I've talked a bit about Severance Insurance being a transfer-of-risk product for large corporations, say the Fortune 500. Clearly, it benefits the buyer (the corporation) by apparently saving them significant amounts of money. A couple of blogs ago I asked "at whose expense?".
So I figured I better do a little more research and inquire of a number of human resource specialists about their feelings towards such a change of approach in funding severance. Virtually unanimously, they were more focused on this approach "not taking anything away from" displaced employees. Almost all of them were concerned that a change would require them to do more work. Hey guys, who's this about, you or the displaced worker?!! But back to the real question...at whose expense?? Clearly, these HR folks are asking that question.
Until I sleuth out the real structure of the insurance coverage, I really can't definitively answer that question. Probably the best way to get a handle on it in the absence of that information would be to analyze the current structure of all post employment compensation; severance, accumulated vacation time, accumulated sick time and state unemployment insurance benefits. By better understanding how much theses benefits can deliver, we can probably put our finger on the likely sources of savings that the insurance companies are incorporating in their coverages.
So, the next blog will begin to model/quantify/discuss those sources of post employment compensation with a view to trying to identify the likely sources of savings.