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Fall 2007 / No. 73
The real pioneers – the mid-size employee benefit brokers
We have been intensively studying Employee Benefit Brokers for the last 18 months. Our first studies allowed us to segment them into two size groups, each sub-segmented by the type of organization they represented (see the Spotlight Report, The Evolving Benefit Broker). These data have been widely distributed. As we have collected additional data in 2007, we can now segment them into multiple size cohorts with type-of-business sub-segments. Many behavioral and demographic factors can be represented by a continuum, progressing in a linear fashion as broker size increases. But a range of items did not fit the pattern.
As has been previously reported, the smallest Employee Benefit Brokers were the least sophisticated about the voluntary business. They sell less, have sold for less time, are most in need of support and training, etc.
The largest brokers looked very different, selling far more cases, selling for more years, selling more non-traditional worksite products, using a wider variety of enrollment methods, etc. Based on that study, our large broker research this year looked more closely at the largest brokers and found that they often relied on worksite carriers to sell and implement their voluntary cases (see the Spotlight Report, Large Commercial Lines Brokers and Voluntary Benefits). When asked which voluntary carriers they use most often, they listed Aflac, Colonial, and Unum. A subsequent study showed that these agencies were unlikely to have a distinct voluntary strategy or dedicated voluntary sales personnel. Based on this, the reliance on the carrier and the product and enrollment mix made sense.
As we collected more data, we began looking at finer cuts by broker size. Looking at it at a high level, several surprises jumped out. Some items, like case size, remained on a continuum (small brokers write the smallest cases, etc.) but others did not. In particular, the mid-size brokers rated much higher on independence factors. They needed far less training and less carrier support than either the small or the large Employee Benefit Brokers. They had been writing voluntary for longer periods of time and were more likely to enroll their own cases, usually through group meetings. They were most likely to use the traditional group voluntary products (dental, VSTD, and VTL) and least likely to use individual platform products.
In summary, these mid-size Employee Benefit Brokers were the early adapters, adding voluntary products earlier than other Employee Benefit Brokers and becoming more self-sufficient as they learned the business. They were more likely to use products offered by the carrier that supplied their employer-paid coverages. On the flip side, they are the least likely to experiment with new products, enrollment systems, etc. They got a head start, but they may now be stuck in their old ways.
As has always been the case, carrier strategies have to begin with identifying and targeting the specific type of brokers the carrier wants to attract. Because, as the latest data show, different types of brokers behave differently, need different types of support, and value different qualities in their carrier partners.
For more information on Eastbridge’s broker strategy services, contact us at info@eastbridge.com.
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