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Concerned about security breaches that expose employees' personal data and the many ways identity thieves steal personal information, more major U.S. employers are interested in making identity theft coverage available to their employees, consultants and insurers say.
"It's something that's becoming much more important to employers of all sizes," so consultants are researching the market to help clients sort out the various identity theft insurance products available, said Vince Ashton, executive director of HealthPass, a small-business health care purchasing cooperative based in New York.
Mr. Ashton wants to add an identity theft insurance product--which could be offered as an employer-paid benefit or a voluntary benefit--to the suite of services HealthPass offers employer members.
"Employers and employees need help in sorting through the maze of products and what they do," said Paul Kersting, principal in the health and welfare practice at Buck Consultants L.L.C. in Atlanta.
Identity theft coverage is available through numerous channels that include employer-paid group insurance from American International Group Inc. and St. Paul Travelers Cos. Inc. These policies, with $25,000 limits, cover out-of-pocket expenses in recovering identity, including lost wages and legal fees. The policies include optional restoration services, in which a caseworker walks the policyholder through the steps necessary to restore identity.
AIG has 10 such programs in force covering 10 million individuals who are employees, customers or members of an association. The programs offered by employers for their employees are increasing, said Nancy Callahan, vp of AIG's identity theft and fraud division in New York.
St. Paul Travelers has more than 1,000 commercial group identity theft policies in force, a number that's "been growing significantly over the past several years," said Hartford, Conn.-based Joe Lester, identity fraud product manager for St. Paul Travelers.
AIG recently introduced a product for employers to offer as a voluntary benefit. It provides broad coverage for financial losses due to fraud, including identity theft and other losses such as theft from an escrow account. The product includes restoration services.
For Metropolitan Life Insurance Co., identity theft restoration services are included at no additional charge if an employee takes auto or home insurance products offered as a voluntary benefit by their employer, said Karen Manning, vp of group auto and home sales for New York-based MetLife.
"Our research shows that resolution (restoration) is the better coverage," minimizing the loss in work time when an employee's identity is stolen. "It can take up to 20 working days to restore their credit," said Ms. Manning, who is based in Warwick, R.I.
MetLife said 55 of the Fortune 100 companies offer the identity theft option with their voluntary auto or home policies in most U.S. states.
Some employers offer identity theft restoration services as a voluntary benefit through prepaid legal assistance programs. Such programs may outline the steps needed to restore identity, but may not provide a caseworker.
Most homeowner insurers offer or are in the process of rolling out some form of identity theft protection, said a spokesman for the Insurance Information Institute in New York. Several observers said many people don't realize they can buy identity theft protection as part of their auto or homeowner policies.
More states are requiring employers to notify their employees when an incident occurs that may compromise their personal data, such as the loss of a laptop containing human resources information.
Although employers have concerns about liability in these instances, "in working with a number of companies in developing this suite of (identity theft) products, before the fear of lawsuits, employers have a genuine concern about the impact of the notification letter on the employee when they receive it," said AIG's Ms. Callahan.
The frustration and anxiety of having one's identity stolen can take its toll on performance at work. "Employers are much more concerned about maintaining the work environment and employee loyalty" by helping affected employees restore their identity, Ms. Callahan said.
Should employers offer the coverage as a voluntary benefit?
"With all the stress just to provide health care benefits, I could definitely see employers offering this as a voluntary benefit," said Buck's Mr. Kersting.
But Gail Gentile, senior director of global compensation and benefits at Palm Inc., in Sunnyvale, Calif., said Palm decided to offer the AIG policy as a group benefit. "I wanted everyone to have access to the coverage. With many voluntary plans, people tend not to get interested until they have a need, and then it may be too late," she said.
"Identity theft is an emotional, frustrating, time-consuming experience. I felt it would benefit the individual to have professional support, and at the same time it made sense from a company standpoint because it would help people be able to concentrate on things at work," Ms. Gentile said.
But some consultants say identity theft coverage is not a high priority for employers or employees.
Aon Consulting has assisted clients in offering identity theft coverage for more than two years--both as an employer-paid and a voluntary benefit, said Robert Moriarty, assistant vp in the elective benefits practice in New York.
Although numerous companies offer identity theft coverage, "in talking to clients, I don't think there's a groundswell of interest out there," Mr. Moriarty said.
The supplier of a voluntary product once sponsored by Aon stopped offering the coverage because "they came to the realization that employees would not buy it," Mr. Moriarty said. "It's a mindset: It will never happen to me."