BACKGROUND ON TRAVELER'S LMSC PLAN From San Jose (Calif.) Mercury, Feb. 7, 1969 UNUSUAL INSURANCE PLAN OFFERED BY LOCKHEED SUNNYVALE-A broad new program of auto and other optional insurance coverage for more than 70,000 Lockheed Aircraft Corp. employes in California and Georgia was announced yesterday. The company said it believes the package program is unique among aerospace firms in scope of its benefits. Under the new program, effective March 24, most of the company's salaried and hourly-paid employes in the two states will be able to buy auto, special accident, and permanent life insurance through payroll deductions. The life insurance is in addition to the existing company-paid group life insurance. Participating hourly-paid employes also will have an opportunity to buy long-term disability insurance, which already is available to salaried employes. The optional insurance package program was declined by District 508 of the International Association of Machinists and Aerospace Workers which represents most hourly employes at Sunnyvale, Palo Alto, Santa Cruz and Menlo Park. In these Bay Area locations the package can therefore be offered only to salaried employes, non-represented hourly employes, and employes represented by unions other than the IAM&AW. The machinist union districts representing hourly employes in Georgia and at all other Lockheed locations in California accepted the insurance program. Accordingly, it will be available to all employes at those facilities. The company said the program will be extended to employes in other states as rapidly as necessary procedures are completed. From the Machinist, Feb. 13, 1969 LOW-COST INSURANCE COMES TO LOCKHEED More than 85,000 employees of Lockheed Aircraft plants in California and Georgia, will soon be able to cut their costs on auto, disability and life insurance. IAM Vice President Robert Simpson of Los Angeles reports that the new Personal Security Program negotiated last summer in IAM contracts at nearly a dozen Lockhead plants will be offered for the first time at the Burbank and Marietta, Ga. plants Feb. 28, 1968. The plan will be offered later at other Lockheed plants. Simpson explains that the Personal Security Program will supplement the company-paid life and medical insurance provisions in all IAM-Lockheed contracts. It offers voluntary low-cost automobile insurance, long-term disability, and special accident insurance and extra life insurance. Lockheed employees can have their insurance premiums deducted directly fram their paychecks. Since the end of contract negotiations last summer, IAM and Lockheed representatives have drafted their insurance proposals and presented them to national insurance carriers. Nearly a dozen companies bid on all or part of the insurance programs. After the bids were checked, the joint committee chose Travelers Insurance Co. of East Hartford, Conn. to write and service the policies. Here are details on Lockheed's new Personal Security Program as reported by Simpson. Auto Insurance.-Benefits include low rates, effective claims handling, payroll deduction plan, and a non-cancellable provision. Auto insurance will be available to any Lockheed worker or dependent having a valid driver's license. The only reason for cancellation will be loss of license. Claims will be handled 24 hours a day, seven days a week. Long-term disability insurance.—After six months of disability an hourly-paid worker would begin receiving benefits equal to 60 per cent of base earnings minus any other benefits. The minimum disability payment is $50 a month. Special accident insurance.-Coverage is provided against accidental death or dismemberment on a 24-hour basis, on or off the job. Benefits are paid in addi tion to those payable under several company-paid plans now in existence. Policies are available in denominations of $10,000, $15,000, $25,000, $50,000, $75,000, and $100,000. Permanent life insurance.-The life insurance program will supplement the IAM negotiated, company-paid insurance program. Hourly paid workers will be able to buy an additional $7,000 of coverage; salaried workers, from $5,000 to $50,000 depending on earnings. Premiums will be well below normal manual rates. The IAM negotiating team for the Personal Security Program was headed by Simpson. He was assisted by Tom McNett, president of District 727, Burbank; Bud Bowen, president of Local 709, Marietta; and Albert Epstein, Associate IAM Research Director from union headquarters in Washington. INTERNATIONAL ASSOCIATION OF MACHINISTS & AEROSPACE WORKERS, Subject: Lockheed Aircraft Corp. personal security option program. MR. REEVES BOWEN (L-709). DEAR SIRS AND BROTHERS: Yesterday, February 24, President and I met with representatives of Travelers Insurance Company and Marsh & McLennan, Inc. to discuss the details of the subject program which will be placed into effect next month. I am not going to attempt to tell you my interpretation of the meeting but am simply enclosing an envelope containing bookets and forms that describe in general fashion what is going to happen. I still have high hopes that this program will be a smashing success, although the Automotive position gives rise to some apprehension. Very frankly, I fear the savings to our members is not going to be as great as we hoped or advertised. Fraternally yours, LOCKHEED AIRCRAFT CORP. PERSONAL SECURITY OPTION PACKAGE PROGRAM All Four Plans LISTING OF COMPETING INSURANCE COMPANIES Aetna Life & Casualty. The Travelers Insurance Company. Continental National (CNA). Insurance Company of North America. Fireman's Fund Insurance Company. American