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Lowerre started Eastbridge Consulting in 1989, when he
recognized that no one was catering specific consulting
services to executives of voluntary benefits companies.
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Increasingly, voluntary benefits are being offered as a
counterweight to cutbacks in core benefits.
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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.
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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.
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