A win-win for the industry

by David Kosar10 Sep 2015
Is our industry ready, now that the Supreme Court of the United States ruled on June 26 that same-sex marriage is legal across the entirety of our country? What does it mean to us as insurance professionals and to the insurance industry as a whole? How will things change, and how will they remain the same?

The court’s decision helps to solve the disparity that many employers have been forced to face in regard to their employee benefits programs and taxation methods. It seems clear that, in some states and with some employers, the structure and administration of employee benefits plans likely will be impacted, and employers may need to modify their benefits enrolment processes to allow all married couples equal access and equal benefits coverage.

Keep in mind that, in some states, there is still no law that prevents an employer from discriminating against an employee who is gay. We are already seeing some people being fi red after entering into a same-sex marriage and then trying to return to work. This could cause a rise in employee practices liability claims or other claims of discrimination.

More broadly, though, is the ruling’s impact on domestic partnerships, for both opposite- and same-sex couples, and the availability of employee benefits to them. It is likely, and maybe even appropriate, that it should affect coverage for domestic partners, as we now can have one single standard for who can qualify for spousal benefits. With the expansion of employee benefits plans to include same-sex married couples, it logically follows that all non-married couples could be considered single, and thus only the employee might qualify for work benefits, not the domestic partner.

Decades ago, we saw many employers expanding their benefits to include domestic partners as a way to help close the gap for same-sex couples who could not legally be married. Out of that followed the need to then allow benefits for all domestic partnerships, both same- and opposite-sex. Once this decision is fully vetted, it will expand coverage for some couples, but it may also contract the eligibility for others, as the one common term of ‘marriage’ is now available to all who want to enter in this legal arrangement.

For the insurance industry, this ruling should also help us as we work with customers on their personal insurance and as we set underwriting guidelines, eligibility, definitions and rate classes. Often, we have young drivers who are living together; we list these couples as married to qualify them for the married rate class. This seems to have become standard practice in some areas. Who among us has not grappled with the question of, “Do I rate you as married or single?” when working with a couple who is in a domestic partnership living arrangement? As agents, we strive to do what is right for the client and for the carrier. I, for one, have walked across the ethical tightrope when making this decision.

The Supreme Court ruling should allow us to no longer face the dilemma of how we rate both opposite- and same-sex couples who live together. This ruling can provide clarity, and we can rate married couples as married and non-married couples (or domestic partnerships) as single. It may take some time to shake out, but one can likely conclude that there will be less ambiguity for insurance companies and their underwriting as we move to a purer use of the married rate class. Insurance companies would be well-advised to review their underwriting standards and definitions for rate classes, as this also can help us ensure that we are getting the right rate for risk.

Change is always difficult, and some agents may be uneasy about this change in particular. Our industry is not one that has been known for quickly adapting to change. However, when we open ourselves up to change, we also open ourselves up to new customer possibilities and growth potential. How we react to this as agents – to our customers and potential clients – can either help ignite new markets and growth, or weigh us down and hold us back.

I believe that our industry is ready to embrace this change. Understanding the impact will only help to solidify our role as risk managers and advisors for our clients.