New Breed Of Worksite Brokers And Products Emerging
There are changes going on in the world of voluntary worksite products, both in the nature of the products being sold and the new breed of broker that is selling them.
Traditionally, worksite-focused brokers sold individual products on a payroll deduction basis. A few employee benefit brokers sold voluntary (100% employee-paid) versions of their core benefit plans (term life, short- and long-term disability). The world was fairly neat and clean. The worksite-focused broker used a one-on-one enrollment process, while the employee benefit broker used a self-enroll or group meeting process. There were clear distinctions (at least for carriers and brokers) between the individual worksite product and the group voluntary product.
But that is not true today. That neatly divided world (if it ever really existed) has been turned on its head. Brokers are selling all types of products using a variety of enrollment systems, and its getting harder and harder to tell a group plan from an individual one.
In the product arena, most of the stereotypes about group or individual products are gone (or at least on their way out). When looking at the products currently on the market, we see that the individual platform products are often offered as guaranteed issue plans (previously a group characteristic) during the enrollment period. In fact, as shown in the chart, 60% of carriers agree that guaranteed issue products are a requirement for the worksite market (and 22% strongly agree).
Another change for the traditional worksite market is in the enrollment method used. Today, individual worksite products are increasingly enrolled during group meetings (traditionally a group trait).
Changing the world on the group side, voluntary group products today have significantly lower participation requirements than they did historically, and many have portability or conversion privileges that allow them to be continued when the employee changes jobs, in much the same manner as an individual plan. In a recent survey of carriers, 78% said portability or a similar conversion privilege is necessary.
In addition, group carriers have begun to understand that they need to maintain records on all covered employees. Seventy-eight percent agreed this is needed.
Group carriers are also looking for ways to build more customer-intimate relationships with employees and provide advice to them. Several already enroll using one-on-one systems.
In summary, there are increasing numbers of exceptions to every rule that used to separate the two worlds. The old-fashioned distinctions mean less and less to employer and employee customers and are becoming irrelevant to brokers.
New Breed Of Broker
Changes are also occurring on the broker side. For some time now, Eastbridge Consulting Group has suggested the likely blending of the traditional group, worksite and even pension distribution channels into a new breed of broker the benefits advisor. These new distributors will be independent and offer to their clients a wide array of both protection and asset accumulation-management products.
Several recently completed Eastbridge surveys of brokers have reinforced that this trend is already well underway. Consider these findings:
o 90% or more of employee benefit brokers now sell at least some voluntary products.
6 in 10 worksite brokers sell traditional group products.
6 in 10 worksite brokers and 8 in 10 employee benefit brokers also sell individual life and health products.
6 in 10 employee benefit brokers and 2 in 10 worksite brokers also sell pension products.
What is driving these brokers to cross business lines? One reason is certainly the intense level of competition in the industry. Brokers have recognized that to protect themselves from competition, they must become more than just a supplier to their employer clients. To solidify their position, they must build an ongoing relationship with the client and become a trusted advisor. Simply, the more lines of business that brokers offer, the more value they can create for their clients.
We are seeing many brokers offer their clients a “total benefits solution.” In fact, over half of the respondents in a recent survey by our company describe their business in this manner.
These total-solution brokers must be able to analyze their clients’ needs, present offerings, understand their clients’ competitive pressures, and recommend creative solutions to the benefits challenges they face. In many cases, they are also responsible for identifying and recommending the “best” products and services to implement the strategies defined in the problem-solving phase. This means that distributors must be more independent so they are truly able to provide impartial advice.
Additionally, as brokers are challenged to offer more to their clients, many are partnering with other brokers or producers who are specialists in other business lines. In fact, over half of the brokers in the same Eastbridge study said they partner with other brokers to offer their clients more solutions. In this type of arrangement, the broker with the client relationship becomes the relationship manager and assists the client in choosing other partners that can provide a broader solution.
The market as well as brokers are changing and will continue to change. In the not so distant future, we believe we will see a more efficient marketplace with a single delivery platform for serving all of an employer’s and employees’ needs. Are you ready?
Gil Lowerre is president and Bonnie Brazzell is vice president of Eastbridge Consulting Group Inc., a marketing consultancy for insurance and financial services organizations in Avon, Conn. Both can be reached at [email protected].
Reproduced from National Underwriter Edition, June 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.