Building Transparency and Trust in Voluntary Benefits for a Reluctant Manufacturer

By BeneRe
November 3, 2023

When a large manufacturer wanted to help its employees but didn’t want to see them burned by high commissions and low benefits, they found transparency and a better value proposition with BeneRe.

Key Takeaways

  • A large midwestern manufacturer wasn’t offering voluntary (supplemental health) benefits coverage because of transparency issues in the industry and a poor value proposition
  • BeneRe showed the company how our group captive model is different, providing full compensation transparency
  • All surplus claims funds were returned directly to the company’s employee benefits program for reinvestment
  • The manufacturer saw 25% enrollment by the second year, and they’ll be receiving plan dividends in the seven figures this year

The voluntary benefits industry has built up a set of problems over the years, and those issues are often felt by employees and employers more than anyone. Sometimes employers are wary of offering supplemental coverage to workers because plans lack transparency and may not offer a value proposition that would truly help their employees in times of need.

BeneRe believes in transparency and communication. Teaching companies about how our voluntary benefits plan is different has already helped many employers see the light. Let’s walk through a case study about how we helped a manufacturer understand the value and offer better benefits to their employees.

Voluntary benefits doubts for a midwestern manufacturing company

We started working with a large midwestern manufacturing company with 40,000 employees. They were in the minority of employers in that they weren’t offering Accident, Critical Illness, or Hospital Indemnity coverage.

The reason was that the CFO didn’t want to expose employees to a poor value proposition, so they weren’t providing this coverage, in hopes of protecting employees from the downsides of the voluntary benefits industry. In many voluntary benefits plans, low claims ratios mean more earnings for the carriers, not the employees. Insurance brokers take advantage of a heaped commissions structure that gives them a big payout in year one – thus incentivizing them to keep switching carriers every couple of years.

Company leaders were looking for a good reason to start offering these benefits, but they just couldn’t see how it would be a positive. They wanted more transparency about the plans. They didn’t like the traditional fully-insured, obscure model.

Another reason they were hesitant was that, if there is very little uptake from employees and only a small percentage sign up, it isn’t worth it for HR to take on all the extra work of offering these plans.

How BeneRe helped solve these problems

BeneRe got to know the company’s concerns and spent time educating leaders about how our program is different.

We were the first to offer a group captive model for voluntary benefits, a model that has been used with great success in other types of insurance for decades. We saw the dire need for a better model within the voluntary benefits sphere. Our approach is fully transparent, and everything earned is reinvested into dividends for plan members that can be used for additional health and wellness support.

Company leaders were surprised when the uptake was significant. In the first year, they saw 20% of employees enroll, and the second year jumped to 25%. Anywhere between 20% and 30% is a great starting point for an online enrollment environment, and we expect the company to see 30% in its third year.

The company has pretty good compensation levels as a manufacturer, but they still have relatively high deductibles and out-of-pocket maximums, so the employees saw the benefit in voluntary coverage right away. When a person gets into an accident, is hospitalized, or has a serious diagnosis, they receive a check that can be used for whatever expenses they need help with. It’s that simple.

Many employers may still be holding back from offering voluntary benefits for reasons similar to this manufacturing company. There are still 10% to 20% of employers not offering these benefits.

With BeneRe, employers can integrate simple communication, enrollment, and administration to make enrollment easy, gain transparency, and take advantage of the dividends to reinvest in better employee benefits.

Better employee communication leads to higher benefits engagement

One reason that many employees may not enroll in voluntary benefits coverage is that it’s not prioritized like medical, dental, and vision insurance are in the enrollment systems. To address this issue, BeneRe helps our clients put a better communication strategy in place so voluntary benefits coverage signup comes right after medical. Employees intuitively think that the most important benefits come first.

We also helped the manufacturer communicate to workers why they were now offering these benefits and how impactful it would be for employees to receive additional support if something happens down the road. BeneRe assisted leaders in integrating the program into their technology platform, further boosting participation.

The company’s first dividend from the BeneRe program will be in the seven-figure range. These funds will be available to use in their employees’ health and wellness programs. 

While companies don’t sign up for BeneRe to “win the lottery” with potential dividend payouts, if they’re going to offer the benefits anyway, the possible money is better spent on their employees’ health programs than kept by the insurance industry. Human Resources departments are restrained by their budgets, and they have to consider the cost of everything on a per-employee per-month (PEPM) basis. They can’t always afford many of the perks they want to offer. So, the potential dividends in a reinsured group captive plan like this are a found resource that can help them fund other goals for their employees.

The benefits of BeneRe’s model

To summarize the key benefits that the manufacturer and other clients experience from BeneRe:

  • Full transparency in the plan
  • Assistance with a communication strategy for employee education and encouragement
  • Lower employee premiums
  • Quarterly reports show employers how BeneRe is performing
  • All underwriting gains are reinvested back into the plans for their health and wellness programs

Ready to get started with BeneRe? Reach out today for a complimentary financial analysis of in-force programs.