In the business world, most people adhere to the motto “think big.”
But in the last few years insurers wisely have been re-evaluating the so-called “baby group” market–firms with 2 to 24 employees–and successfully introducing benefits, initiatives and products that answer the needs of this smaller segment.
There are two reasons carriers are increasing their penetration in the small group market–first, the smaller segment is huge. By some estimates, the 2-9 employee market consists of over 6 million employers and employs more than 20 million people. In addition, growth in the number of businesses offering employee benefits has increased substantially.
A second reason is that there are large numbers of uninsured individuals who work for small businesses, which signals opportunity for the market to expand. A group carrier or broker can focus on reaching out to the uninsured, instead of the usual competitive fight to win clients from other competitors.
Several insurance carriers have developed product portfolios augmenting their core business that aim solely at the employers with 2-24 employees.
Clearly, the size of the small group market and the growing number of uninsured individuals who work for small businesses provide brokers with a significant opportunity for growth. However, some brokers mistakenly do not consider the low end of the small business market to be profitable. In addition, the “baby group” business tends to have a more favorable experience than its larger counterparts.
Today’s small business owners are very savvy. They wear many hats. They serve multiple roles. And, they are tasked with many responsibilities. They also play a vital role in offering benefit plans to their employees. They understand that offering a competitive package is the basis for a more productive and focused working environment, which can impact positively the financial success of their own business.
Employers today aren’t just looking for a broker who can sell them competitive products and services. They are looking for a relationship. A strong relationship between the broker and his client provides a solid foundation for the cost-effective benefits plans employers need and employees want.
Recognizing the demands of running a successful small business, they often look within their own community for a broker. Often these brokers are longtime friends and neighbors and are viewed more as trusted consultants and experts. Trust is an integral component in the broker/client relationship as employers turn to these consultants because of their established reputation within the community. As in any small community, these relationships mature and develop into a winning strategy over the years.
Working with brokers who can help them make the most of their employee benefits, small business owners know they can sharpen their own competitive edge and financial results. They trust their broker to associate with carriers that are innovative and technically advanced, offer valuable products, and have a strong commitment to their customers. Preferring one or two carriers as opposed to several, they often turn to their broker for guidance in the carrier selection process–carriers that can provide their customers with forward-thinking, Web-based solutions, along with exceptional service and products to meet their needs.
Typically, there is a regional medical solution with one carrier providing its suite of ancillary products. Small businesses are more efficiently served by a single source offering a benefits solution for their ancillary lines–a provider of a full spectrum of products such as dental, life and disability bundled into one package. This convenience results in an easier administrative package, enhanced pricing and the potential for added flexibility during renewal.
Another more important factor employers and brokers consider when choosing a benefits plan is service, an essential factor when selecting a carrier. Because brokers are seen as advocates for their clients, they look for carriers that have a proven track record in the “baby” market niche and have a strong service orientation to meet both their needs and the needs of their clients. Specifically, they want hassle-free attention from a dedicated single contact. From plan features, eligibility, submissions and billing information to claim status, member inquiries and change requests, they want a committed carrier from whom they can receive quick issue resolution. This helps brokers spend less time managing their clients’ benefits and more time managing their block of business.
Offering cost-effective and affordable benefit solutions, technological advancements for ease of administration, and delivering outstanding service to add value to your client’s benefits program is a win-win. As the broker, you win with your small business client by helping the client maximize and capture the most value from the benefits investment and provide quality coverage for the employees while the door opens to increased sales and retention for you.
Joel Sanders is senior vice president, sales, Genworth Financial, Employee Benefits Group.
By some estimates, the 2-9 employee market consists of over 6 million employers and employs more than 20 million people