Fast Focus
	Lowerre started Eastbridge Consulting in 1989, when he recognized that no one was catering specific consulting services to executives of voluntary benefits companies.
	Increasingly, voluntary benefits are being offered as a counterweight to cutbacks in core benefits.
	Most benefits firms turn the nuts and bolts of managing voluntary benefits over to third parties, leaving them vulnerable to losing clients while failing to create a firm knowledge base.

Blindside

Gil Lowerre sees brokers failing to take voluntary benefits seriously as a major revenue generator. After the sale, they lose sight of the strategic value of what they have sold.

By  Lesie Werstein Hann

Although his three children are now grown—his oldest has a 4-year-old daughter and his two sons attend Tulane University—Gil Lowerre seems to spend an inordinate amount of time coaxing adolescents to get serious about a new kind of future.

The adolescents Lowerre targets are not impudent teenagers; they are sophisticated employee benefits brokers who have yet to prepare for a future in which voluntary benefits play an increasingly important role.

“The largest benefit brokers have been slow to embrace voluntary. They still see voluntary as a one-off from their primary sales activities,” says Lowerre, president of Eastbridge Consulting Group, Avon, Conn. “My mission is to help them understand that voluntary is the future and they need to have voluntary strategies and structures to position themselves as the solution.”

In the 20 years since Lowerre, 59, launched a consulting firm focused on voluntary benefits, worksite sales have moved from a niche business into the mainstream. In the last decade alone, voluntary benefit sales more than doubled to $5.23 billion in 2008 from $2.6 billion in 1999. Even in the midst of the “great recession,” voluntary sales grew almost 4% last year.

While benefits brokers claim the largest percentage of voluntary benefits sales—with $2.4 billion or 46% of the total—the largest, most sophisticated brokers remain largely on the sidelines. Eastbridge’s third biannual survey of members of the Council of Insurance Agents & Brokers notes that, while large benefits brokerages have yet to fully embrace a voluntary benefits strategy, “overall, this group of companies can be said to have matured—at least to the point of entering the adolescence stage in their voluntary development.”

Brokers Failing to Capitalize

For decades, large brokerages have sold supplemental life, disability and other voluntary insurance products to help their customers enrich the benefits they offer employees. Increasingly, voluntary benefits are being offered as a counterweight to cutbacks in core benefits. Employees choose from a menu of voluntary benefits offered by the employer and pay for them through payroll deductions.

According to Eastbridge’s survey of 2008 sales, voluntary short-term disability is the biggest seller with $800 million in sales, followed closely by term life. Term life was also the fastest growing single product with a 30% increase in 2008, but Lowerre says the hottest products over the last few years have been supplemental medical policies, such as critical illness, limited-benefits or mini-med policies, and gap policies that can help fund high deductibles.

Most large brokerages have not put in place a comprehensive strategy to capitalize on voluntary benefits trends, though survey data from CIAB members suggests that they are moving up the learning curve. A stable 92% of CIAB members responding to the Eastbridge survey in 2005, 2007 and 2009 sell voluntary products, but this year 52% described themselves as active producers who try to offer payroll deduction worksite programs in all cases and/or as proactive producers who also use voluntary products to initiate the client relationship. That’s a big jump from 35% in 2007.

Yet the results reveal a serious gap: The majority of firms still have no central responsibility for voluntary sales and strategy. More than half the respondents (53%) report that no one at their firm has goals or incentives for voluntary sales, and for another 32%, goals exist only at the rep/consultant level. The message: The leaders of these firms do not take voluntary seriously as an area of strategic importance—at least not yet.

“This is going to overwhelm them at some point,” Lowerre says, “but right now it’s easy for them to ignore.”

How so? By making the sale then turning over important responsibilities, like enrollment and billing, to someone else—insurance carriers, third party administrators or worksite specialists. “The ability to turn it over to someone, soup to nuts, is attractive, and it’s the remedy most of these companies have chosen,” Lowerre says. “But the downside is that they have not built their own expertise and capabilities to manage the voluntary business because they don’t yet appreciate the full strategic value that voluntary presents.”

By ceding the nuts and bolts of their voluntary sales to third parties, Lowerre says, large brokerages are missing out on a terrific opportunity to increase revenue and tap into a wider array of products and strengthen client relationships.