The lines between voluntary brokers and employee benefit brokers continue to blur when it comes to selling voluntary benefits, according to respondents to this year's BenefitsPRO/Eastbridge voluntary benefits survey. Over 400 producers responded to the survey in February and March 2017, representing a combination of employee benefits brokers, traditional voluntary brokers, enrollment companies and agents.
Employee benefit brokers today account for 60 percent of total voluntary sales. As such, they are gaining experience with voluntary and, as a result, looking more like voluntary brokers on many fronts. In the most recent survey, a large majority (about 90 percent) of the benefit brokers indicated they currently sell voluntary products, with more of these selling actively than in the past. Fewer of the brokers mentioned they only sell voluntary “occasionally” or as a cross-sell to select existing accounts. The following graph shows the contrast from just a few years ago.
Voluntary products also account for a larger percentage of the benefit brokers’ current revenue stream. Fewer benefit brokers in the current survey say voluntary makes up 10 percent or less of their revenues, while most say it now accounts for between 11 percent and 25 percent of their revenues.
While voluntary accounts for a higher percentage of revenue for benefit brokers, the voluntary brokers continue to sell more voluntary. Even so, benefit brokers are selling more voluntary than before, as can be seen by the increase in the percentage selling $1 million or more in voluntary premium.
Among the benefit brokers surveyed, most indicated selling very similar products to their voluntary broker counterparts. In fact, four of the top five most frequently sold voluntary products today are the same for both benefit brokers and voluntary brokers. This is quite different from 10 years ago, when the products sold by these two brokers were their primary point of differentiaton.
Both types of brokers are also adding non-traditional products to their voluntary portfolio. ID theft coverage is the most popular with voluntary brokers, while wellness programs rank highest with benefit brokers.
With increased sales and productivity per broker, as well as both types of brokers selling similar products, competition has, not surprisingly, increased. This year has seen a marked increase in the percentage of benefit brokers indicating that competition for voluntary sales is high or somewhat high.
From the perspective of which carriers are used most frequently for voluntary products, benefit brokers and voluntary brokers again had similar responses. Four of the five top carriers were the same for both groups of brokers.
Both benefit brokers and voluntary brokers say they now select best-of-breed products for their cases even if that means recommending more than one carrier. Although this has often been the approach used by voluntary brokers, benefit brokers traditionally used just one carrier for simplicity's sake, or to take advantage of bundled discounts. That appears to no longer be the case today, however.
Despite this, there is a difference between voluntary and benefit brokers in the number of carriers used per account. Benefit brokers are still more likely than voluntary brokers to use just one carrier.
Neither benefit brokers nor voluntary brokers recommend private exchanges to a significant percentage of their clients, with the majority suggesting these to 5 percent or less of their clients. The overall percentages in the current survey are very similar to last year's responses.
When asked what the future holds for private exchanges, respondents this year were somewhat less positive than last year that the use of exchanges will grow.
While not as optimistic about the future of private exchanges, many were positive about the possible effect President Trump and his administration will have on their business. Voluntary brokers tended to be more optimistic about a positive impact, though the majority of benefit brokers were also at least somewhat positive.
When asked to name the biggest threat to their personal voluntary business over the next 12 months, a significant percentage of voluntary brokers named “competition from other brokers” while the benefit brokers’ responses were somewhat mixed. Slightly more benefit brokers named “employer lack of interest” as their top threat, followed closely by “takeovers,” “competition” and “employee lack of interest.”
The benefit brokers’ concern regarding lack of interest by employers (and even employees) is somewhat surprising, as surveys with these audiences continue to show their interest in offering and purchasing voluntary benefits to round out their portfolios.
When asked what they need to be more successful, the benefit broker and voluntary broker responses were also somewhat different. The benefit brokers feel they need more assurance regarding the carriers administrative and billing capabilities, as well as more knowledge about carriers. Voluntary brokers are also interested in carrier assurances in administration and billing, but feel they need more enrollment capacity.
The future continues to look promising for voluntary sales and for brokers who sell these products. As competition increases, however, brokers will need to up their game and find ways to differentiate themselves from others in the market.