Home Assurance Company. The Continental Insurance Companies. All But Auto Bankers Multiple Line. LTD and AD&D Only The Equitable Life Assurance Society of the United States. The Prudential Insurance Company of America. John Hancock Mutual Life Insurance Company. Union Mutual Life Insurance Company. Metropolitan Life Insurance Company. Pacific Mutual Life Insurance Company. Permanent Life and Voluntary AD&D California-Western States Life Insurance Company. The Great-West Life Assurance Company. Occidental Life Insurance Company of California (Perm. Life only). Auto Only Chubb and Son. Liberty Mutual Insurance Company. Allstate Insurance Company. Kemper Insurance Companies. Nationwide Insurance Companies. College/University Insurance Company of America. GEICO (Government Employees Insurance Co.). Auto and Voluntary AD&D Only Hartford Insurance Group. SPECIFICATIONS FOR EMPLOYEE AUTOMOBILE INSURANCE Your company, along with several others, is being asked to submit a proposal for Automobile insurance on a payroll deduction basis for all employees of Lockheed Aircraft Corporation on an employee-pay-all basis. The following pages will outline the specifications for this program and all companies will be required to bid on this basis. Subject to the eligibility requirements outlined, most of Lockheed's approximately 95,000 employees will be offered this new program. Both Lockheed Aircraft Corporation and the International Association of Machinists at Lockheed's three major locations are fully committed to this new program and current plans are to install it shortly after January 1, 1969 with the complete backing of management and union representatives. The following specifications will give you the necessary and required elements of the program and will request that you also answer certain questions as part of your formal proposal. Any alternatives, in addition to specified items, you wish to suggest will also be considered. ELIGIBILITY The great majority of Lockheed's hourly and salaried employees will automatically become eligible on the day following the date of completion of 90 days of continuous employment. The only exceptions to eligibility and thus automatic acceptance of coverage will be employees in the following categories: 1. Do not have a valid drivers license (employees, however, can purchase coverage for spouse and children who have drivers licenses as family members even though the employee does not drive). Included as family members should be unmarried children, normally residents of the employee's household, who are away at school or in military service. 2. Within the past five years have been convicted of: a. Driving while under the influence of alcohol or drugs b. Hit and Run c. Manslaughter while driving d. Using a car in committting a felony These are the maximum eligibility restrictions to be used under the program. You can, of course, propose lesser restrictions as to eligibility and should do so if you wish. These will be a question on the subject of assigned risk in the section "Specific Questions." The contract to be issued will be a "Family Automobile Policy" or a special Automobile policy closely approximating the "Family Automobile Policy." In your proposal, please describe the policy you will offer, which family members can be included as persons insured, and enclose a specimen policy. TERMINATION Once an employee becomes covered under the program, he can continue Automobile insurance for as long as he remains a Lockheed employee and has authorized the appropriate payroll deductions unless he: 1. Terminates employment, or 2. Ceases to be in an eligible underwriting classification as defined in 1. and 2. in the preceding section. When an employee terminates employment, he is to be offered a standard Automobile insurance policy by you on a conversion basis with coverage guaranteed for at least one year subject to the same eligibility requirements. Incidentally, payroll deductions for all covered employees will be on a weekly basis with such deductions being made four weeks in advance. Thus, when an employee terminates, he should have four weeks in which to take advantage of the conversion privilege or arrange for other coverage. 39-280 0-71-Pt. 17A-6 In the event of leave of absence or in the event of a labor dispute, provision will be made for continuation of coverage. Employees will be allowed to remit advance premiums directly to the insurance carrier for continued coverage under this program in the event of unpaid leaves (leaves which extend for periods of time longer than four weeks). This will include employees who are on temporary assignment with outside agencies and who thus exhaust their four weeks advance premium payments. It is to be agreed, however, that the insurance company will permit a grace period of 31 days for such individuals to pay their premiums after exhausting the advance premium which has been accumulated in their payroll deduction account. Once covered under this program, an employee who voluntarily cancels his coverage will not be eligible to re-enter for at least one year following his cancellation date. BENEFITS The benefits to be available are all those usually provided under a “Family Automobile Policy." In addition to quoting your premium structure on the "Family Automobile Policy" which will be requested in a succeeding section, we also wish to consider as optional benefits: 1. Replacement cost rather than actual cash value on all Physical Damage losses, both partial and total. 