Voluntary benefits are creeping more and more into the everyday dialogue of benefit advisers and managers, but for those just getting involved, partnering with voluntary carriers and other vendors can sometimes be a difficult and crowded field to navigate. Vinnie Daboul, vice president of national accounts at Employee Family Protection Inc., a company that designs voluntary programs for brokers and their employer clients, says finding the right carrier is different for every employer, depending on their workforce size, employee makeup, location, unique culture and so on.
Heres the big thing: I dont think any one carrier is bad, says Daboul, whose company is based in Glastonbury, Conn. Every broker has a different perspective and a different favorite, he says, usually because of a relationship with a particular salesperson at any given carrier. Wherever or whoever it may be, our business is still very relationship driven, he says.
So what makes a good voluntary partner, aside from that relationship factor? The editors of EBA and EBN set out to get to the bottom of both broker and benefit manager perceptions of the voluntary industry and gather what brokers and their employer clients are looking for from the business in 2014 and beyond.
Overall, voluntary benefit sales grew more than 4% from 2012 to 2013, according to Eastbridge Consulting Group the Avon, Conn.-based voluntary industry researcher that tracks final sales totals and releases them every spring for the year prior. All told, according to the organization, life insurance leads the field with $1.88 billion in sales in 2013, which makes up 28% of all voluntary sales that year. Following are:
- disability insurance with $1.37 billion, making up 21% of all industry sales,
- accident insurance with $775.1 million at 12% of all sales
- hospital indemnity/supplemental medical with $551.8 million at 8% of all sales
The remaining 31% of industry sales last year went to dental, cancer, critical illness, vision, and accidental death and dismemberment combined.
Two types of brokers
When it comes to brokers and agents opinions about voluntary carriers, and ultimately the types of voluntary products they choose to present to their clients, Rob Shestack, senior vice president and voluntary benefits national practice leader at AmWINS Group, says the views vary drastically. It depends on whether the benefit adviser traditionally focused on group medical and is now choosing to opt in to voluntary sales, or they are a tried-and-true worksite voluntary broker who has always concentrated on these products, Shestack says.
In his experience, Shestack finds group medical benefit advisers are most likely to prefer offering clients life, vision, dental, disability and accident benefits, while the traditional voluntary-focused broker is more likely to offer accident as well as critical illness, hospital indemnity, life and disability.
Traditional health and traditional worksite brokers are totally different sets of people, Shestack says. For example, dental and vision products are typically put in place by an employers major medical broker. The group health broker thinks differently than the voluntary benefit broker, he adds, and often doesnt understand how much voluntary is growing in terms of other available products. He says that worksite brokers have always had to work around the group medical brokers sales primarily health, dental and vision to break through with other helpful products that employers need but havent heard about as much.
Critical illness is an example of this. That product, along with accident insurance, has driven voluntary sales rise in the last year according to data Shestack has analyzed from industry researcher LIMRA because CI and accident are being presented as a supplement to protect employee pocketbooks in this increasingly consumer-driven health care marketplace.
How advisers are responding
That idea is exactly what Troy Cook, an adviser and principal at Mercer Voluntary Benefits in Des Moines, Iowa, says is going to drive an increase in voluntary sales across employer clients of all sizes.
Youre going to see more voluntary benefits at all size employers because employers understand they need to be more efficient with their resources today, and at the same time they want to take care of their employees in any way they can, he says. The complementary products like critical illness, hospital indemnity continue to be a trend because these are products that help complement consumer-driven health care.
He adds: The markets asking for voluntary and thats why many agents and brokers are responding with more offerings.
Employee Family Protections Daboul says that may be starting to be true, but the traditional group health broker is still not totally on board with all that voluntary can offer clients. The brokerage and consulting community just do not understand the power of a really strong voluntary plan and when I say plan, I mean strategic plan, he says. One of the greatest roadblocks in our industry is that [brokers] dont understand the power. Theyre resistant, and theyre still not including voluntary benefits in plans.
And he may be right. Less than half, or 42%, of advisers in a LIMRA study at the beginning of 2014, said they plan to respond to changes in the industry by selling voluntary benefits. That was second to 46% who said theyre planning to respond by expanding their customer service with diversified counseling and advising.
However, according to another Eastbridge Consulting Group report from 2013, 55% of all voluntary sales, and growing, are now coming from benefit brokers, while 21% of sales are coming from captive agents at companies such as Colonial and Aflac, almost all of the rest 22% are coming from the specialty, independent worksite voluntary brokers. The final 2% of sales are coming from the occasional person doing voluntary.
What advisers need
Mercers Cook agrees that more and more employers are asking for voluntary, and says the reason more advisers are stepping up to the plate to sell it is because of this demand. The ACA created a mini-revolution in the speed that employers are asking for voluntary, he says.
What advisers need to know about selecting a voluntary carrier, aside from Dabouls comments about starting with a good relationship and a good point-of-contact, is looking very closely at the products to see if they have an individual touch and feel. Most voluntary products are unique in that, Shestack explains, they can be taken with employees from job to job. Thats because even if theyre sold at a group rate at the worksite, many are actually housed on the individual platform as an individual policy.
The carriers that tend to be good at this are the traditional worksite voluntary carriers that have been in the business for years, according to Daboul. For example, Unum and Transamerica both have strong products and strong service, he says. Sun Life and Guardian, carriers that are newer to the voluntary space, dont have products that are as sophisticated as the older players, he believes.
However, when providing feedback on strong voluntary carriers for brokers, Sun Life rose to the top of at least three of our industry experts lists in the areas of voluntary life and disability insurance. These varying opinions underscore Dabouls original premise, that no one carrier is bad, and the good ones rise to the top based on an individual brokers unique relationships.
John Ludwig, EBA columnist and financial adviser at LHD Retirement in Indianapolis, agrees: Why some are better than others, it boils down to the service they provide to the office and clients, and problem resolution.
Shestack says its important for advisers to remember the following when selecting a voluntary carrier: Whats important, No. 1, is that the carrier has both group and individual programs and I think they need a carrier with a wide breadth of product in their portfolio. They need a carrier that can provide solid backend administration functionality really good billing and claims, reasonable and sound underwriting, things like that. And a carrier that has a steady group of reps in the office you want to try to go with a carrier that has a history of retaining their talent, that way you gain consistency a build rapport.
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