that there's been a lot of layoffs in the tech industry. Yeah. When you look at social media companies, even some of the more technologically focused companies like Cisco and Microsoft laying off a lot of people right now, Amazon's another one. Maybe Ford is looking at those types of individuals. When you look at data scientists and artificial intelligence people and other developers of different types of technologies, they may be real appealing and this allows them to, pardon the term, just sort of cut some dead weight and move on to get the right people in place. Again, I think this is really focused on advancing their electric vehicle business.
Abbey Dean: And that was going to be my next question, if this change signals anything to you about the state of Ford, but also just large, more largely speaking about the state of the industry right now and all the kind of changes and curve balls that everyone has been hit with this year.
Jeff Reinke: Well, it's unique in the fact that automotive, and again, we're looking more at the plant floor when I say this as opposed to the front office, but labor shortages have been real. I mean, especially in automotive, they've had a very difficult time finding enough workers. So to hear about a program where they're basically allowing those who have come up on the shorter end of the evaluation stick to leave with some money in their pocket is unique. That's different. We haven't heard, we haven't seen that before, how this impacts automotive going forward. I think every one of these companies is embracing the transition to the electric vehicle marketplace in a different way. Some people have gotten out way in front of it. Ford has been a little bit more, I would say, gradual in their approach. They've started with the F-150 Lightning, they started with the Mustang in electrifying those vehicles, which are two of the most popular vehicles on the planet.
I mean, the F150 has been the number one selling vehicle in the U.S.for 40 years. So their approach has been different, but I think that's what you're going to see with a lot of automakers around the world, seeing what they need to do to get the right people in place to really push these electric vehicle programs forward because they have some extremely aggressive goals in terms of the percentage of their portfolio that they want to be electric and the goals that they have in place for making sure the mass majority of the vehicles they produce are EVs.
Abbey Dean: Is there anything else you think we should touch on that's interesting about this or important to mention?
Jeff Reinke: Well, I think what's interesting, remember Ford is obviously the oldest automaker in the U.S. so when they do things, people still pay attention. I think geographically, it's also very interesting with them still being very focused on Detroit. They've been one of those that has not had as strong a move away from sort of the Midwest, although they have opened, they've got a big truck plant, they've got a lot of facilities in Kentucky. So again, and they're even this year, the way that they've done things in terms of the job cuts, we heard about 3000 cuts earlier in the spring, another 8,000 that were rumored this summer. But then we've seen huge investment again in that Kentucky facility where they make trucks, where they're hiring upwards of 500 or more auto workers. So I think everybody does watch a company like Ford and sees what they do, not necessarily to emulate them, but to get a feel for what may or may not work in their plans as well. So it'll be interesting to see how this plays out, and I could see other automakers potentially taking this route in terms of, here's an easier way to, again, get the right people that we need in transitioning towards electric vehicles.
Abbey Dean: Awesome. Well, I hope they maybe do some updates. I'm assuming if it goes well, we'll hear about it. If it doesn't, then maybe we won't.
Jeff Reinke: Yeah, I, and then you kind of feel bad for these folks who didn't take the initial offering. Oh, I know. They're not able to improve their performance level, and they're letting go anyway, and I kind of feel like that Ford is going to be, even though they wouldn't say it in any type of press release or external statement, I think they're pushing these folks to take the deal,
Abbey Dean: Yeah, I bet so too. Okay. Well, thank you, Jeff, Reinke, for all of your insight and expertise. We'll have to have you back on soon. Either that or I'll just come to Wisconsin and we'll go ice fishing.
Jeff Reinke: That would be wonderful. Abbey Dean, thank you so much for having me on your podcast.
Abbey Dean: <laugh>. Awesome. Thank you, Jeff.
Jeff Reinke: All right, see you later.
Abbey Dean: And that wraps up today's episode. Thanks so much to everyone for tuning in. Now, if you have not yet, please subscribe to the podcast. If you leave us a review, I would be forever grateful. Don't forget too, that you can leave us a voicemail message if you want to send along ideas or have follow up questions to past episodes. Also, something that you guys may not be aware of, but if you are an HR professional and you need some SHRM credit, this podcast does qualify for SHRM credit, so be sure to check out our show notes to learn more about how to access that. In the meantime, I hope everyone is doing well, getting into the holiday spirit, and I will see you all next time.
Thank you for listening to this week's episode of This Week in Benefits brought to you by Mployer Advisor. Mployer Advisor is changing the way employers search, evaluate, and select insurance brokers. Our intuitive platform connects employers and employees to get great benefits and insurance plans by providing employers with actionable data to easily evaluate and select the best advisor for your company's specific needs. To learn more about Mployer advisor and our suite of products, please visit our website at mployeradvisor.com and tune in next time. Thanks.
A survey of benefits brokers conducted by Wellfleet Workplace and EIS found that brokers’ top pain points all center around demands for better technology from their carriers. The survey, conducted to gauge broker sentiment on partner technologies, also examined factors that impact broker satisfaction and their ability to be successful partners with carriers in the current workplace benefits market.
According to the survey, respondents’ top six carrier pain points are all IT-Related. The specific pain points include:
The survey’s results also reveal that while brokers are increasingly embracing their roles as advocates for employer clients, they find themselves in an uphill battle with legacy technology. This finding is critical because technology is the No. 1 reason brokers will recommend a carrier to a client, according to the survey's researchers.
“Employers are stretched thin with the management of their current benefits programs, as well as crafting and implementing benefit strategies that resonate with their employees. When you add in a poor technology experience, the pressure HR benefits managers feel grows exponentially,” said Samantha Chow, LAH Markets Lead at EIS in a statement. “The survey findings reveal the carriers that are able to provide meaningful solutions are going to excel.“
The aforementioned survey also found that, after technology, the other top factors that influence brokers’ carrier recommendation are financial rating (57%) and the claims submission process (36%).
In order to meet the growing demands of clients and the changes caused by the ongoing pandemic crisis, brokers have pointed to a need for strong technology enablement from their carriers. Data from the survey reveals that in order for a broker to recommend a carrier to a client, there first needs to be confidence that the carrier will provide a seamless digital experience for both broker and employer.
What’s more, brokers want to be able to provide their clients a digital-first, customer-centric experience; this includes the ability to access portals and microsites, as well as the power to easily integrate with client benefits administration systems.
When asked about the importance of a carrier’s ability to provide a robust digital experience with features such as a broker portal, client analytics, and educational materials, 93% of respondents ranked it as “very important.”
Looking for more content related to brokers and digital transformation? Read on for “How to Choose an HR Software System.”
