An “amazing” opportunity is open to insurance brokers — at least according to one industry veteran.
Despite widespread industry fears of shrinking revenues, Steve Brady, second vice president of individual disability insurance sales for Portland, Ore.-based Standard Insurance Co., says that with a slight shift in focus, the future can still be bright for brokers. Long-term disability policies can help replace the revenue stream from health sales that could be dammed by the implementation of certain provisions of the Patient Protection and Affordable Care Act, he says.
“With all the turmoil that’s happening in health care right now, brokers are being pushed against the wall,” Brady says. “What are they going to do to create revenue they’re losing with the health care [market]?”
According to Daniel Steenerson, president of Disability Insurance Services, in San Diego, the National Association of Health Underwriters said last month in Atlanta that agents can expect a 25 percent to 30 percent drop in revenue once PPACA is fully implemented. But he sees the real impact being even greater.
“Previously up to health reform, the agent would work with a decision maker, whether the owner of the business, or vice president of human resources, some c-suite individual who would make a decision on actually purchasing health insurance. Well the exchanges are going to mandate now not only is the agent going to have to deal with that gatekeeper, but…that they are going to have to sit down with each and every plan participant. Their income’s dropping by 30 percent and they’re working harder, or longer, or exerting more energy in order to make that 70 percent of what they were making before,” Steenerson says.
But that’s where disability sales can combat those threats, he says.
Despite the importance of DI, many still court disaster by remaining uninsured — which leaves a big market behind.
According to information compiled by the Council for Disability Awareness, about one in four of today’s 20-year-olds will become disabled during their working years. And though claims statistics indicate disability incidences last between two-and-a-half to three years, “65 percent of working Americans say they couldn’t cover normal living expenses even for a year if their employment income was lost, and 38 percent could not pay their bills for more than three months.”
“Medical problems” contribute to nearly two-thirds of personal bankruptcies and half of all home foreclosures, according to CDA’s statistics.
Brady says he’s found workers of all ages are receptive to the need for long-term disability coverage.
“It’s easier with the 50-year-old,” he says. “Most disabilities occur between 50 and 55, so they’re living that, and they probably have some medical history.”
But young people are becoming a more prominent market.
“The 28-year-old is actually a more satisfying sale because they usually haven’t thought about disability insurance; they’re sometimes still single, and this income replacement need they have is a selfish purchase,” Brady says.