Spring 2008 / No. 75
Medical Brokers Begin to Explore the Voluntary Market
By Bonnie Brazzell
The latest entrants (from both a carrier and broker perspective) into the voluntary marketplace are group medical insurance companies and group health brokers. Both have long resisted entering this market space. But all that is changing.
Last quarter in OutsideInput, we talked about some of the findings in our recent Eastbridge Frontline Report, Medical Companies and Voluntary Products. In this issue, we will explore the results of our medical broker survey.
Ninety-four (94) percent of the medical brokers surveyed by Eastbridge in a new (soon to be published) study sell at least some voluntary business. Most (37 percent) tend to sell voluntary only when a case comes to them (incidental). Another 21 percent are occasional producers, using voluntary as a cross sell to existing clients. While this is almost 60 percent of all medical brokers only dabbling in the market, the fact is that this is where most voluntary producers started!
Today, the amount of voluntary business the medical broker sells is still somewhat small. Twenty (20) percent of those in our survey sell under $10,000 a year in voluntary new business annualized premium. Another 24 percent sell between $10,000 and $35,000. Just 12 percent said they had over $500,000 in NBAP in 2006.
While the sales are still small, these brokers already have strong thoughts about voluntary. Sixty-one (61) percent prefer group platform products. Twenty-five (25) percent said it doesn’t matter and only 13 percent prefer individual platform plans (sometimes called traditional worksite plans).
In terms of the types of products most frequently sold, medical brokers tend towards selling voluntary versions of traditional ancillary benefits. The top three most frequently sold voluntary products were:
- Short-term disability
- Dental
- Long-term disability
Term life and vision insurance were also popular. Somewhat surprisingly, however, these traditional ancillary plans were followed by cancer and accident. Both of these products are traditional “worksite” products.
Carriers wanting to attract the medical broker to their voluntary products need to understand that these brokers need/want more support (for voluntary) from carriers. These medical brokers are not as experienced as other voluntary producers and, because of this, the knowledge of the carrier’s sales rep (about voluntary), the enrollment materials, and carrier enrollment support are all much more important to medical brokers when selecting a voluntary carrier. This type of broker is also more likely to use carrier enrollers than many other brokers.
For any carrier to take advantage of this developing distribution channel, a good strategy focused around meeting the needs of the medical brokers is imperative. We believe that medical brokers will increase their voluntary sales as they lose medical client revenues and/or discover that voluntary products allow them to develop new ways of helping their clients address their benefits issues. The carrier that understands the unique needs of the medical broker and that builds the products and services designed to help this broker gain experience and sales, will win out.
Look for the new Spotlight Report with full details on the findings of our Medical Brokers and Voluntary study. The report will be available in May. For information on how Eastbridge can help you attract medical brokers, give us a call.
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