One of the most common misconceptions among modern business organizations is that human resources and human capital are the same thing. Some organizations historically have used the terms interchangeably, and there remains a great deal of overlap between them. However, the modern understanding of these terms as distinct concepts is more than a vocabulary lesson; it is critical to the optimization of both.
The broadest area of overlap between human resources and human capital, as the nomenclature suggests, is that they are primarily concerned with the people who make up an organization. But while human resources involves the employees themselves and their role within the hierarchy of the organization, human capital management is about the intangible assets that each employee brings to their role in the organization.
To put it another way, for any goal that an organization may hope to accomplish, human resources covers the ‘who’ in terms of who will be responsible for defining, delegating, executing and accomplishing that goal. Human capital covers the ‘how’ in terms of the tools, such as creativity, problem-solving, experience, network and authority, that each human resource within the organizational hierarchy will put to use toward seeing the organizational goal achieved.
Another feature that human resources and human capital management share is a difficulty being precisely quantified. While somewhat rudimentary if not crude as a metric, human resources can at least be measured on the balance sheet in the form of salaries and benefits.
Human capital, on the other hand, is even more difficult to represent in figures – though theoretically at least, that human capital should be equally represented in the same salaries and benefits earned by the human resources that embody that human capital.
This is where the distinction between human resources and human capital management becomes significant. It is standard practice within most organizations to associate salary and benefits directly with the concept of human resources. This is because the core salary and benefits package is perceived as being baselined by the title or position within the organizational hierarchy, and then adjusted according to the skills, experience, value and advantages (or lack thereof) brought to the role by the individual employee hired to fill that position.
In other words, salary and benefits are conceptually understood as primarily a function of the titled position within the organizational structure, which then potentially can be modified up or down depending on other factors including the perceived human capital that a prospective hire might bring to their new position.
What is a PEO and Is It Right for My Company?
It should be noted that this perception of human resources as an independent variable with human capital as subordinate is entirely rational given that human capital is so difficult to identify and measure – even more so in the interview and acquisition process. Certainly, abstract human capital assets like talents, good business practices and habits, and creative problem-solving skills are incredibly difficult to value in advance of a thorough on-the-job performance evaluation, which is rarely if ever possible (in outside hire scenarios at least) and is difficult to consistently value even then.
Even more difficult to properly value than the human capital assets that are contained within a single human resource (e.g. talents, skills, individual experience) are the human capital assets that interconnect the employees, teams and divisions. More than just collectively creating the culture of an organization, the individual human capital that each member brings to their role indelibly shapes the systems and processes around them.
Accordingly, there are really two separate classes of human capital assets: those you bring with you to the company (in the case of new hires) or to the new position (in the case of promotion from within) and those human capital assets that develop within the company, ideally representing interconnections, symbioses, and complementary abilities among the organization members.
Put another way, there is one class of human capital assets that employees bring with them when they come and also take with them when they go – along with the new experience and knowledge they’ve gained during the course of their tenure with the organization.
The second separate class of human capital assets represents the footprint that remains embedded within the organization when a member of that organization and their individual class 1 human capital assets no longer fill that space.
With all that in mind, how then can an organization best apply these conceptualizations of human resources and the two classes of human capital assets when valuing employees in terms of salary and benefits packages?
As discussed above, salary remains a rational means for evaluating and rewarding value to an organization, especially in new hire and promotion scenarios. However, it is not the only nor necessarily the ideal tool by which talent can be retained. Further, talent (and other class 1 human capital assets) are not the only human capital assets that the organization has an active interest in preserving.
Salary alone has its limitations as an effective retention tool in today’s highly competitive talent retention environment. In fact, many organizations are turning to creative benefits and incentives structures to better reward employees for the often undervalued footprint that their intangibles make on the organization.
While salary for any given skillset or set of experiences can always be met or exceeded by an outside offer with the flick of a pen, uniquely tailored benefits packages designed to optimally fulfill the needs of an employee can be a much more difficult offer to match and can better align the employee’s incentives in accordance with the size of their intangible footprint.
Knowing the difference between human resources and the human capital management can be a helpful consideration to account for when evaluating those resources and capital assets.
Even more so, when determining how best to compensate employees for the intangibles they bring to and create within the organization, revitalized benefits packages are an effective way to properly align the incentives of both the employee and the organization as a whole.
With a vast variety of benefits options and insurance brokers combined with the current technological search capabilities to nearly instantly find the best fit for your organization, there is no reason not to make sure your current benefits and incentive options aren’t neglecting the human capital assets on which your organization depends.
Start searching today on Mployer Advisor.
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.
An insurance broker can save money for your business by procuring better rates and coverage than you could find and purchase on your own. And the best part? The insurance company usually pays them commissions – not you. But many businesses wonder if brokers have a fiduciary duty to serve in their best interests.
The good news is that insurance brokers do have a fiduciary duty to their clients.
When you hire an insurance broker, they work directly for you – not the insurance companies. So, you can think of an insurance broker as an intermediary between insurers and businesses, with no stakeholder interest in the policy itself.
In this post, we discuss a broker’s responsibilities to clients, how they are paid, and the fiduciary duties of insurance brokers and agents.
An insurance broker's main responsibility is to understand your business and find fitting insurance policies within your budget. They also provide ongoing services to help determine if policies should change, assist you with compliance, and help submit claims and receive benefits.
Some insurance brokers focus on specific industries or types of insurance, while others provide advice on many different business insurance and benefits options. For example, brokers specializing in property and casualty insurance help small businesses find coverage for risks like natural disasters and lawsuits, while group health and life insurance brokers will assist companies with benefit plans.
Many insurance brokers and advisors will also act as an extension of your human resources team. When you need to reconsider policies or file a claim, your insurance broker can be a liaison between you and your insurance carrier. Because brokers work for you, not the insurance company, their advice should serve your company’s best interest.
On the other hand, since they are paid by commissions by insurers based on premium costs, brokers could be confronted with conflicting incentives and fiduciary responsibilities. Understanding whether insurance brokers have a fiduciary duty first requires understanding how they are paid.
Not all brokers are compensated in the same way, so the commissions or fees they collect may be different.
Insurance brokers typically are paid through a commission based on a percentage of your policy premium. In most cases, commissions are paid by the insurance company that the employer chooses.
Sometimes, brokers will charge fees as they take on consultant (or advisor) roles, providing ongoing services that go beyond buying and renewing policies. You should know if your broker or agent charges fees, and who pays the fees, before they start searching for insurance policies on your behalf.
Some brokers are contracted for several years, so you might need to pay broker fees through the contract term, regardless of policy changes, unless the broker violated your contract. Broker fees are usually non-refundable, so you will still have to pay if you cancel your policy mid-term, unless your insurance broker violated your contract.
