UnumProvident Buyers Study Forecasts the Future of Employee Benefits; Critical illness, accident and other supplemental insurance products drive industry growth

Business Wire, Sept 19, 2006

CHATTANOOGA, Tenn. -- Women outpace men as purchasers of supplemental products - most significantly as buyers of 69 percent of disability policies and 61 percent of critical illness policies.

This statistic and many more are a part of a study released today by UnumProvident (NYSE: UNM). The first-of-its-kind Buyers Study provides a snapshot of employee benefits and a comprehensive forecast of trends by combining industry insights with proprietary UnumProvident sales data.

UnumProvident, a leading provider of disability, life, long term care and supplemental employee benefits, examines the purchasing patterns of more than 100,000 employer customers with UnumProvident coverage to create a portrait of the rapidly changing employee benefits industry.

Building off the findings from a June 2006 survey by the Society for Human Resource Management (SHRM), in which employees ranked compensation and benefits as the top two factors required for job satisfaction, UnumProvident crafted this report to help employers take a hard look at the benefits they now offer employees, and to give recommendations on what they should be thinking about for the future.

"In this environment of increased competition, it's never been more important for employers to understand the value of their benefits package," said Kevin McCarthy, executive vice president of risk operations. "This report helps benefits decision-makers understand the current landscape. But more importantly, it discusses the trends that will shape the benefits of the future."

The study provides specific insight on the impact of some critical subjects in the benefit world including the dynamics of the aging workforce, shifting workplace demographics and the effects of the predicted labor shortage. The study makes recommendations for cost-saving strategies, flexible coverage offerings and even plans for smooth enrollment for employees.

"We're no longer in a one-size-fits-all benefits world," said McCarthy. "Using this study as a resource, businesses can map out benefit strategies, determine specific plan designs for specific employee groups and better determine an overall workable, sustainable and suitable benefit plan that better meets the needs of all workers."

The Importance of Choice

A main focus of the study hinges around employee choice. While traditional, mainstay benefits like healthcare and dental will continue to be the foundation of benefit packages, employees are looking for additional benefits that fit their lifestyles. These ancillary benefits, often dubbed supplemental benefits, help create a more robust benefits package and reflect more unique, individual needs. Offering these supplemental benefits on top of the "foundation" benefits shows that employers are thinking more broadly about employee needs. In fact, nearly 64 percent of U.S. employers with 10 or more employees offer at least one supplemental insurance benefit, according to a 2005 LIMRA study on voluntary benefits.

While life insurance and short term disability are the most popular supplemental products, other products like critical illness, accident and hospital indemnity are reaching double-digit sales growth. In 2004 alone, hospital indemnity/medical supplemental plan sales grew more than 80 percent, according to Eastbridge Consulting Group. The UnumProvident Buyers Study corroborates the value of the plans and projects that the demand for supplemental benefits will grow substantially.

What's Inside

The UnumProvident Buyers Study provides new data based on the company's experience that includes not only broad benefit trends but also recommendations for plan designs. An additional supplement with specific trends within nine industries from education to manufacturing will be available fall 2006.

Some UnumProvident statistical highlights include:

--Women outpace men as purchasers of supplemental products - most significantly as buyers of 69 percent of disability policies and 64 percent of critical illness policies.

--The most common purchasers of supplemental products are age 30 to 49.

--Our supplemental insurance products are typically sold in integrated packages. Stand-alone sales only occur about 20 percent of the time.

--Thirty-one percent of critical illness policies at UnumProvident are sold in the health services industry.

A snapshot of the manufacturing industry (nine total industry snapshots are available):

Eighty percent of manufacturers report a current shortage of qualified applicants with the necessary educational background and skills. Manufacturers provide among the highest levels of benefits for employees of any economic sector and will need to continue to do so to attract the talent they need.

--In the past three years, 34 percent of group long term disability customers opted for 100 percent employee-paid plans.

--In the past three years, 55 percent of manufacturing organizations chose monthly benefit levels in the $5,000 to $7,499 range for group long term disability insurance. About 20 percent chose levels of more than $10,000 per month for this product.