Disability for Small Business: Different Products for a Different Market

At the same time, a lot of these businesses do not employ full-time HR professionals, so they require very user-friendly support mechanisms that don't create time-consuming administrative burdens.

Finally, and most importantly, small businesses usually have tighter benefits budgets. "Buy only what you need" is a small-business mantra that demands flexibility on the part of the insurer.

New products are needed, but it's not about flash and dash and new for the sake of new. It's about building something from scratch and using your customers' needs — not your existing template — as a starting point.

Successful and innovative small business disability products have been designed exactly that way. Research into customers' situations and needs ideally should serve as both a blueprint and a foundation for construction of the product.

One solution is to craft new definitions of disability as the basis for products that enhance affordability and access by focusing on serious, life-changing disabling events. An example is a definition that uses impairment ratings based on widely accepted guidelines, such as those published by the American Medical Association. That concept is so innovative it has been granted patent-pending status.

Another answer is to combine features of different types of coverages into a single product requiring only one enrollment and payroll deduction. An example is a product based on a short-term disability platform that extends to a long-term benefit lasting from a full year up to age 65, if specific conditions such as cancer, diabetes or multiple sclerosis are diagnosed. Thus, popular elements of short-term and long-term disability and critical illness policies are combined into one product.

Serving the small business market also requires the ability and the willingness to craft unique packages to satisfy customers whose needs and objectives may be more dependent on local conditions within their industry than national macro-economic factors.

The small business benefits customer can't afford to pay for bells and whistles that don't provide value. So, in some cases, insurers are working with brokers to create benchmarking studies within industries or metropolitan areas and then craft benefit packages that allow their clients to easily and affordably achieve parity with their competition.

Product flexibility, therefore, is key. Small business customers want flexibility in determining a definition of disability, in participation requirements, and in the ability to "class-out" benefit packages by employee category. They thereby pay only for the benefits they want, and not for "extras" that don't provide the return on investment they need.

In sum, this market-driven innovation explosion has taken many forms. New products have emerged, as well as new approaches to sharing costs between employers and employees. These innovations have played a critical role in transforming disability income protection from an executive suite perk to a mainstream employee benefit for the masses.

Of course, we can expect the future to bring new challenges: greater cost pressures, new customer demands, bigger underwriting challenges. The pressure to innovate isn't going to go away any time soon. But those who are up to the challenge have a huge new market to win.