Insurance agents working in the employee benefits market should prepare to break news of significant rate increases for as many as one in four customers.
In its 2015 Benefits Strategy & Benchmarking Survey
, Arthur J. Gallagher & Co. surveyed more than 3,000 organizations to determine that nearly 25% of employers are preparing to pay 10% of more in premiums for employee healthcare. Because companies still want to offer benefits in order to retain top employees, business owners are facing a tough quandary – shoulder the burden, or pass it off to workers.
“By far, the top benefits concern among employers is the continued rise in the cost of providing group medical coverage for employees,” said James Durkin, Jr., president of Gallagher Benefit Services. “Employers are examining all available options to rein in medical costs, while still offering competitive benefits packages that help them attract and retain the best employees in a tightening labor market.
“Whit the Cadillac tax due to take effect in 2018, employers are expected to increasingly turn to newer, alternative cost-control tactics.”
One of those tactics is likely to prove unpopular with employees. Gallagher’s survey suggests many employers are planning to increase deductibles for workers from their current average for $3,000 for family plans and $1,200 for individuals.
However, the survey also shows that employees tend to place greater value on their total benefits and compensation package rather than on individual components.
This could prove useful for agents struggling to advise business clients.
“We recommend employers focus on a benefits and compensation strategy that both improves the performance of their workforces and is appreciated by them,” said Durkin. “The best way to accomplish this is to listen to your employees and understand that certain employee segments have different needs and wants.”
Gallagher also suggested promoting the availability of wellness programs; despite their widespread availability, 72% of employers said that employee participation is low enough to be “concerning.” Also underutilized is any sort of retirement program for workers.
The survey spanned several industries, geographic regions and employer sizes. Major benefits categories studied included medical, wellness, dental, absence management and disability, life insurance, retirement, voluntary and employee communication.