Bundles might refer to product combinations, some with pricing and/or underwriting concessions. But at a voluntary-carrier level, bundles also refer to the attempt to combine products, billing, administration and enrollment into a single (hopefully seamless) package.
There are great advantages to a bundled approach. Bundles are simpler, easier to administer, and the carrier usually provides a single point of contact who will often manage the entire process, from sales through to post-enrollment service. Brokers who are new to voluntary, or who have not mastered the potential complexities of unbundled approaches, usually find these packages the most efficient way to offer voluntary benefits.
But there is often a downside to bundles. The carrier may not be excellent at every product, or underwriting, or may not offer competitive compensation. Billing and administration might be substandard, or the carrier's enrollment options may not be what the broker is looking for. It's not uncommon for a bundle to include one or more less-than-excellent components. Brokers need to scrutinize the tradeoffs they and their clients face with a bundled approach.
If you asked a sophisticated voluntary broker to name the best provider for STD, UL, dental, CI, accident, billing, enrollment, etc., you'd probably have a list of five or six vendors or carriers. So the real question is, “How important is it that you bring the best possible solutions to your clients?”
Unsophisticated brokers cite two reasons for preferring bundles: simplicity and discounts. While reduced costs to the employer should enter in to the tradeoff calculations, simplicity is usually a sign of lack of voluntary experience. Shortcomings can be overcome with world-class solutions from third-parties. But creating your own unique bundle from multiple players requires voluntary sophistication.
For years, we have used a series of questions to categorize brokers based on their voluntary sophistication. And even with the natural tendency to inflate one's own ability and experience, only 30% of brokers qualify as “sophisticated.” Said another way, up to 70 percent of brokers who sell voluntary may be offering bundles with inferior components. Moving up the sophistication learning curve doesn't mean changing carriers for every product. Most bundling carriers will let you “unbundle” their offering to use those pieces that are most appropriate for your client.
Bundles offer great advantages, but they come at a price. The market has third-parties (enrollment companies, etc.) that work with brokers to create customized broker bundles rather than simply using carrier bundles. And as the broker's experience with truly best-in-class solutions grows, they become more willing to build their own top-notch bundles. They, and their clients, benefit from moving up the learning curve. It's time to get moving.
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