Historically, voluntary benefits have been dismissed by busy agents as more trouble than they are worth, but with the Affordable Care Act moving closer to full implementation, agents looking to keep existing clients and gain new business should give them a closer look.
Still not convinced? Following are five reasons why it will benefit you to begin incorporating voluntary benefits into your client proposals:
1. Voluntary benefits work well for both fully funded and self-insured clients. In either scenario, voluntary benefits are a way to fill in the coverage gaps for employees who want supplemental benefits that are not provided within the plan. They can also be valuable in closing a deal for the best reinsurance pricing for self-funded clients. Reinsurance carriers often have a separate line of voluntary benefits and sometimes provide a discount for their reinsurance products if it means they can market their voluntary benefits to an employer's workforce.
2. Voluntary benefits are ideal for clients moving to defined contribution plans. In a defined contribution model, employees receive a set amount of funding to purchase the benefits that best fit their needs. For this approach to succeed, employers need to offer a wide array of voluntary benefits that go beyond primary health care coverage.
These could include dental plans, vision coverage, life insurance and even lifestyle products such as pet insurance, gym membership, ID theft protection or legal advice. The options can make the transition from full health care coverage to defined contribution benefit plans much easier on employees who are now carrying a larger portion of their health costs.
3. Voluntary benefits are not just for large accounts. At one time, carriers were only interested in selling these plans to massive workforces, and only big employers had the resources to administer multiple benefit streams. Today, however, carriers are much more eager to enter markets that offer smaller opportunities, and third-party administrators can be used to relieve any burden on the employer's human resources department.
4. Voluntary benefits offer P&C producers new tools to generate and keep business. As the current soft market undercuts commissions for agents in the property and casualty world, many are looking for ways to broaden their target audience. Voluntary benefits are another line they can offer their current clients that will further prove their value and ultimately increase commissions.
5. Voluntary benefits are a foot in the door. It's a small step from providing voluntary benefits to an employer to taking over their entire health care coverage. If someone else gets to your client with an offering for voluntary benefits before you do, you not only lose the opportunity to expand your business with them, but you could also lose the client entirely.
Change always brings opportunities, and smart agents are adapting by using different strategies even as the world around them heads in a new direction. Voluntary benefits are one more tool that can help them succeed in the long run.
Fleet is president of AmWINS Group Benefits, a wholesale broker of comprehensive group insurance programs and administrative services. He can be reached at firstname.lastname@example.org.
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