Employers should know how their brokers are paid, but insurance policies are seldom simple, so you will need to ask about every potential fee or commission. To avoid unexpected costs, you should know commissions and fees upfront, examine your broker’s relationship with insurers, and understand the difference between insurance brokers and insurance agents. Good brokers have no issue with transparency.
A fiduciary is a person or group (such as a brokerage firm) that acts on behalf of your company, putting your interests ahead of their own. So, being a fiduciary requires being bound legally and ethically to act in a client’s best interests.
Fiduciary duty requires that a representative in a position of trust, such as an insurance broker or advisor, must act in good faith and honesty on behalf of a client.
Insurance brokers voluntarily accept this fiduciary responsibility and agree to carry out that responsibility in good faith. Legally, that means fiduciaries must act reasonably to avoid negligence and not favor anyone else's interest (including their own) over your company’s interest.
Avoiding conflicts of interest is crucial to acting as a fiduciary, so a broker or advisor must disclose any potential conflicts to them serving your interest ahead of their own or the insurer’s.
Fiduciary certifications, along with insurance broker licenses, are managed at the state level in the U.S. and can be revoked by the courts if a representative neglects their duties.
You might wonder if insurance brokers have your best interest at heart. In most cases, they do. When you hire an insurance broker, they work directly for you – not the insurance companies.
Insurance brokers and insurance consultants perform similar functions, are licensed, and have a fiduciary duty to you as the insurance buyer. Moreover, an independent, fee-only advisor is legally bound to be a fiduciary.
The fiduciary duty between an insurance broker and a client is based on trust and good faith, and requires that they act in your interest as a client. A “standard of care” is established between these two parties and it must be upheld, regardless of external interests.
Their duty ensures that brokers advise and work for you when purchasing coverage, not beholden to a particular insurance company.
The distinction between fiduciary responsibility for an agent compared to a broker, however, becomes blurred when agents are working for insurance carriers to sell their products.
An independent or captive insurance agent is primarily a representative of the insurance companies they work for. As far as fiduciary duty goes, liability typically falls to the insurer if the representative is determined to be an agent. This means the agent will not have a fiduciary duty to the insured.
Brokers, meanwhile, owe their allegiance to the client, even though they are typically paid by carriers. In other words, they are an agent for your company and owe fiduciary duty to you as the insurance purchaser.
As we discussed earlier, most brokers are compensated by commissions, which could present an inherent conflict of interest. In the case of conflicting interests, brokers and agents are supposed to disclose the "dual agency" or risk being accused of neglecting their fiduciary responsibility.
You should be able to trust that your broker is finding appropriate coverage for your company. If they are not attentive, do not provide valuable advice, or only appear when renewals are coming up, it may be time to browse other options.
Broker relationships do change. If you are unsatisfied, know that more than 40% of businesses do not feel satisfied with their current broker, and 21% have changed brokers in the past three years, according to Zywave.
When evaluating and choosing insurance brokers, be sure to explore benchmarking studies that give you an understanding of who is out there and how much you should pay. Mployer Advisor’s proprietary M-Score can show you how different brokers rate in terms of industry expertise, transparency and cost.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.
From “policyholder” to “premiums” and “providers,” much of the jargon used in the insurance industry isn’t easy to keep straight. For those unfamiliar with the difference between an insurance broker and carrier, Mployer Advisor outlines the distinction below.
An insurance broker is a licensed professional who helps businesses evaluate and select insurance policies. Unlike insurance agents, brokers do not work for a particular insurance company. Rather, they represent employers and work to help businesses find the best plans and coverage for their needs.
Some brokers work with individuals rather than companies. However, the type of broker an employer will work with deals primarily or exclusively with procuring insurance coverage for businesses. These brokers are often called business insurance brokers or commercial insurance brokers.
There are several types of commercial insurance brokers, such as health insurance brokers, property & casualty (P&C) insurance brokers, liability insurance brokers and more.
Insurance brokers assess the unique needs of a given employer, then work with insurance carriers to negotiate and select an array of coverage options. For this reason, employers who work with a broker often end up with more choices than those who shop online or purchase directly from an insurance provider.
As a result, employers are able to evaluate a variety of plans and policies that an insurance broker brings to the table. Employers can compare coverage, costs and more in order to select the best plans for their company and their employees.
An insurance broker typically gets paid by commission. Usually this commission is built into the premiums paid by policyholders every month. Thus, it’s not a separate payment, but included in the price of the policy purchased through the broker.
Learn more about broker commissions and fees or try our commission calculator to see if your insurance broker costs are competitive for your market.
An insurance carrier is the company that actually provides the insurance policy. Also called an insurance provider or insurance company, a carrier offers one or more insurance products to individuals or groups, such as health insurance, property and casualty insurance, workers’ compensation and more.
In other words, a carrier is the company you pay premiums to. They underwrite your insurance policy and pay out for claims.
Examples of large insurance carriers include State Farm, Allstate, Humana, Cigna and Progressive.
Insurance carriers can offer policies for individuals, such as Geico’s car insurance or Liberty Mutual’s life insurance. However, carriers can also offer business insurance which covers a company or a group of employees. Examples include Blue Cross Blue Shield’s group health plans and Delta Dental’s group dental insurance. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.
Paid time off (PTO) policies are always a big part of the equation for individuals comparing benefits offerings across potential employers. Still, despite the need and desire for competitive PTO, 800 million days of PTO go unused by American workers every year, according to an article by Forbes. This number equals about 6.3 days of unused time off per every American with a full-time job.
Unused vacation days are not only costly for employers, but also can lead to burnout among members of the workforce. What’s worse, these problems have been exasperated by the pandemic due to work-from-home culture and a blurring of lines between work time and personal time.
In response to these trends, some companies like Goldman Sachs are issuing a mandatory PTO policy, with the hopes of curtailing burnout and encouraging more work-life balance. In this piece, we’ll dive into some of the reasons employers across the nation are weighing the pros and cons of implementing a mandatory PTO policy.
A recent study by Deloitte found that 77% of workers reported feeling burned out at their current job. What’s more, 64% said they were passionate about their jobs while admitting they were still frequently stressed out.
Burnout manifests in different ways depending on the individual, but burnout can lead to reduced production and employee engagement while simultaneously contributing to higher turnover rates. Recognizing the signs of burnout and requiring employees to take their earned vacation time forces them to unplug and take a step back from work, allowing them to recharge and be more productive upon their return.
