A few months ago, we wrote about the surge in employee benefit broker productivity: Today, brokers account for more than 57 percent of all voluntary sales. At the same time, takeovers have exploded, increasing from 12 percent of all sales in 2006 to 50 percent in 2013. It would seem logical that employee benefit brokers are accounting for much of this takeover activity.
That conclusion is supported by two other facts. First, most takeovers are in three product lines: term, disability, and dental, the three lines that many employee benefit brokers focus on. Second, takeovers at some traditional, true-group (employer-paid) companies have exceeded 85 percent of all new voluntary sales, while they remain below twenty-percent range at some carriers that are focused on traditional worksite brokers.
Takeovers should be an important and legitimate part of broker activity. Products may be out-of-date, underwriting may be too restrictive, or customer needs and employer priorities may have changed. But if a broker is writing primarily takeover business, it's fair to ask, “Is that all there is?”
In the traditional employer-paid business, takeovers often are the only account sale available to a broker. But in voluntary, 23 percent of employers don't offer any voluntary products and 62 percent of employees have yet to buy their first voluntary product.
This window of opportunity won't stay open forever. Eventually, new cases and enrollments will be harder to come by and takeovers will become more common for all brokers. While it appears that day is far off, the opportunity shrinks a little each year. All brokers want to grow their book of business, and all brokers would like to lock in future sales potential. But focusing on takeovers is a hard way to do that, especially when virgin case opportunities are all around us.
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