2013 Voluntary Benefits Special Report
Voluntary Benefits: Ten things brokers do right—and ten they do wrong
Providers offer advice for capitalizing on growing opportunities
By Dave Willis
It wasn't all that long ago that most independent agents and brokers had little—if any—interest in offering voluntary benefits. "Worksite marketing is relatively new to many," explains Chad Bodner, vice president-worksite sales at Assurity Life Insurance Company. "Due to some changes brought on by health care reform, agents and brokers realize this is a market they need to get involved in."
Today, Bodner's company and others find themselves more engaged with independent agents and brokers, helping them understand the business, the sales process, and how voluntary fits into an employer's overall benefits strategy. Along the way, representatives from these providers have had an opportunity to see what successful agents and brokers do right in the voluntary products market, and where they struggle.
What they do right
The first thing Bodner says brokers do right is recognize the opportunities. "Every broker we're talking to has an interest in pursuing worksite benefits," he explains. And they're acting on these opportunities, in concert with carrier partners. "Because they're quite busy, they are relying on us to help them learn the business and communicate the value of worksite products."
Successful agents and brokers have developed a strong understanding of the basic voluntary portfolio. "For example, they know that voluntary life coverage is almost always needed," explains Marty Traynor, vice president of voluntary benefits and products at Mutual of Omaha. "And unless there is an existing plan in place, disability answers a basic need, as well." In each of these areas, he adds, sub-categories of term and permanent life and short-term and long-term disability can be used to fill benefit gaps.
Brokers who do well with voluntary benefits are beginning to understand the effect of health care reform on their business. "They recognize the limitations it imposes, such as the MLR (medical loss ratio)," Traynor explains. "And they also see the opportunities it creates, such as additional product gaps where they can fit supplemental medical benefits around traditional health products."
Debbie Cecil, director of product and market development at Unum, says successful agents and brokers take a consultative approach to selling, rather than simply pushing products, and they understand the value proposition of voluntary benefits and how they complement existing benefits. "I'm impressed when I see a broker take time to build out a communication plan and well-thought-out strategy that includes a client's core offering," she explains.
Bodner concurs. "Brokers see how voluntary fits," he notes. "They do a really good job of identifying opportunities within their existing block of clients." One common scenario is when an employer has to increase the deductibles on its major medical plan, he adds.
Jay Hutchins, regional vice president for voluntary benefits in Sun Life Financial's East Region, says successful agents and brokers focus on more than just price. "They recognize that competitiveness of rates and underwriting terms are not the only factors for evaluating voluntary offerings," he explains. "The most successful programs include a full enrollment and communications strategy to educate workers and drive participation. If you build it and promote it, they will come."
Mark Kuban, Sun Life's voluntary benefit practice leader for the St. Louis/Kansas City Territory, says agencies are building capacity for offering voluntary benefits. "We see a positive trend in the marketplace, as brokers and agencies establish units that are dedicated to voluntary and worksite benefits," he explains. "Those with dedicated voluntary units are generating the most revenue from these popular solutions." At the same time, they're expanding their client base, he notes.
For many agents and brokers, partnerships help drive success. "They select the right vendor to manage benefits communication and enrollment," Cecil notes. "When a broker brings in the right enrollment firm, they can help communicate all of an employer's offerings—core benefits, voluntary benefits, 401(k) plans and more. This relieves the stress many down-sized human resource departments face, especially during enrollment time."
In addition, says Traynor, "Brokers and agents have learned when to rely on experts for advice. Experts from their carriers or partner marketing organizations that specialize in voluntary are good choices." This advice may focus on product design, enrollment planning, and tailoring plan to meet employer customers' needs, he adds.
What they do wrong
In addition to observing the positives, industry professionals have seen their fair share of what agents and brokers sometimes do wrong. And that's okay, especially if you agree with the following statement, which is attributed to Eleanor Roosevelt: "Learn from the mistakes of others. You can't live long enough to make them all yourself."
Three things Cecil has seen brokers do wrong when selling voluntary benefits are: Going in without a plan and starting to pitch products without a clear strategy; failing to review what's already in place by the employer; and offering products that employees can't afford to buy.