Requiring employees to use their time off is also good for an employer's bottom line. When employees don’t have leftover PTO days at the end of the year, employers won't need to pay for that unused time or carry them over into the next year. For smaller companies where resources may be more scarce, this makes the accounting process easier to manage.
One of the reasons employees may be hesitant to take time off work is because of how they believe their coworkers will perceive them. A good work ethic is something that is universally admired, and nobody wants to be the one asking their coworkers to take on more work on their behalf.
Requiring employees to use their time off not only makes it easier for employees to feel comfortable asking for help, but also sets a precedent that time off is not only encouraged but expected as well. Some companies have even gone as far as tying in financial incentives, specifically by requiring employees to take a certain amount of time off to collect their end-of-year bonus. Changing the company culture around time off is a long-term approach, but one that could lead to a more relaxed and balanced workforce.
Lastly, having mandatory PTO will help recruit young talent. When searching for a job, research reveals that Gen Z workers heavily prioritize maintaining a work-life balance over other working generations. Attractive PTO policies, however, are of no use if a worker gets into their role and discovers that none of their peers utilize the policy. Mandatory PTO can help create a culture that prioritizes a healthy work-life balance, which could prove attractive in recruiting and retaining younger members of the workforce.
Mandatory PTO is not a necessary step for every business, especially if your culture has other measures in place to promote work-life balance. However, if you notice that your employees are hesitant to take time off, it may be time to audit your policy and gauge whether mandatory PTO could be a useful strategy.
Perhaps mandating PTO use is not the best scenario for your company–fair enough. Other ways to encourage time off could include additional all-company holidays that do not necessarily align with the federal holiday calendar. These days can set employees’ minds at ease because they won’t need to worry about getting their work covered or falling behind.
Another viable option: Offering financial incentives for employees to utilize vacation days. For instance, some companies such as PwC have implemented “summer Fridays,” so employees can start their weekends early in the warmer months.
No matter your specific solution, encouraging time off is an important strategy for HR leaders and managers to consistently promote year-round.
For more information, listen to our recent podcast episode, “Combatting Employee Stress and Financial Burnout With Voluntary Benefits,” or read our post “The Pros and Cons of the Four-Day Workweek.”
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to check out our By the Numbers series.
Offering a comprehensive employee benefits package makes all the difference between attracting top-quality candidates and losing them to your competitors. An employee benefits package is one of the first things potential candidates will ask about during the interview process, and for some, a benefits package is more important than their salary.
For many workers, employer-provided benefits offer a sense of stability in a hectic world. Knowing that medical expenses are taken care of, a life insurance plan is set up, and a retirement savings account is growing can bring peace of mind. But, sometimes, employee benefits packages can be a bit complex and confusing. It can be hard to accurately explain all of the ins and outs of your benefits policy, so here are some tips that will help your communication be as clear and concise as possible.
Accessibility is a big hurdle to climb when it comes to your employee benefits packages. The best thing any business owner can do is to make all information easily available on a medium that your employees feel comfortable using. Since benefits can vary widely from employer to employer, it can take some time for employees to feel comfortable understanding how benefits work, so you will want to keep everything in one place for easy access.
With the wide variety of HR software available, this is much easier than you think! There are many user-friendly platforms available that keep all the information an employee would want to know in one place. For example, they can see their bank of PTO hours, access their health insurance card, and learn the specifics of disability coverage. When employees have instant access to all their important benefits information at the touch of a button, they will have a sense of control that they are at the center of their benefits program.
One of the best methods of explaining comprehensive employee benefits packages is by giving employees all the information they need as soon as they start working at your business. Any business owner needs to make sure each and every new hire is properly informed, so use new-hire orientation to your advantage and carve out time to educate new team members fully.
Be sure to provide every hire with a detailed, printed overview of every benefit offered, step-by-step instructions on how to access benefits information, and a frequently asked questions document. It is also a good idea to have one of your existing employees be your business’s benefits resource. This person can either be an HR professional or an employee who has been with the organization for a while and is available to answer any question, big or small, about anything related to benefits. When your employees are given a resource like this, they are more likely to feel comfortable and knowledgeable about their plan.
Medical benefits are usually the largest piece of the benefits puzzle, so it is always a good idea to carve out some time to go over medical benefits in extreme detail. Generally speaking, this is twice a year; once for all new-hires when they are brought on the team, and once before open enrollment starts in the fall, as this is the only time in the year any employee can change their healthcare plan. You’ll still need to communicate with your team regularly if there are any changes to your plan, but a business-wide meeting or conference is always a great idea.
Keep in mind, the spouse may be the person that is the benefits person in the employee’s home. Find a way to communicate to the spouses as well.
Health benefits can be notoriously hard for even employers to understand, so don’t hesitate in bringing in a health benefits professional to come and lead these meetings and answer questions for you. Remember, you most likely are enrolled in the plan as well and may have some questions you need to ask for yourself! That’s what professionals are for.
Sure, you’ve thoroughly explained the “what” of your benefits package. But that may not answer all of your employee’s questions, so you’ll need to emphasize why you have provided what you have. It is common for most employees to feel both uneducated and confused about why specific things are offered in your plan, so take the time to adequately explain your reasoning.
For example, if your health care offerings are changing due to updates within the Affordable Care Act, explain why. Or, if you provide specific personal days that are meant to be for mental health days instead of vacation days, say that! Not only will being overly transparent about your “why” aid in your employee’s understanding, but it will also help to show a more personal side of you and your business.
Your employees need to know that they feel trusted and valued as workers on your team. One of the best ways of showing this is to be completely open and honest about how much you are spending on their benefits packages. Most employees don’t realize how much their employer pays for their personal benefits plan, and seeing the number printed on paper will go far to add in their appreciation for both you as a boss and the benefits offered. They’ll see how much your company is investing to make them happier and healthier in their daily lives, which will work to boost morale and job satisfaction.
Who said that benefit plans have to be dreadful and boring? You can easily spice up your communications about benefits by hosting a benefits fair. This can be something simple where you decorate a conference room with detailed information about each plan, where the employees can wander in at their leisure. Add some health-specific raffles, such as gift cards to a healthy restaurant or workout equipment, to make things a bit more fun. Doing something creative like this can go far in helping the benefits feel less daunting to new employees, as well!
In addition, you may be able to schedule all the carrier representatives on site to answer questions.
With these ideas in mind, your employees will become both knowledgeable and confident in your employee benefits packages. An open line of communication with your employees is always a great idea, so use these tips and tricks to get started. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and read "How to Measure the Success of Your Employee Benefits Package" for more information on this topic.
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New research from people management platform Gusto shows that employer-sponsored 401(k) offerings dramatically increase employee retention and—even better—pay for themselves several times over in lower staff turnover.
