It’s a problem many brokers face: clients love our property casualty risk management products and services, but have we given them all they need? What else can we do for them?
An employee benefits program offers an excellent opportunity for brokers looking to expand a relationship with property casualty clients. But employee benefits offers more than just a significant market opportunity. It can fill a genuine need for business clients, particularly small businesses.
Employee benefits
For many people, “employee benefits” means “medical insurance.” But it doesn’t have to. Medical is a highly specialized and volatile field, but there are employee benefits opportunities for property/casualty brokerages that do not involve medical insurance. These are the so-called “ancillary” benefits such as dental, life and disability coverages.
Casualty insurance protects against loss-of-property risks, including non-tangible risks, such as professional or product liability. Employee benefits insurance is not unlike that category of risk as it protects a company’s most valuable assets — its employees. That similarity makes the property/casualty broker a logical provider of this kind of coverage for smaller employers who don’t already have an employee benefits broker or whose employee benefits broker has not sold non-medical coverage.
Market forces have driven significant changes in the ancillary benefits field in recent years. Medical insurance price inflation has pushed ancillary carriers to develop new products and platforms designed to make their products more affordable, more widely available and easier to administer for both brokers and employers.
The low penetration of ancillary benefits among smaller employers provides a niche offering substantial opportunity. Property/casualty brokers can find success working with an employee benefits carrier that provides flexible products tailored to small-business needs, just as their property/casualty products are.
Offering voluntary (employee-paid) products is a very strong trend, because it offers advantages to employers and employees alike. For employers, it’s an opportunity to add benefits without adding significant additional costs. For employees, voluntary benefits offer significant additional value over open-market individual purchases such as lower rates, convenient payroll deduction and guaranteed issue.
Dental
According to LIMRA International, dental coverage is the second-most-popular employee benefit after medical insurance. That popularity is likely to grow among both employers and employees as medical research continues to demonstrate that dental care can play a significant role in overall total-body health and wellness.
Regular dental care such as cleanings and examinations can help detect certain conditions early, particularly oral cancers. Good dental hygiene can even help prevent serious illnesses such as cardiovascular disease and stroke, which have been linked to bacteria that enter the system through the gums. An investment in dental coverage — especially dental plans that promote a high level of hygienic and preventive care — can help reduce both absenteeism and medical costs.
One of the most important factors in making sure that a dental plan is used is an extensive network of participating dentists. Sharing of networks, available among medical insurers, is now available in dental coverage as well, creating a premium value-add.
For some clients, though, a basic plan is more appropriate, at least as a door-opener for prospecting. Prepaid dental plans — essentially a dental HMO — offer basic coverage with significant advantages for the brokers that sell them. These plans are simple, straightforward and transparent, offering clear up-front payment schedules and no-balance billing, so there are no complicated explanation of benefits forms to manage. They are also easy to administer.
Disability
In the disability arena, an explosion of new products in recent years makes this vital coverage more widely available and more affordable. More and more people are learning how prevalent disabling injuries and illnesses have become, and thus, how important disability income protection can be to an individual or family’s financial security.
As with dental, the greatest opportunity is in the small-business segment where penetration is still low. Insurers have moved to meet that demand with innovative products designed to make disability coverage affordable to all classes of employees and more available even to high-risk industries once considered off-limits for disability income protection.
These new products also offer added value to brokers through their simplicity. They are designed to be easy to explain and sell, with standardized, across-the-board rates and minimal, straightforward qualifications.
Administration of these plans is very easy. Brokerages can facilitate routine transactions, or Web administration sites allow small businesses with limited staff to manage this desirable coverage with little effort.
Targeting prospects
Nothing breeds enthusiasm better than success, so it’s a good idea to help your sales force target the best prospects. The brokers I work with experience the most success when they target established businesses, rather than start-ups. The best targets generally have at least 20 employees and are growing, so the need to recruit and retain good employees is an up-front concern.
For disability sales, target companies in industries that have not had access to traditional disability programs, particularly those with a substantial number of skilled blue-collar workers. Fields such as construction, specialized manufacturing, transportation, energy, mining, health care, entertainment and dining are all good targets for non-traditional coverage at a more affordable cost.
Cross-selling employee benefits enriches everyone — the brokerage, the individual sales person or account manager, and the customer and the customer’s employees, who come to view the brokerage and its staff not as an insurance policy vendor, but as a business partner and a valuable risk management counselor to management. Adding ancillary employee benefits to your product mix can pay big dividends, boosting sales and reinforcing customer relationships, enhancing the role of the property/casualty broker as a trusted counselor and strengthening the relationship with the client.
Mark Bohen is senior vice president, Marketing and Customer Relations, at Assurant Employee Benefits, Kansas City, Mo., which specializes in employee benefits and services. He can be reached at mark.bohen@assurant.com.
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