Carrier Flexibility a Key Element to Voluntary Market Sales

As the benefits industry enters the final two weeks of the year and standard enrollment periods for 2016 come to a close, it’s worth reminding brokers that enrolling small-business clients in a voluntary benefit program only fulfills half the equation.

The other half involves choosing the right carrier.

As veterans of the benefits brokerage trade know well, not every carrier is set up to manage a voluntary benefits program. There’s nothing more disheartening than signing up a small business only to have the carrier decline.

Voluntary benefits include life and health insurance products — accident coverage, short-term disability, dental and vision plans, long-term care, life insurance and critical illness insurance — at the employer’s discretion and that employees may choose to buy voluntarily.

The key to selecting the right carrier is to make sure the insurer has flexible enrollment capabilities, according to a new white paper published last month by Colonial Life in Columbia, S.C.

“There is a lot of discussion of brokers leaving the small business market because of health care reform and insurance industry realignment,” said Gil Youmans, director of small market solutions at Colonial Life, in a news release.

“But brokers and advisors can still be very successful working with small business — and the right benefits provider. We hope this research shows that,” he said.

Benefit brokers, who were responsible for 57 percent of voluntary benefit sales in 2014, according to Eastbridge Consulting Inc., should do business with voluntary benefits carriers that offer a maximum of flexibility with enrollment systems.

Enrollment comes in many forms: enrollment of first-year employees, new hires, annual re-enrollment, automatic enrollment and express enrollment.

Carriers should also offer a range of core and voluntary benefits, support for case sizes as small as three people, and the ability to enroll workers at more than one worksite and in more than one state, Colonial Life said.

In addition, carriers should provide benefit counselors that belong to a national network, an in-house team for large-case management and data collection and daily enrollment reporting, Colonial Life added.

Assisting with carrier selection was the third-most important service performed by brokers and advisors for small businesses offering employee benefits, according to LIMRA’s 2013 study titled “A Little Advice: How Small Business Use Advisors.”

Benefit brokers play a particularly important role in the $6.89 billion in voluntary sales recorded in 2014 to businesses of all sizes, according to data compiled by Eastbridge Consulting Inc.

Responsible for 57 percent of voluntary benefit sales last year, an increase of 4.8 percent from 2013, benefit brokers were the leading sales channel for voluntary benefits sales by far.

Career agents were responsible for 18 percent of voluntary benefits sales last year, a drop of 5.3 percent from 2013, Eastbridge said.

A sales channel labeled “classic brokers” was responsible for 13 percent of sales, an increase of 8.9 percent over 2013, followed by a “worksite specialists” channel with 10 percent of sales, a 20.6 percent jump from 2013.

“Occasional producers” were responsible for only 3 percent of voluntary benefit sales in 2014, a drop of 21.5 percent from the previous year, Eastbridge said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.