In an increasingly challenging worksite sales environment, insurance carriers must do all they can to make it easy for employers to sponsor benefits. In the face of limited resources, many firms, especially small-to-midsize ones, encounter challenges when administering voluntary benefit plans or educating workers about benefits without support from brokers and insurance carriers.
Carriers that take the lead in employee education, technology and customer service will gain tremendous competitive advantages in coming years.
The voluntary benefits market looks stronger than ever. A LIMRA International report compiling worksite premiums from several carriers reveals that sales skyrocketed during the second half of 2006, leading to year-end sales totaling $1.9 billion in new premiums–a 6% increase over the prior year. Total sales for the industry are much greater. Companies that already sponsor multiple worksite product offerings continue to add even more products to their benefits package.
The market opportunity is clear. LIMRA reports that 10% of the nation’s 5 million small businesses plan to add voluntary products to their benefit plans. Small businesses employ half the private sector workforce in the United States, and their ranks are growing. These employers are hungry for business partners that can help them administer voluntary benefit plans.
A critical first step in approaching the small-business market is to partner with brokers who are experienced and successful in serving small to midsize employers. The broker’s job requires a great deal of face-to-face interaction with the company’s benefit staff and employees. Small to midsize firms want a personal touch. The broker must be able to make a compelling case for why voluntary products add value to the benefits plan.
Employers greatly value their employee benefit brokers, according to a recent survey of U.S. employers by Guardian Life titled “Benefits and Behavior: The Voice of American Business Owners and Benefit Decision Makers Today.” Among small employers, a broker’s recommendation is the single most influential factor (for 38% of respondents) in choosing a carrier, the survey found.
Brokers, meanwhile, should seek out carriers that provide outstanding administration and customer service capabilities. After all, these services are every bit as important to making a sale as the insurance products themselves. And, if done well, these services can help carriers retain customers.
Large employers typically have well-staffed human resource departments that are used to administering insurance plans. But at small firms, there may not be a human resource department. The company president might also be the company benefits manager. The more services brokers and carriers can provide to relieve burdens from executive shoulders, the better.
One way to provide an extra level of customer service to small employers is to employ dedicated benefit advisors to help educate employees about voluntary benefits. Experience shows that face-to-face meetings are the best way to explain benefits to employees and to boost enrollment. While not a hard-sell environment, such meetings give the products a chance to “sell themselves” once workers have an opportunity to ask questions and learn about them.
Some insurers are so confident in the power of this approach that they are willing to waive the minimum enrollment requirement in group disability, dental, life and vision plans for certain companies that support communications techniques known to increase employee enrollment.
One of the keys to success, for example, is conducting mandatory enrollment meetings during normal work hours. Although it involves a slight sacrifice of time for the employer to do this, the reward is in adding a benefit to the company plan that increases employee financial security, well-being and satisfaction.
Without this enrollment guarantee, many employers would not offer voluntary benefits. They don’t want to go through the trouble of offering a benefit only to have it declined by the carrier because too few employees enrolled.
The point of mandatory enrollment meetings is to educate employees, even when they think they have nothing new to learn. A recent Guardian survey, “Benefits & Behavior: Spotlight on Group Life and Disability Insurance,” revealed that many workers are overconfident in their understanding of group benefits.
About two-thirds of employees said they understood the difference between group and individual coverage, yet nearly half believed a medical exam was necessary to get coverage under a group life or group disability plan. In reality, group plans often waive that requirement.
If more employees knew about the advantages of group and voluntary plans, these benefits would likely become more popular.
Education is critical, however. Many workers are already planning to cut back on the amount they spend on voluntary benefits. Sixty percent of U.S. workers with employer-sponsored health care coverage had to pay higher premiums between 2005 and 2006, according to LIMRA. Nearly half of these workers said the rising cost of health benefits would be a deciding factor in whether or not to purchase other benefits through the employer plan.
Convincing them to shell out hard-won earnings for voluntary benefits–especially intangible products like life insurance–will be a challenge. But education will help to bridge a gap that will help employees make the right decisions with limited resources.
Technology can contribute by simplifying administrative processes and providing instant access to information. Only 24% of small employers administer employee benefit plans online, compared to 46% of midsize employers and 59% of large employers, according to Guardian’s survey of business owners and benefit decision makers.
Carriers have an opportunity to serve clients by establishing free and secure access to a website that allows them to perform basic administrative tasks, such as enrolling workers, paying bills and ordering plan materials. Workers, meanwhile, can access benefits information, check the status of claims and create local provider directories. These capabilities take a huge administrative burden off employers.
Today’s insurance carriers market to 3 customers: the broker, the employer and the employee. Who is most important? All play critical roles, but workers are the ones who ultimately decide on the success of voluntary benefit plans. It’s their money, and with rising health care costs, they have less of it to spend.
Carriers are wise to focus on serving needs that are as individual as each American consumer. Improved customer service offerings through personalized employee education and hassle-free online administration are an enormous step forward in this goal.