Also in this issue:
Past Issues
|
Winter 2008 / No. 74
Medical Companies and Voluntary – The New Frontier
The latest entrants (from a carrier perspective) into the voluntary marketplace are the group medical insurance companies. In a recent Eastbridge Frontline Report, Medical Companies and Voluntary Products, we surveyed 40-plus medical carriers and found that over 30 already offer some voluntary products. Another five either have access to these products through a subsidiary or are in merger talks with companies that offer voluntary. But, for most of these carriers, voluntary accounts for a very small percentage of overall sales. Even as a percent of ancillary or non-medical sales, the numbers tend to be low. With the vast distribution networks and existing customer relationships, why are the voluntary sales so often disappointing? Our study turned up several factors that may account for the results.
First, for many companies, the voluntary product portfolio is limited. Some of the medical companies offer just dental or vision plans. Others offer these plans along with group term life and disability insurance. Voluntary medical products, such as a limited benefit medical plan, and coverages like critical illness and hospital indemnity, are some of the least offered products. Compare the offering of many medical players to that of a “full service” voluntary carrier and you’ll quickly see some missing products. Those responsible for voluntary sales in medical companies say one thing they face (that is not faced by other voluntary players) is the different risk profiles associated with medical companies and life insurance companies. Specifically, medical companies are more focused on short–term risks, whereas life companies are more comfortable with long-term risk. This makes some medical companies more reluctant to embrace traditional voluntary products.
Similarly, many say that management does not always “get it” (i.e., they don’t see the importance of voluntary). Others say that upper management levels are very supportive, but that the mid and senior operating company personnel do not see the value. Either way, getting resources, support, and cooperation is impaired—in some companies voluntary is just an after-thought or a “nice to do.”
Another issue is that only a few of the medical carriers package voluntary products with their medical plans. Most leave this decision to the broker—and most brokers aren’t yet packaging. (Brokers may introduce voluntary later on but not necessarily along side a medical plan proposal.) Some carriers want to encourage more packaging and cross selling and, thus, offer price discounts to accounts that allow ancillary products, including voluntary. But this is still somewhat limited, and the effectiveness is not yet proven.
Additionally, most medical companies do not have special voluntary sales reps. This is understandable, but because of the mixed messages from management and the perceived complexity of voluntary, sales reps are often reluctant to aggressively promote voluntary. Companies attempting to achieve significant voluntary results say it takes a tremendous amount of work to train sales reps and to get them to take voluntary seriously. Promotion and training must take place continuously over a very long timeframe to get traction.
So what does work? A good strategy is imperative. Strategy must be focused around distribution and meeting the needs of the brokers that the carrier wants to attract. Conducting pilot programs is often a successful way to fine-tune a strategy as well as to get “champions.” Success by other sales reps is a good way to spark the reps’ interest in voluntary.
For more information on how to establish a successful voluntary program in your company, give us a call.
|
