Insurance agencies that historically focused on property and casualty have a once-in-a-lifetime opportunity to expand into benefits in a really meaningful way. The opportunity is related to benefits technology, and the best agency leaders are taking advantage.
The window is that most employers aren’t yet handling benefits and HR online, but increasingly want to be. P&C agencies have never had trouble landing meetings, but have had trouble finding a clear differentiator over other benefits brokerages. Right now, before the window closes and every employer and broker is online, benefits technology can be that differentiator.
Here are three steps to setting yourself apart.
Step 1: Pick a platform
There are a handful of benefits platforms that have emerged as market leaders, and all of them will provide an online benefits enrollment experience. But when comparing benefits and HR software vendors, there are a few other factors you will want to consider.
Consider the software’s background and whether it has the benefits experience to develop its product in line with client needs. Compare features, especially beyond benefits — does it have the necessary HR capabilities to be an all-in-one, comprehensive solution? Is it integrated with carriers and payroll companies?
Lastly, consider return on investment. There are three areas that determine ROI with a benefits platform: the licensing model, system support and revenue growth. Look for a platform with cost-effective licensing, robust tech support and a tested approach to revenue growth.
Ultimately, you will want to find a platform that improves administrative efficiencies while allowing your client to expand their benefits package.
Step 2: Hire someone who is tech-savvy and interested in health care
When you hear “tech-savvy,” you might immediately think of hiring a millennial or recent graduate. But this doesn’t have to be a young person, it just needs to be someone confident enough with technology to be trained on your new platform and assist the agency in going online.
This person will also need to be trained on how to sell and position the software with prospects, which is where a tested method for revenue growth from the benefits platform becomes especially handy. An effective go-to-market strategy is necessary for using the platform to win new business.
Next, this person will need to meet with the carriers in your market. If you have someone on your team who does group benefits, you may already have these relationships.
Step 3: Set meetings for them and help them close
This is where you can leverage your existing P&C relationships to win new business.
You will be shocked by how much the meetings will revolve around how the software will make HR’s life easier. If you have a P&C client whose broker is not currently offering them any sort of tech tool, having a solution for benefits administration, onboarding, compliance, PTO and more will be a clear differentiator.
This can result in significant revenue growth for your agency. Here’s an example.
Let’s say you set a meeting with 75 groups with 50 employees each and an average commission of $30 per employee per month. If you’re able to close 20 percent of those meetings and gain five new clients, that represents annualized revenue of $270,000 per year.
Further, that is just with a 20 percent close ratio. We have seen agencies report close ratios as high as 31 percent, which in this example would result in new client annualized revenue of over $418,500 per year.
Why P&C agencies have a unique opportunity
The challenge most brokers face after adopting a system is getting it in front of enough prospects. That will not be as big of a challenge for agencies that have a larger P&C arm which can use their existing P&C book to set meetings.
However, the window of opportunity is slim. The industry as a whole is making the move online, which will reduce P&C agencies’ ability to use a platform as a differentiator. But right now, P&C agencies have two market dynamics on their side that are creating a unique opportunity: the ability to leverage existing relationships to win new business, and to offer a clear differentiator in those meetings through a benefits platform.