There are a half-dozen subtle drivers of growth that account for the almost unbroken string of annual sales increases for the voluntary industry. These drivers propel industry sales ahead, even during weak economic times, and are in addition to the traditional “more people, selling more” momentum we have been chronicling for the last quarter of a century.
One of these drivers is the documented tendency of accounts, once they offer a voluntary benefit, to add a second, a third, (etc.) voluntary benefit in rapid succession. This serves as a built-in sales accelerator.
Once a broker sells an account on a voluntary offering, if she does a good job, she’ll be rewarded with a string of new-product sales in the coming years. Looking at medium-size accounts that offer voluntary, as an example, 67 percent offer three or more voluntary products. That measure is 65 percent in large accounts and 74 percent in small accounts.
At the same time, these accounts are increasing the number of voluntary carriers they use with 43 percent of all accounts using two or three carriers and another 20 percent using more than three. In the past, employee benefit brokers (one of the five major voluntary broker segments) have most often relied on their group carrier (employer-paid life and disability) for their voluntary product offerings.
These offerings, in turn, were usually very limited to products that were clones of the carrier’s employer-paid products, but with a different payor. Over the last several years, as the above trends have developed, carriers all across the board have been busy building out their portfolios. Some of these efforts have been very successful, some have missed the mark, and others are reasonable designs that are forced into the previous delivery model that worked well with group voluntary life and disability (the round peg in the square hole).
As carriers expand their product portfolios and employers seek carriers who offer superior value in a product category, brokers need to step up their game, being ready to identify and offer best-of-breed products and administrative and billing solutions that can accommodate the benefit programs of multiple carriers.