Winter 2012 / No. 90
Don’t Miss Out on the Annual Eastbridge Voluntary Sales Report
We are offering the following voluntary/worksite industry data on 2011 sales for free:
- Listing of all carriers, ranked by sales and market share
- Industry sales totals, with 10 years of historical data
- Sales by product platform (individual vs. group)
- Takeover sales estimates
- Product line sales results with share by line
- Sales and share by distribution segment
- Inforce premium estimates and history
- Universal life/whole life sales by company
- Term life sales by company
- Short-term disability sales by company
- Long-term disability sales by company
- Cancer sales by company
- Critical illness sales by company
- Accident sales by company
- Dental sales by company
- Hospital indemnity/voluntary medical sales by company
Last year, we also added data about sales and inforce by state. This data is optional but the only way you can get the sales penetration numbers is by participating in this portion of our survey. (Refer to a separate article on this report.)
And the best part is that the report is available for “free!” All you have to do is participate in the survey. No catches. In fact, the only way you can get this data is by participating.
Simply give us the name of the person we should contact when the survey period begins (late January). Call us at (860) 676-9633 or email us at info@eastbridge.com and we’ll add you to the list! The study is open to all insurance carriers in the voluntary/worksite market.
The Carriers’ Role in Enrollment
Enrollment platforms continue to evolve, blending into benefit administration systems, offering core benefits, offering multiple carrier products, providing 24/7/365 employer access, etc. The demands for openness, flexibility, and comprehensiveness are pushing the envelope for tomorrow’s platforms. The bar is getting higher and the price tag is following.
It wasn’t that long ago that most voluntary carriers offered proprietary enrollment platforms, (technology with or without human based components) and encouraged brokers to use their program for all of their voluntary enrollments. Smaller carriers used alliances with enrollment companies (Specialists) or a technology vendor to fill this need. But these solutions became more expensive, both in terms of outlay and in the staffing required to maintain and upgrade the system.
Two trends are upping the ante for this approach.
First, Employee Benefit Brokers are becoming more sophisticated about voluntary and have been chafing against the requirement that they sell only that carrier’s products and nothing else. As they look for “best-in-breed” offerings, they are more likely to demand mixing carriers in a single enrollment. Second, to improve their customer offerings, they have looked to combine voluntary and core enrollments into a single event.
Second, more sophisticated technology vendors have entered the market, offering the platform and the enrollment services that surround it. The resulting package is looking more and more like a potential total enrollment solution. These better-capitalized vendors are pushing the package definition and heading towards the day when their platform is the total solution for all benefit delivery and management (customer services, case set-up, billing, etc.).
For all but the very largest carriers, this has caused a lot of internal stress for voluntary insurers. They’ve found themselves running two businesses: selling voluntary products and maintaining a voluntary enrollment technology platform. And it is becoming clear that most are falling behind the technology vendors.
As product competition inevitably increases, margins will be compressed, forcing carriers into compromises in both businesses. To the degree that competitors can avoid this trap and minimize investment in enrollment technology, their central offerings should become more competitive. The danger is that laggards will begin to trail in both businesses.
Today, more and more carriers are partnering with those vendors, creating private-label versions, or differentiating their third-party platforms through cost or other differences. The trend is obvious. Most carriers will exit the enrollment technology business and focus on their central insurance business.
The largest carriers have the wherewithal to resist this evolution for a period of time. While most now offer an optional third-party platform, they continue to push their internal, proprietary platform. As time goes by, they will be forced to move to an outsourcing model or will have to settle for the least sophisticated brokers in the marketplace. It’s ironic that this model will force them to work with brokers new to voluntary who will grow in sophistication to the point they move on to carriers with more flexible and modern solutions.
Long term, carriers won’t and shouldn’t be in the enrollment technology business. It’s an expensive distraction that pits them against experts focused on that business and against the natural evolution of their customer-brokers.
Fall Quiz Answer
The Fall question was “Which three products were offered most frequently by employers, on an employee-pay-all (voluntary) basis?”
Unlike employer-paid products, voluntary products, when offered, vary greatly in the degree to which they are purchased (participation). So any time you see stats on penetration or market share, it’s important to note whether the author is talking about products “offered” or products “owned” (purchased).
The Fall quiz question asked about products “offered.” In Eastbridge’s most recent employer study, the most commonly offered voluntary product was cancer, followed by LTD and accident. These results have been consistent across studies for many years.
If the question had been about products “purchased by employees,” life insurance and disability would have led the way.
So this question turned out to be trickier than we intended with all but a few of you guessing life insurance (or term) as the most frequently offered product. Those who weren’t fooled still had problems placing cancer in the lead spot.
This is the third straight quiz without a clear winner. We’ll try one more quiz and if we stump you four times in a row, it’ll be time for a break.
Adding a New Dimension to Sales Planning and Analysis
Most executives have a good sense of where industry sales are strong, at least on a regional level, but the Eastbridge Sales Index (ESI) and Eastbridge Premium Index (EPI) provide measures of real sales coverage (ESI) and penetration (EPI) on a state level. These numbers provide a new perspective for sales managers.
The measures are published in our annual report, US State ESI and EPI Data for 2010. The report is an adjunct to Eastbridge’s annual U.S. Worksite Sales Report© and includes sales and inforce data by state, as reported by the survey participants. Additionally, the two indexes are published: ESI, which offers a state-by-state measure of sales coverage and EPI, which looks at inforce premium per employed person, by state. These indices are published annually and tracked over time, by state. The report is free but available only to survey participants.