Even more compelling, researchers found that offering a retirement plan can save small-and-medium-sized businesses (SMBs) more than $100,000 annually in reduced employee turnover costs.
The data from Gusto also revealed that retirement benefits led to better retention across all industries. In fact, employees were 40% less likely to leave during their first year if they were extended retirement benefits. In some positions, that figure jumped to 54%.
On average, employees with an active 401(k) were also 32% less likely to leave their job in any given month.
What’s more, most SBMS don’t offer retirement benefits of any kind. Overall, 22% of SMBs on Gusto’s platform extend retirement benefits. Specifically, for businesses with fewer than 10 employees, retirement plans for available to 15% of employees. However, 65% of employers with more than 100 employers were offered access to retirement benefits.
In a recent article, Luke Pardue, an economist at Gusto, explained that the time spent finding new workers can be a time-consuming and expensive endeavor for employers.
“One of the best ways a company can avoid those costs is by offering a 401(k) retirement plan for its employees,” he wrote. “Our calculations show a 401(k) plan can lead to annual cost savings of more than $100,000 in reduced employee turnover costs alone or a 2x return on the initial costs of offering a 401(k).”
For many working Americans, the importance placed on financial security has always been high; however, this sentiment was further exacerbated during the tumultuous ups and downs of the market due, in large part, to the COVID-19 pandemic.
As a result, millions of Americans chose to leave their jobs for better-paying positions with competitive benefits packages, resulting in what many refer to as the Great Resignation.
In fact, according to the Pew Research Center, in September 2022 there were two job openings for every unemployed person, and the rate at which workers were leaving jobs for more attractive positions hovered near historic records.
Additionally, it’s worth noting that more than 40 million employees currently do not have access to retirement benefits. If those workers could access a 401(k) through their employers, they’d be able to save as much as $5.7 trillion in 20 years.
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of Mployer Advisor’s new podcast “This Week in Benefits.”
Editor's Note: This piece has been republished with the permission of The Horton Group.
During a merger or acquisition, employees may understandably feel wary about the security of their jobs, changes in management style, and cultural differences between the two merged companies. If business owners do not keep these factors in mind while preparing for the transaction and continue to neglect them during the entire process, employee productivity and morale could decrease drastically.Mismanaging talent can adversely affect a mergers and acquisition (M&A) transaction, which is why you should implement a strong talent strategy before the transaction has closed. Here are some effective ways to retain your best employees during the mergers and acquisitions process.
Many traditional retention strategies involve pay incentives, such as stay-or performance-based bonuses. However, firms are also looking for additional levers that can help bolster their retention strategy.For example, executive medical reimbursement offers programs that allow companies to reimburse their key employees tax-free for out-of-pocket medical expenses for themselves and family, which would not otherwise be covered by their base health insurance plan.Additional options include but are not limited to:
It may be a good opportunity to reevaluate your company’s benefits package. Creative benefits are an opportunity to show candidates how you can help them inside and outside the workplace. Do you offer flexible work schedules? Are there options for childcare? Are you able to offer remote working options? All of these are topics to consider.
It is important to keep employees’ needs in mind during the transaction and to update them frequently on the status of the merger or acquisition. If a certain change being implemented is going to be altered, let them know. If a timeline is going to run longer than projected, inform everyone. Keeping your employees in the loop will make them feel involved and trusted as a valuable part of the company. This also means you must be very transparent about positions that will be opening up or others that will be eliminated. It would be helpful if this information were decided and relayed before the actual merger begins, but sometimes decisions are unforeseen or must made along the way. These should be handled with tact and honesty.
Additionally, if employees are taking on extra work during the merger or have moved to a position that drastically alters their current roles and duties, ensure they are compensated fairly for the change. If employees must take on extra tasks and their increased efforts are not recognized, it could cause resentment.
It is also important to set aside time to reward and recognize employees for successfully handling changes, adapting quickly to new methods or processes, and managing new roles or duties well. Employee recognition is a great way to keep everyone encouraged and moving forward.
Stay positive and keep employees motivated when working through the merger or acquisition. There may be changes in the plan that are not ideal for your company or employees but are necessary to facilitate the merger. You should encourage employees along the way and keep reminding them of the end goal.
After the merger is complete, your most important focus will be training employees on changes to policies, processes and new systems or programs. Coordinate small group training where employees can work hands-on and receive guidance regarding any changes in workflows and processes.Employees may feel more comfortable asking questions in a smaller group setting. Any employees who need assistance above and beyond the scope of normal training can be helped on the spot. It’s also a good idea to set benchmarks to measure where you want employees to be with the training and by when. Setting goals will help employees who are struggling with or resisting the changes to stay on track.
Make sure new management is open and honest with employees after the merger–in return, employees will feel more comfortable being open and honest with management. Fostering these relationships and keeping them positive is imperative. Consider setting time aside for old and new employees to get to know each other outside of the office or during the day away from work responsibilities for a period of time—this could accelerate the time it takes for everyone to feel more comfortable around each other.A successful merger or acquisition requires planning beyond contracts and finances—business owners must remember to address the needs of their most important resource: employees. Looking for more exclusive content? Check out what's trending on the Mployer Advisor blog, and be sure to check out the Season 1 finale of Mployer Advisor's podcast "This Week in Benefits."
Business interruption insurance is a type of commercial insurance that compensates your company for any lost revenue or unexpected expenses.
Business interruption insurance generally does not cover temporary interruptions, such as power outages, or offer protection against losses unrelated to property insurance. If your company experiences an unexpected incident, like a fire, then your office could be forced to close temporarily. During these types of unforeseen closures, business interruption insurance could cover your expenses during that time.
Although your business insurance broker can discuss specific events covered by your policy, below are the different types of expenses that business interruption insurance covers in most cases.
Business interruption insurance covers all your lease and rental payments while your business cannot operate. If you are closing your business temporarily, you will still have to make rent or lease payments on the property. In most cases, business owners must pay for the equipment they don't own.
For instance, if your electronics store is damaged in a fire, you can use business interruption insurance to cover the rental payments until your shop reopens and throughout the renovation period.
Let's suppose your business can no longer make sales, serve customers, or work with clients because of damage to your property. Interruption insurance compensates your business for lost revenue, and the policy guarantees that a temporary shutdown does not turn into a permanent closure.
There are times when you could be forced to relocate your business. If any devastating or unexpected event forces you to relocate, business interruption insurance will help you bear the brunt of the moving costs. Your business could also use this money to cover the rent in a new location.
