FOX 11 Investigates layoff insurance
MADISON (WLUK) -- Wisconsin’s unemployment rate continues to hover near record lows. Help wanted signs are everywhere. If you need a job there are plenty available. And yet that didn’t stop Roger Kamin of Appleton from purchasing employment insurance six months ago.
"I wanted to make sure I had a backup plan," said Kamin.
The insurance he bought was a new kind of policy being offered by a company out of Madison called SafetyNet. It’s simple and bare bones. Kamin pays $30 a month, and if he is laid off, SafetyNet will pay him $9,000.
Kamin admits his current job is going well. But that’s what he thought in 2009 when after 11 years at ANS Machine in Peshtigo, his position was suddenly eliminated.
"I found out real fast how things could change overnight," said Kamin. "Basically, I thought I was pretty secure in my other job too being a plant manager but it turned out not to be."
Is this a peace of mind kind of insurance?
"It is, I mean we realize people aren’t prepared," explained Mark Greene, director of innovation and product development for SafetyNet.
Greene admits the approach is new for insurance. It was first offered in Wisconsin in 2016. It has now received approval to be sold in 9 other states. Greene says the company isn’t in business to make a killing. He says the aim is to help people who haven’t been able to save in the event they lose their job.
"Insurance speak, what we operate at is a minimum of 70 percent loss ratios, which means for every dollar we take in a minimum of 70 cents goes back to the consumer," said Greene. "People don’t have a lot saved in a lot of cases so we’re trying to get someone through that time of volatility so they can find another job."
Despite most people working, a Federal Reserve study released earlier this year found 30 percent of adults nationwide are “finding it difficult to get by” or they are “just getting by” financially. Another study, from Prudential Financial, found 69 percent of Americans have less than $1,000 saved.
But with more people working, and other jobs waiting to be filled, we asked economist Marc Schaffer at Saint Norbert College if such insurance is even necessary.
"Standard economic response I’m going to give you...it depends," said Schaffer. "In my mind, this is equivalent to buying supplemental health care. You have your healthcare package, whatever it is, and it’s, whether you’re comfortable paying if a claim hits for something like that, or paying out of pocket, or if you want that supplemental health for extra protection. It’s the same kind of idea with this."
SafetyNet doesn’t spend a lot on insurance agents and advertising. Clients sign up online with very little paperwork. With low payments and a big payout, SafetyNet is banking on people keeping their jobs.
"Obviously we know insurance. We have the data. We’ve done the math. We’re building a viable product, but really what we’re trying to do is help the consumer," said Greene.
If you’re fired, quit, retire, or an act of mother nature destroys where you work—there is no payout. You must be laid off, or, become disabled and unable to work for 30 days to get the money.
Not all SafetyNet clients are satisfied. Jenna Boyce of Green Bay says she would not recommend SafetyNet.
Boyce purchased SafetyNet earlier this year. Then she says she was forced to quit her job in Madison because she felt harassed and unsafe at work. She said she provided emails and other documentation to support her claims, but since she quit—no payout.
"I know they’re an insurance agent. I know they’re out to make money and you know you cannot approve every claim that comes through. But I believe it should be a case by case situation," said Boyce.
FOX 11 Investigates asked Greene about the rejected claim.
"It’s difficult to say in that particular circumstance, but we do investigate each circumstance," said Greene.
Greene says like any insurance claim with any insurance company there are going to be clients who believe they should get money and for various reasons the claim is rejected.
Greene says thousands of clients have signed up for the insurance. Policies are as low as $4.50 a month for a $1,500 payout.
So you might wonder: Is there a sense this is too good to be true?
"We’ve heard that quite a bit," admitted Greene.
And yet the good economic times can’t last forever.
"I don’t think there’s a question of if there’s going to be a recession. I mean we’re going to have a recession, it’s always a matter of when," said Schaffer.
(Note: Since interviews were completed for this report, the rate for the $9,000 payout in Wisconsin was dropped to $27 a month. The company said the adjustment was made to reflect current market economic conditions. Rates vary by state.)