Employees React to Economic Downturn
To succeed in the voluntary market, carriers and producers need to understand what employees think about voluntary, what they want, and what they need. That’s the goal of the study MarketVision™—The Employee Viewpoint 2010. Based on telephone interviews conducted with over 700 employees nationwide in October and November of 2010, the study shows that employees have made some significant changes since our 2006 study.
First, the study found that the importance of various types of coverage has shifted. Employees report that key coverages like medical, drug, dental and vision are more important than ever. This priority shift is balanced by the reduced importance of all other coverages. The overall ownership rates (regardless of funding) are down for all but these “priority” coverages. As examples, overall ownership of life, cancer, critical illness, and hospital indemnity plans showed decreases. The changes are not huge but mirror the idea that employees are focusing on priority coverages.
Second, voluntary ownership has dropped, driven by economic realities. The lower rate of ownership is slightly offset by the tendency of owners to purchase more policies than in the past. In fact, the percentage of those owning more than one voluntary product increased by ten percentage points since 2006. Additionally, the workplace continues to be the source of most employees’ insurance products. Even with a lower percentage owning a voluntary product, less than one-quarter of those surveyed said they own insurance products (other than auto or homeowners’ insurance) that were purchased outside of their or their spouse’s employment.
One item that has not changed is the importance of choice in benefits. However, in reacting to tighter budgets, employees are uncertain if they would be willing to pay more for their benefits in order to get more choice.
Clearly employees and their decision-making regarding voluntary has been under pressure over the last few years. We will be conducting another employee study late this year/early next to see if there are any signs of improvement.
The MarketVision™—The Employee Viewpoint 2010 report is available for purchase; for more information click here.
In the 10 years between 2000 and 2010, the HI/Supplemental Medical product line had the highest compound annual growth in new voluntary sales at almost 17 percent. This line includes mini-med and gap products. Of the five remaining product lines (life, disability, accident, cancer/critical illness, and dental), which came in second and what was the compound annual growth rate? (We calculate to hundredths of a percent.) The winner will need to correctly choose the product line and come closest to the correct rate.
Send your guess to email@example.com with the subject “Summer Quiz.” You can submit multiple guesses, but only one per email.
Eastbridge has been offering consulting and research services for over 22 years and has become the dominant supplier of both services in the voluntary/worksite industry. In fact, 21 of the 25 largest insurers use both sets of services.
In the consulting line, our two most popular services are Strategy Development and the Readiness Assessment. Eastbridge has completed 76 strategy projects and 20 percent of those clients have had us repeat the process periodically. Our Readiness Assessment process examines all customer-facing functions (employers, employees, and brokers) and benchmarks them against industry and peer standards, including best practices analyses in 120 different categories. Twenty-nine (29) insurers have used this service.
Almost every company uses Eastbridge research on a regular basis and members of our Information Partner research subscription program sell over 60 percent of all the new business in the industry. We remain dedicated to the idea that our client’s success is the driving force motivating Eastbridge’s excellence. And it’s clear that the industry appreciates the effort.
Spring Quiz Answer
In the last issue, we posed this Spring Quiz question: “Of those carriers who have participated in the annual Eastbridge Sales Survey for the last five years (2005-2010), which carrier has had the highest compound growth rate for their new business annualized premium over that period?”
This question brought the highest number of guesses ever for a quiz, but unfortunately, none was correct. We eliminated all but organic growth, so growth through acquisition was not credited. The leader in growth for this five-year period was Reliance Standard.
PASS Provides Important Feedback
What do brokers value when choosing a carrier for their voluntary products? The answer varies a bit by the type of broker that you are targeting, but the most common answers are:
- Customer service at the account/employer level
- Customer service at the employee level
- Responsiveness to the needs of brokers
- Claims paying history and capacity
- Product price
This information is important to know when devising your distributor strategy, but how do you know what brokers think of your company in particular and how your offering (products, services, etc.) compares to your competitors?
