Companies offer ID theft coverage as perk

NEW YORK - A growing number of companies are offering identity theft coverage as an employee benefit, in part to reduce lost time when a worker becomes a victim.

On average, a consumer whose identity has been stolen spends about 200 hours restoring his or her good name, according to industry research. Often, employees need to interrupt work routines or take time off to call or meet with banks, credit bureaus and other agencies.

"The victim of identity theft is left with a tremendous burden of cleaning up the problem, and the employer becomes an indirect victim," says Nancy Callahan, vice president of insurer American International Group Inc.'s Affinity Group Services.

Corporate customers began asking AIG last year about a perk that would give employees an efficient way to deal with identity theft - a problem that affects 10 million consumers a year. AIG responded with Personal Identity Coverage, a group insurance benefit that provides victims with a case manager who guides them through the recovery process and ideally saves them time and money.

AIG reports growing sales of its product, which also reimburses employees' legal expenses related to identity theft. "It's really gaining momentum now," Callahan says. "We're finding interest from all kinds of companies in all kinds of industries - from financial services to health care to manufacturing."

The benefit is relatively cheap. Companies wind up paying a few dollars a year per employee, depending on the size of the company and the level of coverage, Callahan says. Employees generally don't pay any portion of the premium. "This is a nice, attractive, timely and meaningful benefit (companies) can offer at a reasonable cost," she says.

St. Paul Travelers Cos. says hundreds of companies have bought its similar Identity Fraud Expense Coverage Master Policy since the product was relaunched a year ago.

Travelers introduced the plan in 1999 as a rider to homeowners' policies. Now, companies buy the product and offer it free to employees, says Joseph Lester, a product manager for the insurer.

Identity theft "has been such a hot topic in the past 12 months," he says. "It's proven to be a very popular addition to the policies we offer."

Prepaid legal plans also have beefed up coverage in recent years to address identity theft. Employees generally pay between $20 and $25 a month for the plans, which provide them with a lawyer or case manager if they fall victim to identity theft.

"We offer this as kind of a stress reducer, so individuals can be more productive at work," said Paul Kluding, a spokesman for ARAG North America, a Des Moines, Iowa, provider of legal plans.

Companies such as Ford Motor Co., Microsoft Corp. and Nokia Corp. offer legal insurance with identity theft protection as a voluntary benefit to employees.

"This is something that has really piqued the interest of our current and potential corporate clients," Kluding said.

Still, some critics say companies would do better to direct resources and attention to fixing workplace security.

Judith M. Collins, a professor at Michigan State University, says her research suggests that 51 percent of identities are stolen in the workplace, often by people hired to perform data entry or other low-level jobs.

"Businesses would, I believe, spend their money more wisely by keeping it at home," says Collins, author of a soon-to-be published book, "Preventing Identity Theft in Your Business."

She doesn't see the need for insurance, pointing to free identity-theft advice offered by nonprofits such as the Identity Theft Resource Center in San Diego and the Federal Trade Commission.

"Why pay some insurance company? That help is available," she says. Besides, "I don't know how any insurance is going to decrease the amount of hours an employee spends on cleaning up the mess," she said.