The Case for Group Legal: Now More Than Ever

To say today’s human resource managers are getting the squeeze is the understatement of the year. They are forced to do more with less, yet at the same time, they need to provide more options.
In a recent study conducted by Prudential Financial, cost containment is the most important employer-driven influence in shaping future benefits strategy, while achieving work-life balance is the most important employee-driven influence. According to the Center for Studying Health System Change, private health insurance premium trends accelerated again in 2003—increasing an average 15 percent, the largest jump in at least a decade—and continued to outpace underlying healthcare spending.

Because of this, HR professionals are being forced to spend the majority of their budget on healthcare; yet, today’s employees are interested in a variety of benefit options—for healthcare, to savings and investment plans, to an array of voluntary benefits.
HR managers are on the hunt—looking for benefit tools that comply with their budget parameters, but also provide value and substance for their employees.

There is a solution available. It’s called group legal insurance.

Legal insurance is a viable product that is the perfect complement to any company’s work-life initiatives. Consider the following:
• 70 percent of U.S. households had an issue during the past year that might have led them to hire a lawyer, according to a 2002 survey by the American Bar Association. But, “when it comes to hiring a lawyer, consumers feel uncertain about how to tell a good lawyer from a bad one,” the ABA report stated.

• A recent study by William M. Mercer Inc. showed that more than 30 percent of respondents believed a legal insurance benefit would improve their productivity on the job. In addition, 50 percent said that legal insurance would be a benefit they might need in the future. Nearly 15 percent said having legal insurance as an employee benefit would influence their choice of employer.
This is music to HR managers’ ears, as most legal insurance plans are easy to administer, offer a variety of plan designs and, best of all, are paid fully by the employee. Legal insurance has existed as an employee benefit for 30 years, but is currently seeing unprecedented growth.

A 2003 study by the Society of Human Resource Management (SHRM), analyzed the usage of 193 employee benefits, and while the study “saw an overall decrease in the number of organizations offering many benefits,” legal insurance witnessed significant growth.

Of all the benefits that have been offered since 1999, legal insurance had the highest four-year growth rate (53 percent) of all externally provided benefits. This marks the sixth year legal insurance has seen a growth in popularity among HR professionals.

The legal insurance plan design
Types of coverage
There are two main types of group legal plans: access and comprehensive.

• Access plans are the most basic of the two group legal plans. They provide plan members (employees) with easy access to legal advice and consultation. Service is provided over the telephone and is restricted to basic legal problems. Should a plan member need representation or in-office services, the member is referred to an attorney for a reduced hourly fee. Access plans cost employees between $5 to $10 per month on a voluntary basis.
• Comprehensive plans include the same services as access plans with the addition of in-office legal consultation, negotiation, document preparation and trial representation for a $15 to $20 per month premium. Plans cover attorney fees for complex personal matters such as adoption, consumer issues, property issues, real estate transactions and will preparation. With most comprehensive plans, service is provided through a network of attorneys who meet the standards of the plan administrator. Plan members may consult attorneys outside the network; however, reimbursements may not be as broad.

Enrollment rates
Enrollment rates for employer-sponsored legal insurance plans average around 10 percent in the first year, according to the National Resource Center for Consumers of Legal Services. Most companies’ enrollments grow to 15 percent to 20 percent, but it is not uncommon for companies’ enrollment to advance to 30 or 40 percent, particularly in the technology industry.

Administration responsibilities
From the beginning of the relationship, the administrative responsibilities of the employer and the outside group legal
insurance plan administrator must be clearly outlined.

One of the most effective ways to do this is with an implementation meeting that outlines details, actions, responsibilities and timelines. This is the time for give and take that will help the group legal insurance plan administrator better manage the plan. Items to consider in the discussion include:

• Length of time the con-tract is binding (some plan administrators do not require a specific time agreement)
• Specific service options
• Any eligibility requirements or actions the employer must carry out to sign with an administrator (minimum number of employees, organizing program promotions or meetings, marketing support, etc.).

Benefit managers also may want to evaluate the amount of time it will take to get the group legal plans they are considering ready for employees to enroll. The plan administrator will be able to provide a more detailed time line after discussions with the benefit manager.
With many group legal insurance plans, once enrollment begins, in-house maintenance of the benefit is generally minimal. For employees who are enrolled in the plan, the benefit manager must create a slot on the payroll for the monthly automatic deduction. Continuing activities may include sending a monthly eligibility file to the plan administrator or an annual assessment of the plan’s acceptance and usage by employees.

Complaint resolution
One of the top considerations when choosing an administrator should be the effectiveness of its complaint resolution process. Does the plan administrator address complaints or are they routed through the employer’s benefit department first?

A strong plan administrator will resolve employee concerns without involving the benefit department, saving time and effort for the company.

Enrolled employees should have access to the plan administrator’s customer service center. Those specialists work with each employee to determine where problems originated and what the administrator will do to resolve the matter. The company should require that the administrator act upon each complaint immediately and seek a solution as quickly as possible.

The agent’s benefit weapon of choice
Legal insurance is the perfect accompaniment for the professional broker. Here’s why:

• Most plans are commissionable. This allows brokers to increase revenue from their existing client base. It’s also a tremendous product to get in front of large prospects.
• It enhances the value of benefit plans without adding cost. Broker’s clients are looking for ways to recruit and retain the best employees. Offering group legal plans on a voluntary basis helps do that without affecting the bottom line.

When considering a legal insurance administrator, consider the following before selection:
• Does the carrier have multiple products? Depending on your client’s employees’ needs, the employer may want a legal plan that offers additional benefit to the employee base. There are several types of legal insurance plans available, and some include financial planning and eldercare assistance, in addition to the legal services. Make sure you choose the right carrier to meet your client’s demands.
• Can the legal plans be customized? Based on your client’s demands, several administrators offer customizable legal plans to better match the needs of the employees. This customization showcases your level of adaptability for your clients.
• Is sales support available? Reputable legal insurance providers offer a team of qualified sales support, helping agents to present and sell the concept and benefit to your clients. This team approach can be invaluable at closing time.
• Are the legal plans easy to administer? One of the biggest requests from companies offering legal insurance plans is ease of administration. Make sure the provider you choose has the processes in place so that once the case is sold, the implementation process is simple and takes little follow up.
• Does the administrator guarantee quick turnaround time? No one’s time is more valuable than yours and your clients. Therefore, you want to make sure you partner with a company that guarantees quick turnaround time for proposals and rate requests.

HR managers are looking for benefit answers. In this age of work-life hysteria and decreasing HR budgets, brokers can become the benefits savior for their clients by offering a low-cost, easily administered product that satisfies everyone’s needs. And that product is legal insurance.

Lou Greenberg has more than 25 years experience in insurance account servicing, marketing and management. His responsibili-
ties with ARAG North America include managing and overseeing the company’s national sales activities. Founded in 1973,
ARAG North America is a leading legal insurance and supporting services administrators, and maintains its domestic headquarters
in Des Moines, Iowa.