Retaining employees and covering their wages can feel impossible doing a temporary business closure business because you may have difficulty paying their wages. With business interruption insurance, you can pay your employee wages on time. Most policies offer coverage for up to a year for each employee.
An example: If a water pipe bursts in an architecture firm, it can flood the office and destroy valuable documents. Moreover, the carpeting, furnishings, and walls could be damaged. With business interruption insurance, the company can pay their employees for up to a year while the space is repaired.
Even if your business is experiencing a temporary shutdown, your company will still have to meet its annual and quarterly tax obligations.
With business interruption insurance, you will have enough funds to pay your taxes, even with no revenue.
Most business owners, especially small business owners, have loans to pay. If you are not making any substantial profits, business interruption insurance will ensure you can make your loan payments and pay down your loan.
Typically, business interruption insurance has a coverage limit, or the maximum amount allocated toward a covered claim. All financial losses that exceed your coverage limit become your responsibility. Thus, it is crucial to opt for coverage limits suitable for your business needs.
Here are a few points employers should consider when selecting business interruption coverage:
Business interruption insurance can help you pay for extra expenses and replace lost income if your business experiences an unexpected and damaging incident. This type of coverage is a crucial component of every solid business plan.
Business interruption insurance typically has a restoration period that refers to the length of time your policy can help pay for extra expenses and lost income. Ensure you read your policy documents closely and consult your broker to understand your restoration period. Generally, it takes two to three days before the restoration period kicks in, but it can also last for about a year.
The best way to get the right business interruption insurance coverage for your company is to work with an experienced commercial insurance broker, preferably one who specializes in your company’s industry.
Looking for more exclusive content? Check out the Mployer Advisor blog, and read on for what types of business insurance are required for your company.
Critical illness insurance provides a lump sum payment to policyholders who experience one of a few serious medical conditions, like a debilitating stroke or certain cancers, that are specified in the policy. These medical conditions often create significant financial burdens beyond the costs that traditional health insurance will cover. For this reason, critical illness insurance is typically complementary to traditional health insurance coverage.Imagine a scenario in which a person is diagnosed with a potentially life-threatening illness. Even with the best possible health care coverage, that person is likely to experience additional financial strains that are well outside the scope of their traditional insurance policy.
For example, time away from work may lead to reduced or eliminated income. The illness itself may render the person incapable of taking care of dependents or even themselves, thereby requiring additional childcare and other assistance. Further, perhaps the treatment for the illness is not available locally and therefore requires extended travelling and accommodation expenses.
In the above scenario, critical illness insurance may serve as a crucial stopgap that enables a person who is experiencing unfortunate and often unfamiliar circumstances to maintain some semblance of financial security and normalcy, such as looking after their household and paying rent or a mortgage despite significant time away from their job or home.
In some ways, critical illness insurance is similar to the traditional health insurance coverage that it supplements. For example, critical illness insurance policyholders will typically pay monthly premiums for coverage that extends to a finite list of conditions that are clearly outlined in the policy.
However, this is essentially where the similarities with traditional health insurance end. In fact, there are substantial differences in terms of what critical illness insurance covers as well as when and how claims are paid out.
The premiums for critical illness insurance tend to be considerably smaller than the more expensive premiums that accompany traditional health insurance.
Depending on the size of claims payment outlined in the policy, premiums for critical illness coverage may only cost 10% or less of what a policyholder's traditional health insurance coverage costs.
Of course, the cost of the monthly premium is relative to the potential maximum claims pay out, with lower premiums earning lower maximum claims payouts while higher monthly premiums lead to larger maximum claims payouts.
Critical Illness policies are more akin to term life insurance policies than traditional health insurance when it comes to the policy term. For critical illness insurance, many if not most policies will only remain active until the policyholder reaches a certain age, at which point the policy will expire. This is often 70 to 75 years old.
The list of conditions that critical illness insurance will cover is significantly smaller than the range of ailments that traditional insurance will cover, sometimes only including a handful of conditions.
Ailments and conditions that are commonly covered in critical illness insurance policies include:
Chronic conditions are typically excluded from critical illness insurance policy coverage because the continuing nature of such maladies is better served by types of insurance with other claims payout structures beyond the capped, lump-sum payout structure of critical illness policies.
Unlike traditional health insurance which typically pays out claims directly to health care providers, critical illness insurance pays out claims directly to policyholders in a lump sum once the policyholder has been diagnosed with a covered condition and has met the policy requirements.
Paying out critical illness insurance policies in lump sums allows policyholders to choose how best to allocate those financial resources to best meet their individual needs, which can include anything from paying a high deductible on their traditional insurance to taking a vacation if they deem rest and relaxation to be a prioritized step toward their recovery.
How the lump sum is spent is entirely in the policyholder’s discretion.
The amount of the lump sum can vary significantly from one policy to the next depending on the cost of the monthly premiums (higher premiums = higher lump-sum claims payouts) and the specific conditions that are covered by the policy. The size of capped payouts may range from $10k up to $100k and possibly even more in some circumstances.
There is a maximum amount for each lump-sum payout per condition that is covered under the policy. For example, assume that a given critical illness policy has a maximum payout of $30k and covers 5 conditions including strokes and coronary bypass. If a policyholder has a stroke and receives the full 30k lump sum payout, and then the same policyholder has a heart attack and needs a coronary bypass, most critical illness policies will then payout an additional 30k lump sum for the heart condition and treatment.
However, should that same policyholder then experience a second qualifying stroke or heart attack, the policy will no longer pay out a lump sum for those conditions. The policy would still pay out for the other 3 remaining conditions for which the policyholder had not yet made a claim.
Even when a patient experiences one of the handful of conditions that are covered by a critical illness insurance policy, full payment of the maximum lump sum requires that the condition in question meets a requisite degree of severity, as outlined in the policy.
For example, if cancer is covered in a critical illness policy that has a maximum lump-sum payout of $50k, that policy will likely stipulate that it will only pay out $10 to $15k if the cancer is stage 1 or stage 2, whereas stage 3 or stage 4 cancer might garner the maximum payout.
If a proportional payout is made due to the limited severity of the condition experienced by a policyholder, the policy will still pay lump sums for that same condition up to the amount of the capped maximum lump sum.
For example, assume a given policy has a $10k maximum capped lump sum for certain cancers, but will only pay out 10% of the maximum lump sum in cases where the cancer is in stage 1. In this instance, if a policyholder is diagnosed with stage 1 of a qualifying cancer, they would then be paid out $1k. However, if that same policyholder is later diagnosed with stage 4 cancer, they could then be paid out the remaining $9k to reach the amount of the maximum capped lump sum in accordance with the policy.
