harles L. Ratner
In these highly competitive times for corporate-owned life insurance brokers and carriers, I would like to offer this independent advisors thoughts about what brokers and carriers, respectively, can do to win more COLI cases. Though this article assumes the involvement of an independent consultant and the use of a Request for Proposal (RFP), there should be plenty of helpful insights for cases where there is no consultant or RFP, but stiff competition among brokers and carriers.
Lets assume that you are a COLI broker. You have been asked to compete in a case where a company is exploring the use of COLI as a funding vehicle for an existing Supplemental Executive Retirement Plan (SERP) for a group of executives. You may have been involved in discussions with the company for months (or years) about funding with COLI. Or, you may be someone whom the company thought should be added to the list of competing brokers for any number of reasons. Anyway, the company lets you know that you will receive an RFP from its consultant and that you should work with the consultant in the RFP process.
You receive the RFP, along with a copy of the plan, a census and other pertinent information. You see that the RFP consists of 2 sets of guidelines: (1) general guidelines to format and facilitate your response, and (2) specific guidelines for your presentation of products and carriers.
With variations on the theme, the first set of guidelines will:
Ask you to describe the approach(es) you would recommend for using COLI to fund the plan, give support for your recommendations and describe how you would have the company deploy the COLI, i.e., whom the company would insure, how premiums would be allocated, death benefits determined, and so forth.
Tell you the type(s) of product(s) the company wants to see and any particular design parameters you should know about. In certain cases, the RFP will give you free rein to look at as many carriers as you wish. In other cases, where the company wants to avoid overlap, assure adequate coverage of the marketplace or both, the company and consultant will ask all the brokers to create a list of carriers they will investigate and then apportion the carriers on that list among the brokers.
With respect to products, the RFP may likewise give you free rein to explore and submit any type of product you choose; or the RFP may be more specific, limiting products to a certain type (traditional or variable) or to those with a certain fundamental characteristic, such as flexible premiums and investment flexibility. You may be told to limit your actual submissions to those 2 or 3 products you believe are most credibly efficient for the companys purposes. In any event, you will be asked to provide your specific reasons for recommending the carrier(s) and product(s) that you do recommend. You also will be asked to identify the other carriers and products you considered and why you concluded that those you submitted were superior to those you didnt.
Ask you to describe in detail how, in the context of the recommended funding approach, the company will gauge performance of the COLI product and how the product you recommend will achieve and sustain that targeted performance more efficiently than other products.
Ask you to provide evidence of your firms experience and expertise in administering this type of plan, examples of your enrollment materials and communication materials, and the reports you would present to the company and the participants, respectively.
The second set of guidelines sets forth how you should present products and carriers.
The RFP notes that certain sections are to be completed by you and others by the carrier. The RFP goes on to say that the company intends to review the responses, discuss them with you and the carrier, as appropriate, make some preliminary decisions, and eventually invite you (and perhaps your chosen carrier or carriers) to the company to make a formal presentation.
After the formal presentation, the company will select the broker it wants to work with and move to implementation. Keep in mind that the company, and not the consultant, makes all the decisions about brokers and products, winners and losers. Said another way, in this type of process, the company calls all the shots; the consultant just takes them.
Well, now youre in the hunt! Based on how I have seen the more responsive and resourceful brokers go about responding to the RFP, I have some suggestions (see the box on page 22).
The RFP process goes well and you are invited to the company to make a formal presentation of your carrier and product recommendations, administrative services and overall value proposition. You will have 90 minutes. Here are the things the responsive, resourceful and successful brokers do:
Be sure there is an agenda! Well, let me temper that suggestion. Brokers who are prepared to compete on a level playing fieldwith full presentations about carrier, product, compensation, administration, and so forthabsolutely want to be sure that all brokers have to follow a standardized agenda. On the other hand, if a broker does not want to compete on those terms, the last thing he wants is to be saddled with a standardized agenda. But, on the assumption that the company expects all presenters to follow an agenda, heres a sample bill of fare: