Traditional Brokers Pushing Into Voluntary Benefits Turf

Traditional employee benefit brokers continue to make inroads against brokers who specialize in selling voluntary benefits in the competition for employer business.

The percentage of brokers selling or cross-selling voluntary benefits to their employer accounts climbed to 57 percent this year from 48 percent three years ago, according Eastbridge Consulting’s latest market survey.

“The days of the benefit broker and the voluntary broker peacefully co-existing in a case are waning,” wrote Eastbridge president Gil Lowerre.

Competition among brokers and increasing employer expectations have forced traditional benefit brokers to “up their game,” said Eastbridge consultant Erin Marino.

Benefit brokers used to bring in one voluntary insurer to simplify administration for their client, but now traditional benefit and voluntary specialists offer “best-of-breed” products regardless of the number of insurers.

That has forced many brokers to bring a portfolio of benefits from several insurers to meet client needs, Marino said.

Traditional benefit brokers focus primarily on medical or core group coverage, but offer voluntary benefits as well.

Premiums to pay for medical or core group benefits can be employer-funded or shared between the employer and the employee.

In contrast, voluntary benefits are usually employee-paid benefits, but often required a different sales approach on the part of the broker.

Survey Says …

Inroads into the voluntary broker turf is reflected in the numbers. According to the survey of 400 brokers conducted in February and March:

• The percentage of benefit brokers writing more than five cases annually rose more than 10 percentage points to 40 percent over the year-ago period.
• The number of benefit brokers with more than 25 percent of their total benefit revenue coming from voluntary products rose almost 10 percent this year over last year.
• The percentage of benefit brokers selling $100,000 or less in voluntary premium dropped by almost 10 percent year over year.

Despite the growth in voluntary benefit sales, traditional benefit brokers rely on premiums from employer-paid products to make up a majority of their business.

Only 5 percent of benefit brokers have voluntary premiums that represent over 50 percent of their benefits business.

Even with benefit broker activity up, voluntary brokers still write more cases and generate more premium per broker than do benefit brokers.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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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 [email protected].