The ESI provides an entirely new perspective on sales effectiveness. Large states like California and New York are usually seen as strong sales areas but without looking at the ESI, executives cannot determine for certain if the sales coverage in these states is strong or weak. (Ironically, the indices for 2010 showed that sales coverage was actually weak.) A state with relatively low voluntary sales might be a great opportunity if there is a large prospect pool, but a small population of potential buyers may not justify investing in distribution resources. The ESI and EPI reports provide an objective basis for looking at sales coverage, penetration, and therefore, the opportunity for voluntary expansion.
Our first report was published using 2010 data, and we’ve received strong reviews from those companies that received it. Other companies have also asked for the report but were not eligible since they could not provide state-by-state sales and inforce data. The good news is that these companies and others can receive the 2011 report simply by participating in the annual sales survey and completing the state-by-state sections of the survey. These participants will automatically get both the US Worksite Sales Report© and the US State ESI and EPI Data for 2010 report. [Note: You must submit both the annual sales data and the state data to get the supplemental ESI/EPI report. Also, as with the Sales Report, only carriers are eligible to participate and receive the report.]
If you are not on our list for the annual sales survey, simply give us the name of the person we should contact when the survey period begins (late January) by calling us at (860) 676-9633 or emailing us at info@eastbridge.com.
Get 45+ Eastbridge Research Reports for the Price of Five
This is the month for companies to join the Eastbridge Information Partner© program. For a low annual fee, companies get all of Eastbridge’s research reports. The fee is fixed and never goes up, and is equivalent to five or so reports at the retail price. But, for that one fee, the client company receives all fifteen reports each year, as they are published, plus the forty-five current reports on our web site.
If you’d like more details about membership, contact us at info@eastbridge.com or call 860-676-9633.
Life Insurance: The Voluntary Cornerstone
We are all hearing a lot of sniffling and moaning from certain trade associations and carriers about the state of life insurance sales. Income coverage, number of individual sales, individual life insurance ownership, and opportunity to buy measures have all been sinking for years. And maybe the volume of that complaining isn’t surprising given that individual life business has historically been the primary mandate for three of those trade associations.
Voluntary life sales, however, have not participated in this decline. Most uninitiated observers guess that accident, STD, dental or cancer lead voluntary sales, often due to confusion between “offered” and “purchased” measures (see the discussion in the “Fall Quiz Answer” in this issue). But when measured by new annualized premium, life insurance has been the largest selling voluntary product line almost every year. In 2010, life insurance accounted for 25% of new premium, followed by disability (20%) and supplemental medical products (HI, mini-med and gap) at 13%.
More importantly, over the last 10 years, life insurance sales have increased at a 7.2% compound annual growth rate, second in growth only to the supplemental medical product line (16.9%). In 2010, the industry sold $400 million in UL/WL/ISWL premium and $931 million in term premium. Given the large amount of employer-paid life insurance in accounts, this suggests that for most voluntary buyers, life insurance remains the cornerstone of their personal insurance portfolio.
We can surely do more, but we certainly aren’t contributing to declines in life insurance ownership.
New VSTD Report Now Available
Our updated report on voluntary short-term disability products is out and available for purchase. This report is a favorite since VSTD is one of the top selling voluntary products.
This year’s report includes data from 19 different carriers and 25 different plans. The report includes:
- General market information and results from respondents
- Detailed product features and benefits
- Underwriting guidelines
- Rates and premium structure
- Distribution and commission information
The full table of contents is available on our website. The report can be purchased for $3,000. To order, please call us at (860) 676-9633 or email info@eastbridge.com.
Sales Skills
For most carriers, the sales success of their wholesalers (reps, regionals, etc.) depends largely on their sales abilities. Yet, how many carriers teach sales skills as a core part of their training program? A handful, at best.
Maybe it’s time to stop depending on their previous carrier for sales training and accepting the fact that not teaching salespeople to sell is simply foolish.
How is Your Confidence?
We don’t yet know how we fared as an industry in 2011 but regardless, it’s a brand new year and time to start the measures all over again. So how do you think the industry will do in 2012? Are we on the road to recovery or are we still experiencing problems that will impact voluntary sales?
Our semi-annual Voluntary Industry Confidence Index survey will be sent out in January and it is your opportunity to share opinions about voluntary sales, employee enthusiasm for voluntary, new group growth, profitability, and more. The survey index has been shown to be a good barometer of what is to come in the near future, but we need everyone to participate to make the findings even stronger. Look for the survey in your inbox and go online to let your voice be heard!
If you do not receive the email link to the Voluntary Confidence Index survey in the next few days, email us at info@eastbridge.com and we’ll get it to you.
Enrollment Companies
How do you handle enrollments at your company? Do you find that you need help from outside parties to provide enrollment support? Many companies turn to enrollment companies for their enrollments, especially of large cases. Indeed, enrollment companies (Worksite Specialists) are a mainstay in today’s voluntary market place, particularly for those brokers who cannot provide this service on their own. But what do enrollment companies do exactly? What services do they offer? What products? Which carriers do they use and why?
These questions and more are answered in Eastbridge’s report, Enrollment Companies and Voluntary—An Update. Some of the findings revealed include:
- Where enrollment companies get their cases to enroll
- What products are the most popular for enrollment companies
- Case sizes preferred by these firms
- How and how much these companies typically get paid
- Enrollment methodologies and services offered
Where possible, the report compares the current study findings with a similar study published by Eastbridge in 2008. With this information, carriers can examine how these companies—and the services they offer—fit into their enrollment strategies.
The report is now available for purchase for $2,500. More information about the report, including the table of contents, is available on the Eastbridge website at http://www.eastbridge.com/spotlight/archives/d_2011enrollmentcompanies.html.
To purchase the report, e-mail us at info@eastbridge.com
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