What’s ahead for workplace distribution

The pace of change in the world continues at a fast clip. Most changes in the workplace were expedited due to external forces, such as the rush to remote work adoption in the face of the COVID-19 pandemic in 2020 and expanding leave opportunities created by many state governing bodies. Other workplace factors seem to resist change; for example, the array of employee insurance benefits remains fairly static.

One aspect of workplace benefits that seems to resist change is the distribution model. Workplace brokers continue to dominate distribution, representing more than 80% of sales. Because brokers are a well-entrenched and successful source of workplace sales, it is not surprising that carriers anticipate this channel will be strong in the foreseeable future.

Although carriers see brokers as their primary workplace benefits distribution channel, market forces are revising that relationship as other players expand their influence and technology changes all aspects of the business. Brokers’ expectations of brokers are quickly evolving, prioritizing an enhanced delivery model from carriers. 

Given that carriers continue to view brokers as the dominant distribution channel in the industry, it only makes sense that the two align their service and delivery priorities. Although this alignment does happen with the services carriers offer, broker expectations are influenced by customers and new standards for delivery established by sales experiences outside the insurance industry.

LIMRA collected carrier feedback on 27 different services they provide to the independent brokers they partner with. Across all categories of services, carriers considered implementation and onboarding support among the most valued. Brokers echo some of these sentiments, discussing how implementation and onboarding are critical to their relationship with the carrier, but also how vital this process is for employers.

Workplace benefits carriers historically delivered products and services to captive audiences in one location. Today, new work models, changing customer needs and the digital transformation of the business have changed workplace benefits delivery in fundamental ways. At the same time, new players have entered the ecosystem, embracing the new world of work and aligning their value propositions to meet the needs of a changed workplace. These new players impact not only the relationships among the various parties in the business environment, but the economics of the business as well. 

Employers must balance the realities of today’s business environment with the desire to offer a comprehensive suite of benefits. Inflation and other cost pressures impact an employer’s ability to offer a robust suite of benefits, and so they look to provide those benefits that are most valued by today’s workforce in a cost-effective way, particularly since benefits other than health care must fight for the limited remaining wallet space of employees.

Mary Trecek, Ed.D, is a member of the workplace benefits research team at LIMRA and LOMA. Contact her at [email protected].