Internal studies are a start, but these don’t always give you an objective picture of your ratings as compared to your competitors. That’s what the PASS program (Producer Attitude Scorecard Service™) is designed to do. The PASS survey is a standard broker survey that we administer to your brokers. The easy-to-complete survey provides ratings on how you are performing in all of the areas important to brokers. But, the difference (and advantage) of the program is that we can tell you how you are rated compared to other carriers.
The survey is inexpensive since it’s being offered on a larger scale with standardized instruments. In fact, the cost is less than a third of the price of a typical survey. For most companies we administer the survey and a produce a final report in about 30-45 days.
If your company wants a quick and inexpensive way to gauge how your brokers rate you, give us a call today.
Like most insurers in the voluntary market, one client carrier recently told us that the annual U.S. Worksite Sales Report serves as the basis for all of its internal business analyses and planning each year and the 64 carriers included in our survey provide the only comprehensive view of the industry’s performance. However, the client’s marketing department uses another organization’s survey (with only 37 participants) in their sales material because it makes them “look better.” When we checked, we found that this client’s brochure stated that it was one of the “top ten” sellers of a certain product, according to the ***** survey. And they were right because they didn’t make that top ten cut in our survey. They also didn’t mention there were only 19 carriers in that category. That’s marketing!
The Two Enemies of Success
If ignorance is defined as the lack of complete knowledge, then we’re all ignorant. But some are more so than others. In our business, which is changing so rapidly, the search for new ideas, better information, and marketplace insights is a healthy sign. We all have to work hard at staying abreast of changes and shrinking our areas of ignorance.
Arrogance is a more dangerous characteristic. Arrogance involves the assumption that little can be learned from others and that our views of the world and our business practices have to be superior. Arrogance limits our ability to attack ignorance.
In the voluntary/worksite business, we have the usual bell curve when it comes to ignorance. Some carriers are very experienced and very knowledgeable. A few are just starting out or are just learning the lesson that change erodes prior truths, and the majority of companies are somewhere in between these two extremes.
We are blessed by the fact that there is no bell curve when it comes to arrogance. The vast majority of insurers do not generally display arrogance and there is a clear hunger for information, knowledge, and wisdom (three different qualities). But there are a few who do display an arrogance that hampers their ability to grow. Happily, all but a very few are knowledgeable and although that lack of openness may limit their growth, they are still successful—at least in the short term. But then, there’s the one or two who are near the bottom of the ignorance curve and also display an arrogant attitude towards learning and changing.
It’s worthwhile to periodically take your own temperature on both scales. Where do you rate on the ignorance curve (data, knowledge, and wisdom)? And to what degree does organizational arrogance hinder your ability to move up that curve?
Eastbridge Frontline Report Gives Insights into Executive Viewpoints on Voluntary
Every two years, Eastbridge invites executives to share their thoughts and insights on the obstacles facing their company and the worksite/voluntary industry—both currently and in the future. This year, executives from among 25 of the top worksite companies responded, sharing feedback on such topics as:
- Formidable challenges facing the industry and their company
- Expected future growth rates
- Anticipated changes to product mix and distribution
- Legislative and regulatory changes on the horizon
- Competitors of the future
- Voluntary industry trends including enrollment, sales, etc.
Additionally, the study, Worksite/Voluntary Marketing: An Executive Perspective 2011, compares this year’s findings with past studies.
Following is a glimpse of some key findings:
- More executives view “product competition” as a top obstacle facing their business today compared to the past where “attracting quality brokers” was the number one issue.
- Most respondents expect to see some changes in their product mix over the next five years in response to healthcare reform—or to take advantage of it.
- Carriers expect more types of producers to focus on voluntary sales and, in particular, expect the medical/benefit brokers to be more active.
- They also expect enrollment to play a more critical role in a carrier’s competitive advantage.
The report is available only to Eastbridge Information Partner companies as well as to participants. For more information on becoming a participant in future studies, contact the company at firstname.lastname@example.org.
