It is difficult to find an insurance publication these days that isn’t telling you to cross-sell voluntary benefits/worksite….. (or enhanced benefits, thanks Nelson Griswold).
As a student of the employee benefits insurance industry, with a specialization in voluntary benefits, it is nice to see these benefits getting some credibility, even though much of the focus has been from a compensation perspective, gaining credibility as a result of MLR’s, reduction/elimination of compensation on group health plans, etc.
In that vein, I will play along with the compensation conversation, deftly dodging voluntary benefits as a tool to modify behavior, curb utilization and playing a key role as a long-term risk containment mechanism.
So, if you are using voluntary benefits to drive revenues, here are a few things to keep in mind.
1) Product is product, don’t get stuck on a carrier, focus on the process.
If you have performed your due diligence, you have likely selected a handful of decent voluntary benefit carriers with decent reps and decent products. From your seat, most products are likely very similar. Similar benefits, features, exclusions, underwriting, rates, commissions, etc. Sure, a couple of things may stand out to you as better, but I would bet, that the end user wouldn’t likely focus on that nuance of coverage at time of claim. Find a carrier that knows their stuff, is easy to do business with and makes you look good. From there, if that carrier backs their promises with an easy and fast claims process, the end user will be appreciative of your carrier selection.
2) Revenue and commission percentages are not the same thing, and arguably, loosely related at best.
The market is plagued with cases where someone checked the box for voluntary benefits, because they were told that they needed to offer more lines. So they did. Maybe they got some participation, maybe they didn’t, either way, the ROI was likely disappointing regardless of percentage of commission. By the way, my accountant or banker never asked me about my percentage on commissions, they wanted to know my revenues. Don’t let old thinking cloud your judgement. This can also hold true, even if you aren’t outsourcing the distribution process.
3) Voluntary benefit compensation can be substantial, but if that is where you are focused, you are missing the boat.
The compensation opportunity of the voluntary benefit integration process affects multiple lines. Ancillary mindset gets you ancillary results.
Integrate to maximize the potential. For example, a national firm was working with a benefits client with approximately 3,500 employees, enrolling over the past few years with an ancillary mindset. We not only increased HSA participation 350% (crucial to client retention), we increased the incumbent ancillary plans by 3,400 new apps, while adding 2,600 apps for the new voluntary benefit carrier. Integration increased incumbent participation over 875%, not to mention sales in the new offering. Revenue went through the roof and that’s before we factor in bonuses. If the broker was only shopping compensation and product, they would have likely ended up with a different carrier, a different process and another 10% enrollment with marginal (if any) increase in revenues.
4) If there isn’t a communication and engagement strategy, don’t do it.
Regarding voluntary benefits, if the goal is to check a box, then check it without the expense and the false sense that you accomplished an objective. If it makes you feel better, ask your client (the non-insurance professional for their benefits advice) if they want to offer voluntary benefits this year, then you can check the box ‘no’. Regarding all employee benefits…if you don’t have a 5 year plan, maximum communication, employee engagement, embracement of technology, etc., your livelihood is in danger.
4) If there isn’t a long term cost containment behavior modification strategy, then you are likely going through the motions for $$.
That is ok (I guess). But consider, if I am going to go through the process and the expense, why not make a full effort to do it right. Kicking the can down the road is just an opportunity for the competition to outshine you.
Consider selecting voluntary benefit products to compliment strategic planning for employee benefits. If your carrier reps differentiate themselves by touting how their product is better than the competition, these may not be your best strategic resources.
6) Find a partner that offers depth and strategic value to your firm, not just a product.
You can certainly build a division/department in house to accomplish this initiative, but it may be advantageous to find a solid partnership from carriers and enrollment firms in the market. Example, many brokerage agencies lease enrollment software, others pay a PEPM for software, reporting, billing services, benefit statements, etc. But often, carriers and/or enrollment firms have the same/similar products/value adds at a reduced or eliminated fee.
If you maximize the financial advantage of partnering for professional distribution/implementation, you have likely made a big step toward your differentiation to help grow and maximize your book.
So, like everyone else in the benefit industry, I implore you, go sell voluntary benefits.
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