"It's key for a broker to know the client, know the client's workforce and understand what plans and products are already in place," she explains. "In doing this, the broker can take a more consultative approach to selling voluntary benefits. Also, this lets the broker provide a benefits package that offers solutions for employees faced with high-deductible plans or gaps in coverage due to higher medical costs.
"Many times, voluntary benefits can fill gaps in a current plan with benefits that offer employees additional financial protection," Cecil adds. "Additionally, a broker should know what an employee is already paying for their benefits because this will help determine what additional products an employee can afford."
Sometimes the mistake agents make is the most obvious one. "We know that, with health care reform taking effect, voluntary represents an additional way to generate revenue," explains Hutchins. "However, brokers need to know so many benefits solutions that they may actually overlook the chance to proactively ask clients and prospects about voluntary benefits. Automatically asking questions about voluntary as part of developing any enrollment strategy can pay off significantly."
Sometimes, agents and brokers struggle with enrollments. "They are really good about setting up the enrollment condition, but poor at conducting the enrollment itself," Bodner notes. The traditional benefits enrollment features a broker spelling out new—something higher—deductibles, increased premiums and little more, he notes. "Once people hear higher deductibles or premiums, they don't hear anything else," he adds. "It's important to really explain how voluntary can help fill the gaps or added financial exposures employees face, and take time to meet one-on-one with employees."
In some cases, brokers present too many products. "Too often, they'll show employees four or five products and say, 'Choose what you think makes sense to you,'" Bodner explains. "Well, as we know, a confused mind always says, 'No.' Laying out too many options can paralyze employees."
Some agents and brokers focus too much on sales and not enough on service. "Brokers and agents can focus on the front end of the voluntary process—the employer agreement and the employee enrollment—without thinking through the back-end support for billing and deduction management," Traynor explains. "Keep in mind, the secret to voluntary profitability is keeping customers, not just getting sales."
They sometimes forget to do other things after the sale, as well. "Brokers and agents often miss opportunities to add new products to an existing voluntary package," Traynor notes. "Adding products is a great strategy for keeping customer relationships strong and vital and, as I mentioned, profitability comes from keeping customers."
According to Traynor, some brokers give up too easily. "They think the customer has to be right to the extent that they fail to fight for good enrollment conditions," he explains. "Employers need to understand the importance of good access to employees." Such access results in well-educated, happy employees and an effective enrollment process. "If the employer pushes back on granting good access, agents and brokers need to remind employers that an ineffective enrollment does no one any good," he adds.
Bodner sees some brokers relying too heavily on career carrier reps to sell the products to employers, and to communicate to and enroll the employer group. "It's easier," he admits, "but they ultimately will lose control. At the end of the day, they don't really know what is being communicated to the employees, or how. It's ultimately a reflection on that broker." The solution: Work with a carrier that will come alongside and teach the sales process, so the broker can be involved.
Finally, notes Mark Harper, senior vice president-sales for AmeriFlex, agents sometimes miss opportunities with Flexible Spending Accounts. "In some ways, these are the ultimate voluntary benefit," he explains. "FSAs are a great way to free up cash employees can use to purchase voluntary life, disability or accident plans.
"The biggest mistake I see brokers make is spending far too much time focusing on the 'use it or lose it' aspect of these plans, and practically encouraging employees not to participate," Harper adds. "The average voluntary sale is in the neighborhood of $400 of annual premium per employee. An FSA can free up that much money, which they can use to purchase needed voluntary benefits."
Some agents and brokers do more things right than wrong when it comes to voluntary benefits. Others lean more heavily in the other direction. And some really don't do much at all. For agents and brokers in all groups, it makes sense to learn from these insights. They can help your agency grow. As Kuban puts it, "Voluntary is expanding so fast, it's a great time for agents and brokers to learn more about the product, sell it to their existing clients, and use it with prospects, as well."
TEN THINGS THEY DO RIGHT
1. See the opportunities
2. Act on them
3. Know the products
4. Understand context
5. Sell consultatively
6. Align benefits
7. Go beyond price
8. Build capacity
9. Create partnerships
10. Tap experts
TEN THINGS THEY DO WRONG
1. Fail to plan
2. Ignore what's in place
3. Sell unaffordable products
4. Don't address voluntary
5. Put enrollments on auto-pilot
6. Offer too many options
7. Stop at the sale
8. Don't stand their ground
9. Over-rely on partners
10. Neglect FSAs