It’s a given – health care reform legislation will continue to change our industry in ways we never before imagined. These changes are already showing in our products, our services, and our bottom lines. For example, anecdotal data suggests that health insurance commissions could be lowered by up to 60 percent to accommodate health care reform mandates.
Benefits plan designs are changing, too: The legislation includes up to 85 percent in required loss ratios for certain group health plans, and the federal agencies involved in health care reform legislation, implementation, and oversight have requested input from industry and consumer groups and the public at large on how the minimum loss ratios should be determined.
Questions still abound, but we know that employers will seek new benefits alternatives, consumers will continue to exercise more choice over their coverage, and insurance carriers will strive to uphold their profit margins while reducing such costs as distribution expense. Many brokers will find their traditional revenue streams challenged, and will need to adopt new business models.
What will it take to thrive in this era of change? Historically, certain professionals have focused on a service differentiator rather than alternative product solutions to maintain and grow business. Now, helping clients cope with benefits challenges by offering innovative product solutions could be the key to our success. Cross-selling to existing clients would seem a logical place to start.
Ample research indicates that cultivating a new client is as much as 10 times more labor intensive than cross-selling to a current one. But cross-selling isn’t simply a good business practice – it’s an essential tool for surviving and thriving despite national health care reform and other trends.
It’s not just about how or why to cross-sell; it’s about redefining your business model through strategic diversification. If you work in the employer-paid product niche and voluntary product lines are still ancillary for you, it is time to learn more about employee-paid products and how to bundle them with traditional coverage. It’s important to know the tipping points between what is beneficial for employers to offer as employer-paid versus voluntary, and how both can be combined to offer a more attractive alternative.
It’s also crucial to stay abreast of the changes brought about by health care reform. When we understand what health care reform has to offer our clients, we can better determine which products will suit their needs. Enhancing our knowledge, diversifying our product menu, and bringing these options to the client indicates that we’re cross-selling in a manner appropriate to the market shifts.
Steve Howard is vice president, of benefit solutions for American General Life Companies. His monthly blog on ASJonline addresses issues and trends in the insurance industry. He can be reached at [email protected]