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Economic storm clouds may be massing on the horizon, but most owners of well-established businesses are hoping to keep staffing and benefits stable.
That's the assessment of Amy Friedrich, president of benefits and protection at Principal Financial Group.
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Friedrich talked about the impact of the trade tariff news on the employee benefits market Monday, during a conference call Principal held to go over earnings for the first quarter with securities analysts.
Principal has big group life, group disability and group dental operations. Its typical benefits client is a small or midsize business, or SMB, that's been in operation for about 30 years.
Principal conducted a quick survey of the SMB benefits customers earlier this month to see how they were reacting to the tariff news and the resulting investment market turmoil.
"Businesses were definitely saying, 'We think it could have an impact,'" Friedrich said. "They were targeting actions towards things like supply chain adjustments, making customer pricing changes, or even bracing for temporary margin contraction. But very few were planning to take action on things like benefits or wages.
Related: Tariff turmoil putting 401(k)s at risk? What employers can do to keep workers financially stable
Friedrich said she thinks the SMB owners are trying to maintain staffing and benefits levels partly because the owners were around when the COVID-19 pandemic hit.
Many businesses responded to the pandemic-related downturn by laying off employees.
"They couldn't get to full staffing after 2020 and 2021, and they remember that," Friedrich said.
For now, at least, memories of problems with hiring are causing many SMB owners to try to minimize staffing or benefits changes, Friedrich said.
Many of those owners have also used their experience with the 2007-2009 financial crisis and the COVID pandemic to try to plan for uncertainty, and that might help their businesses get through any problems related to the new tariffs, Friedrich said.
Benefits prices: Friedrich is continuing to see some of the same problems with rising dental insurance claim costs that she talked about during Principal's analyst call for the fourth quarter of 2024.
Principal began imposing a series of dental insurance price increases in 2024, and the increases are continuing now, she said.
But the benefits ratios for life insurance and disability insurance products have been low, and Principal has been able to ease up on pricing for those products, she said.
Overall benefits package prices have been holding steady, and that's helped Principal keep customer retention at the expected levels, Friedrich said.
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Allison Bell
Allison Bell, a senior reporter at ThinkAdvisor and BenefitsPRO, previously was an associate editor at National Underwriter Life & Health. She has a bachelor's degree in economics from Washington University in St. Louis and a master's degree in journalism from the Medill School of Journalism at Northwestern University. She can be reached through X at @Think_Allison.
