Growing pains

We're all familiar with the fable about the grasshopper and the ant. During the summer when food was plentiful, the grasshopper enjoyed singing and playing -- even laughing at the ant who worked hard during the hot summer months to prepare for winter and store up supplies. When winter came, the grasshopper had no food or shelter while the ant was warm and had plenty of food.

The lesson of this fable is, of course, to prepare now for when times might be tougher. For smaller benefits agencies, those whose core clients are businesses with 100 or fewer employees, there might be some tough times coming in the next five years or so -- times that could lead to reductions in your agency's income. If you'd rather be prepared for the future like the proactive ant, there are actions you can take now to help position your agency for security and growth:

oBecome aware of what's happening in the benefits industry and how these trends might affect your agency.

oConsider adding voluntary benefits strategies and solutions to your agency's portfolio.

oLock in a plan to secure your agency's income for now and the future.

Potential threats
There are several industry trends that could greatly affect small and medium benefits brokers in the next five years -- trends you need to be aware of so you can prepare now to protect your agency.

Possible reduction or elimination of contingent commissions. The benefits industry has been under tight scrutiny, especially regarding contingent commissions that some insurance carriers pay to brokers. Small and medium benefits brokers whose main business revolves around health insurance and related core benefits might not realize how this scrutiny could affect their business; however, it's in your best interest to learn more about the contingent commission issue and understand how it might affect your business during the next few years.

Ever-increasing core health insurance costs. Already core health insurance is becoming expensive for many companies with 100 or fewer employees, and it might soon become unaffordable and unrealistic for these clients. It could even get to the point where your clients will simply offer a monthly stipend for employees to use to purchase their own health insurance. If these trends bear out, you might find your agency losing traditional group health as part of your portfolio. Are you prepared to replace the income you could lose within the next five years? Are you preparing your clients for what's coming down the road regarding changes to core health coverage?

More competitors calling on your clients. With opportunities created by high health insurance costs plus innovations in enrollment technology, more insurance carriers and enrollment companies are entering the business of providing voluntary benefits at the worksite. If you aren't preparing your clients for what's happening with health insurance costs and plan design and if you aren't bringing them solutions, you can bet one of these competitors will call on them soon, if they haven't already.

Strategies and solutions
Smaller businesses feel more pressure from higher health insurance costs because they typically don't have as many benefits options available to them like large companies do, yet they need a competitive benefits package to compete with larger companies for qualified employees. Not only is it tough for your clients to provide a competitive health insurance plan that will help attract and retain quality workers, but there aren't extra dollars lying around to fund additional benefits, such as life insurance and disability coverage.

Voluntary benefits can help expand your agency's offerings and bring much-needed ideas and solutions to your clients. No longer a short list of individual products, voluntary benefits have matured into a thriving industry, offering a variety of products on both group and individual platforms, providing more benefits choices and bringing a larger selection of enrollment options.

We're seeing larger numbers of small businesses putting in high-deductible health plans, which means their employees are taking on more responsibility for health care expenses. However, the voluntary benefits industry is evolving to provide solutions to meet these employer and employee needs. By adding voluntary benefits to your agency, you can help clients better manage benefits program costs and provide employees with coverage choices to meet their additional medical expenses.

There's a wide range of voluntary benefits solutions available -- such as supplemental health, life, cancer, short-term disability and accident insurance -- and there are many ways you can use them to enhance a client's benefits program. For example, if a client needs to move toward an HDHP to help reduce health insurance costs, you could add a voluntary supplemental health insurance product to the benefits program, giving employees access to additional benefits to help pay for their increased medical expenses. Your client could pay a portion or all of the supplemental health product's premiums or let employees pay the premiums themselves through convenient payroll deduction. Here's another example: A client could reduce its company-paid life insurance to a basic $10,000 and let employees purchase additional voluntary life coverage on their own to meet their needs. These are just a few examples of ways voluntary benefits can help your clients expand their benefits offerings at little to no cost.

Effective benefits communications
Studies show that employees who understand their benefits and the value of what their employer provides appreciate their company more and use their benefits more responsibly.

According to the Watson Wyatt WorkUSA 2004 study, "how well a company communicates the value of its health benefits can do more to retain top-performing employees than the actual richness of the benefits themselves." In companies that don't do a good job communicating the value of their rich benefits programs, only 22 percent of surveyed employees were satisfied with their benefits package.

Yet in organizations that comprehensively communicate the value of less rich benefit packages, 76 percent of employees were satisfied with their benefits.

Effective benefits communications can go a long way in helping employees understand and appreciate their benefits, and the most effective method of enrolling employees in their benefits is the one-on-one session with a benefits professional.

How can you provide this valuable service through your agency? By bringing in a voluntary benefits partner to help develop voluntary benefits strategies for your clients and deliver benefits communications and enrollment support for your clients' core and voluntary benefits -- at little to no cost.

Add an Income Stream
There's no better way to protect your agency's income stream than to make sure you develop long-term client relationships that are strong enough to keep out the competition. When you choose the right voluntary benefits partner, it's almost like adding a whole new team that's just as interested as you are in keeping your clients happy.

Find a voluntary benefits partner who can help you:

oAssess a client's benefits program needs and recommend long-term strategies.

oCommunicate core and voluntary benefits.

oReassess the client's program each year and conduct annual re-enrollments.

Many voluntary benefits carriers and enrollment companies don't conduct annual assessments and re-enrollments after the initial enrollment. But the way to strengthen relationships with your clients and to secure future income for your agency is to look at your client's benefits program not as a one-time enrollment opportunity but as a long-term strategy for meeting client needs. This is where the true strength of a voluntary benefits partner becomes evident -- in its willingness to do what's best for you, your agency, your clients and their employees over the long haul, not just the first year.

Make sure you know what's ahead for your agency in the next few years and that you understand how benefits industry trends might affect your agency's income and your clients' benefits programs. You can take action to prepare and protect your agency.

Choose a voluntary benefits partner to help you bring new ideas and solutions to your clients, provide coverage options for their employees and bring in new income opportunities to your agency.

Overall, your voluntary benefits partner can help you create longer, stronger relationships with your clients and position your agency for growth and continued success.