We all know how rapidly the worksite/voluntary business has grown into a major industry, the most dynamic segment on the benefits landscape. Over the last two decades, business has been strong, and new cases and customers have been plentiful. For carriers and brokers alike, it's been a gold rush, with all parties focusing on shoveling new business in the front door, as fast as possible.
But that will change, and is already changing. We now have 38 percent of all U.S. employees owning at least one voluntary product, and 71 percent of employers offering at least one voluntary product. Meanwhile, sales may have experienced uninterrupted growth, but takeovers have grown to 51 percent of new sales, and case retention is dropping as a result. Carriers, on average, only conserve about 5 percent of customers who leave their employer's plan. Virgin business coming in will have to moderate at some point.
Meanwhile, profits have been good for carriers. The robust sales coming in the front door have hidden the impact of poor and worsening losses through the back door. But as the pendulum swings, sales, persistency and case retention will all moderate.
Brokers were a major force in driving carriers to enhance and expand portability options on their products. But these rights are rarely exercised, because very few carriers focus on the back door. Handing a departing employee a brochure (if that even happens) is not a conservation program.
It's time brokers used their clout to demand that carriers put more emphasis on issues that keep business in force. Carriers need to be urged to deploy some of those resources to better customer service, cross- and up-selling, re-marketing, conservation and case retention strategies. Improving conservation 500 percent from today's average rate is not just possible, it's been done. The potential results: enhanced commissions, better-served customers, and more financial success for carriers. But if history is a guide, this will only become a priority once the gold rush ends, unless brokers make it happen.
When we compare the carriers we choose to partner with, we tend to focus on front-door issues like brand, products and commissions. We need to do a better lob of vetting our carrier partners by adding service, conservation and case-retention strategies to the comparative spreadsheet. Only by selecting our partners on the entire spectrum will we be making the best choices for our customers and ourselves.
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