Dismal economic conditions suggest that worksite benefits marketers may be tested by falling enrollments as businesses lay off staff. Complicating matters, worksite producers report, is that employees who survive downsizings may seek to cut out voluntary benefits to save on costs.
Yet vendors also report finding new opportunities as struggling business owners who have cut core benefits turn to voluntary benefits to help lessen the impact on their workers.
Luke Vandermillen, national director of worksite solutions for Principal Financial Group, Des Moines, Iowa, says one of the biggest challenges producers are facing is getting employers to focus time and attention on benefit issues in light of the other pressing concerns they have in the current economy.
Principal has had some success in breaking through this resistance by offering personal financial counseling sessions to employees, Vandermillen says.
“More than ever, employees need help with financial decisions,” he says. “It’s a good time to offer to help them to assess their personal financial situation and what problems they need help solving.”
Vandermillen advises worksite producers to impress on business clients that employees will remember that their employer went out of its way to help them when times got tough.
Employee attendance at personal financial counseling meetings offered by Principal was up 20% in 2008 over the year before, he reports. Overall last year, participation rates in such meetings were 76% of employees who took part in its retirement benefit plans and 57% among employees who had purchased the company’s voluntary insurance plans.
Barry Zell, a territory vice president for Transamerica Inc. based in Columbia, S.C., notes that in an economy where major medical benefits are dwindling, there are “more and more gaps we can fill with our voluntary benefits.” Try to be creative and find product opportunities employees are looking for,” he advises. “Having a wide portfolio of products helps.”
“Historically, really, our industry tends to be recession-proof,” says William A. (Tinker) Kelly, president, Voluntary Employee Benefits Advisors, Nashville. “The danger is when you’ve got an account that’s going to go out of business or that’s reducing payroll. That’s the biggest fear for worksite marketers. If someone doesn’t have a job, they can’t afford to pay for benefits.”
On the other hand, Kelly says, worksite “has grown to be a more mainstream part of employee benefits over the past few years,” Kelly says. “There is ample room to continue to expand.”
One problem is that some larger employers looking to reduce spending are demanding reductions in broker fees for their core benefits, Kelly reports. To replace these diminished revenues, brokers and consultants need to try to add new supplemental benefits to their large accounts, Kelly reports.
When the economy is depressed, it’s time for producers to partner more closely with employers with whom they have an established relationship, says Ron Agypt, vice president of broker support for Aflac Inc., Columbus, Ga. “Worksite marketers have to be innovative during an economic downturn.”
During challenging times, when both employees and employers are carefully reevaluating their finances, worksite marketers must provide an increased level of quality customer service, he says.
“As more customers and potential customers look for ways to survive the current economy with little to no savings, producers also have a unique opportunity to serve as a solutions provider in an even greater capacity than usual,” he says. “This can be an especially good opportunity for voluntary insurance marketers with products designed to help with everyday living expenses that are often impacted by an unexpected health event.”
Larry Kay, president, National Benefit Systems, Sherman Oaks, Calif., finds that voluntary benefits sometimes sell better during recessions than they do in a flourishing economy. “When employees are making money, they can afford high coverage,” he says. “When there are layoffs and cutbacks, it’s a different story.”
A recession demonstrates why it’s important to sell voluntary benefits “properly” in the first place, says Debra Waldman, president and CEO of Waldman Insurance Services, San Clemente, Calif.
“If you sold them correctly, people don’t want to drop them,” Waldman says. “But when you sell employees on too many ancillary benefits, they’ll want to cut them when times get hard.”