Takeover sales now account for 50 percent of new sales premium in the voluntary market reported in 2013, up five percentage points from 2012.
It’s the highest percentage of new business achieved profit since 2006 when Eastbridge Consulting Group began tracking takeover sales — where one carrier’s plan is replaced with a similar plan issued by a different insurance carrier.
“After slowing some several years ago, takeovers have increased again, and the level of increase in 2013 was even more than in 2012,” says Eastbridge President Gil Lowerre. “The movement since we began tracking takeover business in 2006 has been significant.”
In 2006, takeover sales accounted for just 12 percent.
Eastbridge said the increase in takeover sales was due to more group insurance carriers selling voluntary products and benefit brokers being responsible for a higher percentage of voluntary product sales. Brokers accounted for 57 percent of all voluntary sales in 2013.
Still, Lowerre said, “too many brokers do not recognize all the opportunities for virgin sales in the voluntary market.”
Virgin business includes: Accounts that do not currently offer voluntary; employees who have not yet purchased coverage in accounts where voluntary is offered; and new lines of coverage sold to any employee in an existing account.
In addition to reaching the 71 million employees who don’t have any voluntary products today, Eastbridge said there’s opportunity for selling other voluntary products to the 43 million who already own at least one. Among employees owning voluntary, the percentage of employees who own just one voluntary product has declined over the last decade. Only 15 percent of the voluntary product owners have just one product, Eastbridge said.
“The bottom line for brokers and carriers is that you do not have to be satisfied with just replacing an existing plan,” Lowerre said. “There is tremendous opportunity for new premium dollars in the market.”
Total voluntary sales increased 4.3 percent to $6.644 billion in 2013, according to Eastbridge.
Results are part of the findings from Eastbridge’s U.S. Worksite/Voluntary Sales Report, which analyzes data from more than 60 carriers.