Even when a policyholder is diagnosed with or experiences one of the conditions explicitly covered in a critical illness insurance policy, the lump-sum payment, proportional to severity or otherwise, may not necessarily be immediately forthcoming.
For example, some critical illness insurance policies have explicit delays in payment to make sure that the policyholder survives the initial onset of the condition (i.e. stroke victims may have to wait a period of several weeks as outlined by the policy to ensure they survive their stroke before their claim will be paid out).
A 2018 article from the Society of Human Resource Management states that 25% of employers offer some form of critical illness insurance as an opt-in benefit for their employees. This was 8% higher than the number of employers that offered critical illness insurance in 2017 and 10% higher than 2014.
Given the trend, it’s likely that even more employers are offering CI benefits today.
There are many advantages to critical illness coverage, including relatively cheap premium payments for what can be a windfall of financial support when it’s needed most. Further, that financial support is flexible in terms of allowing the policyholder to focus those resources where they are most needed.
The most obvious negative aspect of critical illness coverage, however, is that the small number of conditions that a given policy will cover means that there are a wide variety of significant and sometimes catastrophic medical issues that a policyholder may experience for which their critical illness insurance policy will be of absolutely no help whatsoever.
That said, from the perspective of the employer, there is little downside to offering critical illness insurance on an opt-in, voluntary basis.
Given the relatively low premiums, these policies are typically affordable both for the employer (in the somewhat rare event that employers are making contributions) and for the employees, even if they’re paying their own premiums entirely out-of-pocket.
To get critical illness insurance, you should start by talking to your insurance broker. Ask them the questions above to ensure you receive the policy that best fits your specific needs.
If you don’t have a broker already or need a broker who has experience and expertise with critical illness insurance, Mployer Advisor can help. We make it easy to find and compare top-rated insurance brokers in your area.
Search for brokers with critical illness insurance expertise near you, and see reviews, ratings and more to help you find the best fit. Start your search now on Mployer Advisor.Find Insurance Brokers Near You
At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.
The past year has made many businesses worry that they will become the next to be impacted by bouts of civil unrest, riots or looting. You might be wondering if insurance will cover the damages that could occur at your properties.
Fortunately, most standard commercial insurance policies cover the cost of damage associated with riots and looting. Property damage caused by civil commotion and vandalism is generally covered under many business insurance policies.
This would include damage caused by rioters as well as business interruption caused by police and civil authorities during such an incident. Of course, coverage varies depending on your policies and your carrier.
In this post, we discuss which businesses need coverage for civil disorders and which types of business insurance cover riots and looting.
The limitations of insurance and the process of reestablishing operations became major hardships for many brick-and-mortar businesses in 2020. Civil disturbances can pose significant risks for many companies, but business owners can protect their assets with the right insurance coverage.
Businesses with property in urban areas are especially susceptible to losses due to riots, civil unrest or vandalism. A small business in an area that has seen rioting and looting faces not only rebuilding costs, but also a wait for customers to return.
Restaurants, too, could have specific risks inherent to their business property that require them to purchase individual coverages for riots and looting. Some policies cover inventory separately, and some businesses like jewelers or art galleries carry specialty policies that have specific limitations.
Small businesses need coverage for civil disorders when there is a potential for rioters or vandals to cause physical damage to your building or property. People may break into your location and loot property, including your inventory or merchandise. You may lose income if people damage your property and you cannot operate regularly until repairs are finished. You lose income if a civil authority closes access to the area where you do business.
Luckily, if your business is damaged from arson, violence, vandalism or burglary, a standard commercial insurance policy will help cover the costs. Which damages an insurer will cover – and how much of it – depends on your insurance plan and your management of claims.
The best way to prepare is to contact your broker, agent or insurance provider to understand exactly what your policy covers if your business suffers due to riots and looting. Make sure to ask for specific details, including the type of damages covered, how much you would be compensated, and how to file a claim properly if this occurs.
Businesses most commonly have general liability insurance, property insurance, and workers’ compensation insurance. Most of these standard business insurance policies will cover damages in the event of riots and looting. But different types of insurance and policies may protect you in different ways.
Here are some tips on how to use coverage and file claims for damages related to civil unrest, riots and looting:
After speaking with your broker or carrier and finding out what your policies cover, you may want to pick up additional commercial coverage that protects your business and your employees. Every business should find a reputable broker or agent that specializes in commercial insurance to find out which policies best protect you in the unfortunate event of civil commotion, riots and looting.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and learn more about insurance brokers here.
With over 50 years of experience, Omaha-based consultant Marty Traynor is an expert in the world of insurance and employee benefits. Recently, he interviewed other industry experts to get their perspectives on everything from the insurance world to corporate leadership and beyond.
During the interview, Traynor spoke with Kari Beam, a Certified Executive Coach and the Founder of Kari Beam Coaching, about her recent career transition and knowledge of the healthcare industry. For the past 15 years, Beam worked in healthcare leadership, including as a Chief Strategy Officer for Bon Secours Mercy Health and for over a decade at HCA, before starting her own firm in 2022.
Beam shared her thoughts on pandemic-induced stress being felt by the healthcare industry and the future of the healthcare system. She also offered some advice for those looking to start out in the healthcare industry.
Beam also discusses her new role as an Executive Coach. She advises those looking to make a similar change to take some time to really get to know themselves before committing to a new direction.
For more advice and insights, watch the video below for the full conversation. Also, be sure to watch Mployer Advisor’s compelling, on-demand webinar co-presented by Beam– titled “Tips for Managing a Hybrid Workforce and Redefining Company Culture”–or read the recap here.
Stay tuned for future “A Conversation With” interviews led by Traynor.
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, including our recent webinar recaps and show notes from Mployer Advisor’s new podcast “This Week in Benefits.”
It’s almost that time of year again. With the 2022 open enrollment season rapidly approaching, there are several worthwhile questions that you should ponder in the coming weeks. How happy are you with your current broker? How have they best served you over the past year? Were there times when their offerings or communication felt less than satisfactory?
Whether or not you’ll be shopping for a new broker to expand upon or better your company’s benefits offerings, what’s most important when researching and auditing your current plan is weighing your employees’ needs. Do your research when building your candidate pool, and consider multiple brokers to represent your company before making a final decision. Remember to start the RFP process as far in advance as possible, too. It takes time and no small amount of effort to decide on a broker who will give you the day-to-day service and value that your employees need and deserve. Not sure what other questions to consider? Here are four to get you started:
Most employees thrive in a flexible work environment, and the same thing goes for creating a benefits package. Your employees need to see that their needs are important, which is why conducting a company wide survey and soliciting feedback will increase satisfaction in whichever plan that you choose. When choosing a plan, it’s also important not to take a one-size-fits-all approach in today’s diverse workforce environment. A good broker will have the knowledge on how to use your new plan to your advantage by keeping current employees around for longer while also attracting new talent.
