Spring 2007 / No. 71
Groupification continues
“Groupification: the tendency of voluntary and worksite
segments to merge into a single line of business, forcing each
to change. The resulting business has an increased number of
group insurance industry characteristics.” (©
2007 Eastbridge Consulting Group, Inc.)
Several years ago in this newsletter, we coined the phrase
“groupification” to describe a phenomenon we saw
unfolding in the world of employee-paid insurance. That phenomenon
is described in the definition above.
Today, groupification is “alive and well,” as they
say. In our recent Executive Perspective survey, we
asked worksite and voluntary executives to agree or disagree
with several statements relating to groupificiation. The results
show us just how far we have come.
The first statement said: “More of the voluntary industry’s
sales will be on a group platform in the future.” Eighty-one
(81) percent agreed with this statement; 19 percent were neutral
with no one disagreeing.
We then probed a little further by asking for their agreement
with the statement: “Group platform products are likely
to account for more sales in the market than do individual platform
products.” Seventy-one (71) percent of those surveyed agreed
with this statement. However, seven percent disagreed and 23
percent were neutral.
Other indicators of continuing groupification are:
- Seventy-four (74) percent of carriers believe that group
products must be portable or at least convertible.
- Eighty-eight (88) percent of carriers believe that guaranteed
issue is required for most voluntary products.
- Group carriers have relaxed their participation requirements
for voluntary.
- Several carriers have come out with products that have a
choice of commissions, either heaped or level.
- Group carriers are using “published” rates for
some group products and/or accounts.
Indeed, the lines keep getting blurrier and blurrier. The distinctions
between group voluntary and individual worksite are disappearing
on an industry level. Some companies insist on staying with one
of the traditional models, but the marketplace seems to be more
or less ignoring the distinctions and matching products to the
needs of the customer. Companies that cling to the pure old models
may find themselves unable to expand their sales and keep pace
with the market.
For more information on how Eastbridge can help your company
stay competitive in the voluntary market, call us or email
us today. |