The Country’s Largest Brokers are Becoming More Active in Voluntary
Since 2005, Eastbridge has partnered with the Council of Insurance Agents & Brokers (CIAB) to study its member population and better understand the role worksite marketing plays for this group, especially as compared to the “traditional” Employee Benefit Broker segment. Members of The Council of Insurance Agents & Brokers include the largest P&C firms that have benefit agencies and some benefit-only agencies. Results from the most recent study show that Members are gaining experience with voluntary benefits and no longer consider themselves, for the most part, “Occasional” worksite producers. Rather, many Members are now what Eastbridge terms a “Cross Seller” whereby they use payroll deduction as a cross-selling tool in select, existing accounts. Much of this movement has been accelerated by the Members’ need to find ways to replace revenues they anticipate losing due to health care reform.
As this evolution continues, Members will become more critical in their carrier selection. First, they want more of a relationship with their carrier reps. Although members still consider product quality as their number one reason for selecting a carrier, they also place a high value on the relationship they have with the carrier’s sales rep. This latter reason (the relationship) is a new addition to the possible answers this year and it replaced the carrier’s ability to handle the entire case as the number two reason. This suggests that the Members may be getting more comfortable with voluntary and no longer need this full service support for all accounts. Members also want more assurances regarding administrative and billing capabilities in order to successfully sell voluntary products. They want to know that their clients will not be burdened with the addition of voluntary products to their benefits package. The Members also mentioned that they need more training in cross selling voluntary to their existing clients and more knowledge about voluntary products in general.
Still, while Members are becoming more interested in voluntary—and better educated on the market and its products—most leadership within these agencies don’t seem to see voluntary as a key strategic business line within the benefits operation. This, in a sense, may limit some of the forward momentum of the Members themselves. Until there’s more buy in from management, the firms won’t be maximizing their potential in voluntary and perhaps may even jeopardize the rest of their benefits business since more and more benefits these days are becoming voluntary.
This is the fourth bi-annual survey conducted with members of the Council of Insurance Agents & Brokers (CIAB). This study focuses on the current voluntary experiences, results, processes, and opinions of Member firms; our prior surveys were conducted in 2005, 2007, and 2009. A Spotlight Report based on the findings of this study and subsequent qualitative interviews will be released later this summer to our Information Partners and for sale to other companies.
It’s Been a Busy Year
Since the beginning of 2011, Eastbridge has released several reports covering a myriad of topics relative to the voluntary industry. These include:
- Voluntary Hospital Indemnity Plans—examines the current voluntary hospital indemnity product of nine carriers including carrier results and product details
- MarketVision™—The Employee Viewpoint 2010—studies employee attitudes towards benefits, in general, as well as towards voluntary products and looks at changes that have occurred in employee attitudes since our last MarketVision™ employee studies in 2002 and 2006
- Voluntary Long-Term Disability Insurance—looks at the current state of the VLTD market (sales, competition, etc.) and the VLTD products of 13 carriers
- Field Structures in Voluntary Companies—details the positions available in 18 different carriers’ field offices as well as the specific functions provided by the staff, their compensation structure, and reporting relationships
- Broker Services—reviews the services offered to brokers by voluntary carriers including those offered to assist the brokers themselves as well as those provided for brokers to offer their clients
- Worksite Marketing: An Executive Perspective 2011—bi-annual survey that tracks worksite executives’ thoughts and insights on the obstacles facing the worksite industry today as well as those they expect for the future
- Voluntary Industry Confidence Index—reports on how worksite/voluntary carriers, third-party administrators, and brokers feel about where the voluntary industry is headed [Note: available only to Eastbridge Information Partner companies as well as to participants]
- 2020: Half Way There—indentifies the major underlying trends that will drive the worksite industry going forward and gives an overview of the benefits industry landscape in the year 2020
- U.S Worksite Sales Report— estimates sales for the entire voluntary industry with detailed data on the performance of 64 voluntary carriers, both group (voluntary) and individual (worksite) carriers/products [Note: available only to study participants]
For more information on all of Eastbridge’s reports, visit our website at www.eastbridge.com.