A broker’s job goes far beyond simply discussing and running through your benefits plan. They should be communication experts, who possess the skills and expertise on how to address, cover and inform your employees on the best ways to approach open enrollment. In fact, nearly one-third of employees either know nothing about or don’t understand their healthcare coverage. Addressing the topic of education and transparency immediately in your broker selection is crucial to overall employee satisfaction and happiness.
When shopping for a new insurance broker, it’s important that a broker possess the expertise and knowledge regarding the rules and regulations that come with the ever-changing policies and industry. Your broker can give you the tools and resources to stay on top of this information in the time-sensitive manner you require.
Not only should brokers be experts in the insurance they’re providing you, but they should also be experts in your company as well. Your broker should have a genuine curiosity and want to dive deeper into your company’s mission, industry and demographics. From there, your broker should deliver customized information on why those solutions make the most sense for your business. And, above all, find a broker that offers you complete transparency to solidify your trust.
Technology is constantly changing and your broker needs to be changing with it to provide an easy and interactive solution for your employees to easily select their benefits plan. Although there has been an accelerated shift in transitioning to digital-first solutions, many brokers still fall short in this area. In the end, you’ll thank yourself for selecting a broker who provides you with a seamless digital experience and an efficient time-saving journey. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and see what to expect from your insurance broker here.
For employers looking at insurance options, cost can be a major factor in your decision. For some required types of insurance, like disability, you might wonder how much these policies cost employers.
The cost of disability insurance for employers depends on the type of business, amount of employees, age, gender mix, percent of coverage, maximums, elimination periods, coverage definitions and limits, and location
Disability insurance will provide your employees income security when needed.
In this post, we discuss what disability insurance covers, the cost of disability insurance for employers, and how to find the best plan for your company.
Disability insurance is a type of employee benefit that pays income if employees cannot work due to a non-work-related accident or illness. The insurance is needed more than you might think: About a quarter of 20-year-olds will become disabled before they retire, according to the U.S. Social Security Administration.
Disability insurance covers a large portion of a worker’s income when they lose their ability to work due to an illness or injury not resulting from their job. It generally replaces 60% of a policyholder's annual income up until retirement age – typically 65 years old.
In many cases, you may be required to purchase certain types of disability insurance when you have employees. U.S. government regulations generally require companies with employees to have a minimum of workers’ compensation, disability and unemployment insurance. Some states can require additional insurance, depending on your business and how hazardous it is.
Your business is explicitly required to carry short-term disability insurance for employees if you operate in a state where this coverage is mandatory. States currently mandating commercial disability insurance include California, Hawaii, New Jersey, New York and Rhode Island.
Otherwise, insurance requirements vary by state, so visit your state’s official commerce website and speak with an insurance broker to find out exactly what your business needs.
Offering this benefit is crucial to many employees, because rates for group plans are almost always less expensive than rates for individual coverage. Since your company is buying for many people on a consistent basis, the premium typically is much lower than individuals can get on their own. This is typical of any group policy versus an individual policy.
In short, almost every business needs group disability insurance to safeguard its employees in the event of serious injury or illness. The coverage also alleviates the company from determining when to pay and how long to pay a disabled employee and the liabilities therein. It transfers that to the insurance carrier.
There are two types of disability insurance: short-term and long-term.
Short-term disability insurance covers a portion of an employee’s salary for a short period of time. The length of time varies from policy to policy, but typically covers three to six months after the incident that qualified them as disabled. Long-term disability insurance, meanwhile, is used when the policyholder is disabled to where they are unable to work for more than six months.
Importantly, disability Insurance does not cover work-related injuries. Workers’ compensation insurance is used instead for accidents occurring on the job or work-related illnesses.
Disabilities from sickness and illness triggering coverage generally include chronic conditions like cancer, heart disease and back problems, along with off-the job injuries and, sometimes, pregnancy. Pregnancy coverage is an important benefit if your business expects to offer paid maternity benefits, as short-term disability partially compensates leaves of absence due to childbirth.
If your business offers or plans to offer disability insurance, you should familiarize yourself with the Employee Retirement Income Security Act (ERISA). These federal regulations, along with state guidelines, dictate how disability claims are made and what standards your group insurance policy must meet.
The cost of premiums for this type of coverage will vary for every organization and every insurance carrier. Researching coverage terms and prices, along with speaking to the right insurance experts, will tell you what makes the most sense for your business and lead to the best coverage.
The disability insurance policies you can choose and how much you pay for them vary depending on your business’s industry, among other factors. Costs for coverage are affected by the perceived risk of employees in your industry and the stability of the workforce.
According to the Bureau of Labor Statistics, short and long-term insurance plans generally cost $0.15 per employee, per hour worked on average. This works out to a premium cost between 1% and 3% of an employee’s total compensation. Monthly premiums – how much you and/or employees pay for the policy – range from about $25 to $600, but this varies depending on many factors.
To determine pricing and coverage limits for these policies, disability insurance providers group jobs into specific occupational classes taking into account the hazards of the job and typical risk profile. Much of this figure is based on the historical claim experience associated with certain professions. However, the size of your business generally will not change the cost of disability insurance for employers. All else equal, a small business owner is often subject to the same rate as a large enterprise. The rate is made up of many factors that include loads and discounts.
Of course, employers take many different approaches to benefits and the insurance policies dictating them. Some businesses cover disability insurance premiums in full, while others ask employees to contribute a small portion to participate.
Contributions that an employer makes or the employee make have tax consequences to the benefit. This is best reviewed by a professional insurance broker, agent or advisor.
The cost of short-term disability premiums are similar to, but generally more expensive, than long-term premiums. Employers are not legally required to offer long-term disability coverage, but many mid-sized and large corporations offer it to workers as a benefit.
There is no limit to how many employees your business can offer disability insurance, and much of the workforce sees it as an essential benefit. Having coverage will not alleviate the risks your employees face outside of work, but it will protect them financially when tragedy strikes.
Insurance brokers and benefits brokers can research coverage options, conditions, limits and costs across multiple insurance companies, and recommend policies that best fit your needs. They can eliminate your need to learn about the intricate details of disability insurance requirements, making it easier to choose the insurance that will provide your employees security and fit your budget.
To decide which insurance you need and find the best disability insurance plan for your company, consider using an insurance broker who knows what you need and can get you the best rates. Start your broker search at Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.
Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.
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