2. In addition to provision for theft, a car rental allowance subject to a twoday deductible with a maximum of $10.00 per day not to exceed 30 days. 3. Towing and Road service-$25.00 per disablement. Although the usual limits and deductible options must be available, the program communicated to employees will be substantially streamlined to offer formally a much smaller number of options as follows: Liability and Medical Payments Insurance 1. $35,000 combined single limit per occurrence in California ($25,000 in Georgia)-$1,000 Medical payments. 2. $50,000 combined single limit per occurrence in California and Georgia$2.000 Medical payments. 3. $100,000 combined single limit per occurrence in California and Georgia$3,000 Medical payments. 4. $300,000 combined single limit per occurrence in California-$5,000 Medical payments. Note: Uninsured Motorists Protection Statutory. Physical Damage Coverage Comprehensive-Full Coverage. Collision-$100 deductible. As will be indicated in the next section "Enrollment" as important part of the solicitation of employees will be a self-rating device. The intent in this connection is to enroll as many employees as possible using this approach, recognizing, however, that counseling (both personal and telephone) and service will be available to employees who cannot decide on coverage by means of the selfrating device. Thus, as part of your proposal we must require your premium rate structure as requested in the following sections for many alternatives, such as $50.00 and $250.00 deductible collision coverage, separate rates for medical payments, costs of split-limit liability protection, etc. In the self-rating device wording the employee will be urged to use it, but a statement will be included that he may inquire as to alternatives in coverage. ENROLLMENT In addition to strong and substantial endorsement by both management and the union, the following communications to and with employees will be an important part of the enrollment procedure. An attractive and easily read booklet will be prepared for employees explaining the coverages available. In conjunction with the booklet, a combination self-rating device, application and payroll deduction authorization will be given to each eligible employee by Lockheed. In addition to policy printing, the insurance carrier will bear the cost of the employee booklet, self-rating device, application and payroll deduction authorization forms. Personal counselors and service people will definitely be used as an important part of this enrollment. In the section "Specific Questions" you will be asked to bid on the basis of your furnishing the counselors/service people. You will also be asked if you will provide a lower premium structure if another organization such as Marsh & McLennan, Inc., provides the necessary counselors/service people. As an indication of the number of counselors/service people we believe will be required at least during the first year of enrollment, we estimate the following: Lockheed will provided each employee with the necessary enrollment literature including booklet, self-rating device, application and payroll deduction authorization. Lockheed intends to use its computer and machine accounting facilities to internally administer the payroll deduction system on the previously mentioned four weeks in advance basis. As much as possible verification and input of the correct payroll deductions will be done by Lockheed. If an employee's coverage commences earlier than four weeks from the time payroll deductions begin, Lockheed will make multiple deductions until the employee is on the four weeks in advance basis. Lockheed will remit premium to the insurance carrier on a 5 week-4 week4 week system. i.e., in any calendar quarter there will be three premium remittances to the insurance carrier. The individual policy or certificate should be designed so that only the first page requires any individual insertions. Any necessary binding of coverage in specific situations for Lockheed employees will be done by the counselors/service people and possibly Marsh & McLennan people. The insurance carrier will receive the necessary copy of the employee application in order to perform the policy issue functions. Future changes in individual coverage will be accomplished by meams of a "self-change" form which, after verification, will be used by Lockheed to change the employee's payroll deduction on the same four weeks in advance basis with appropriate adjustments. As a result of this administrative procedure, the insurance carrier will be furnished with the pertinent information on employees covered, amounts and classifications of coverage, additions, changes and terminations. ENCLOSURES Approximately 85% of Lockheed's employees are in California and Georgia. Enclosed are employee data sheets for these two states which will give you an idea of the age and wage distributions, males and females in the three principal locations: Burbank, California (CORLAC and CALAC). Sunnyvale, California (LMSC). Marietta, Georgia (Lockheed-Georgia Company). Also enclosed is a listing giving you some idea of the approximate number of Lockheed employees in states other than California and Georgia. The final enclosure (five pages) sets forth the format of the self-rating devices we propose to use in Northern and Southern California and Georgia which are to be completed by you as requested in the first paragraph in the next section. SPECIFIC QUESTIONS 1. As mentioned in the preceding section, the final enclosures set forth the format of the self-rating devices. It is most important that you complete all the blank spaces on the last four pages of this final enclosure. |