In the past, employers have rarely chosen to tap that river of dollars. The major reason, say observers, is that it’s hard for an employer to sell coverage to workers and act in their best interests at the same time.
Certainly, selling insurance to minimum-wage workers can come off as sleazy, even predatory. “As soon as you introduce a profit motive for the HR function, you introduce a philosophical conflict of interest,” says Michael Main, a director at ChapterHouse, a strategy consulting firm in Downers Grove, Ill. “The idea of employee benefits is to provide health and welfare benefits to employees. It’s kind of a selfless act to attract and retain quality employees.”
Then again, corporations are not exactly famous for their acts of selflessness. Already, a few employers have purportedly taken the plunge into direct sales of benefits. Main points to one closely held California grocery-store chain where an officer of the company has been selling health insurance to store managers and cashiers for seven years. Main, who once worked as a consultant to the business, declined to name the company.
But he does note that, on paper, the company’s health insurance program operates as a pure profit center. The officer who sells the insurance, a licensed insurance agent, turns his commissions over to his employer. The chain’s HR department even conducts meetings about the coverage and enrolls employees in the plan, according to Main.
Granted, that plan isn’t the stuff of conventional employee benefit programs. But executives of the chain think they’re providing employees with a net gain: relatively cheap coverage for an under-served population of “gray-collar” workers.
Not on My Block
Given the raging potential for conflicts of interest, it’s doubtful companies will have their HR heads out there selling annuities to factory workers any time soon.
A growing number of businesses are allowing outside insurers to set up shop inside their factory gates, however. Standard Register, a document-management company in Dayton, Ohio, lets insurance vendors sell a wide array of financial products to employees.
Richard Mayer, the total rewards manager of the company, says coining it off the company’s 5,600 employees is “not what Standard Register’s core business is.” So why the company store? To reinforce the idea that “Standard Register is a great place to work,” Mayer explains.
Standard Register is certainly a great place to shop. Among the company’s current offerings: employee-paid Liberty Mutual auto insurance and homeowners coverage. Workers can also buy extra long-term disability, life, and accidental-death insurance to supplement the coverage Standard Register already provides. The company is also looking at the possibility of adding employee-paid long-term care insurance and pre-paid legal coverage.
Lately, however, reining in health insurance premiums has become a greater priority at the company than enriching its menu of voluntary benefits. Like many other employers, Standard Register was hit with whopping increases in its benefit costs in 2002. Last year, the company witnessed premium hikes of 12 percent to 17 percent for its various health plans. Those increases have company executives homing in on the issue of “what increases we will accept,” Mayer says, “and what we are willing to ask the associates to pay for.”