While reviewing the events scheduled for the recent National Small Business Week, I started thinking about the opportunity to provide non-medical benefit plans to small businesses. The people leading and working in small businesses have just as much need for life insurance, disability income protection, dental coverage and other typical employee benefits as employees in larger organizations.
In many ways, we benefits pros have overlooked the opportunity to provide these businesses access to quality benefit plans. Why has the small-group market been so overlooked by benefit professionals?
A range of factors have traditionally inhibited interest. For distributors, the challenge is to make selling benefits to small businesses easier than to large businesses. If the sales process is the same, it takes as much work to sell a group plan to an employer with four or 40 employees as to an employer with 400 employees. So a key to the small-business market is simplifying every step of the sales process. This includes plan design, rate quoting, purchasing and implementation.
Another key to success is opening our minds to the scope of the opportunity. It’s not only easier to find dozens of small employers, but it’s much easier to gain their interest. A LIMRA study of small businesses in 2015 found that less than 30 percent of employers with fewer than 100 employees offered such basic benefit programs as dental insurance, group life insurance, disability income protection and vision insurance. And LIMRA noted that market penetration for employers with less than 10 employees is about half that of larger small businesses.
In essence, we have walked past hundreds of small-business opportunities to fight over the relative handful of large accounts.
There’s a need for an easier process on the employer side, as well. The 400-life employer has trained, dedicated team members in the benefits admin area. At a small employer, the people managing benefits usually have multiple job functions, so no one is dedicated to benefit management. The small employer needs a much more automated service process. Making every part of the process simple for the employer—from purchase through implementation, ongoing service and claims—is essential in the small-business market.
More-efficient, low-cost benefit management technology is possible today, and that opens doors to offering better value benefits through group products. Carriers can offer distributors a simple quote process backed by intuitive service processes for employers. A recent research project we sponsored told us that smaller employers love self-driven services, backed by easy access to expert help, if needed.
This means we can deliver great value to the employer and their employees. Individual products generally have higher prices than group products for equivalent benefits. Today’s group pricing systems can tailor rates to the specific employer.
On my drive to work today, I must’ve passed two dozen small employers. Very likely two-thirds of those employers have virtually no employee benefits. The opportunity is sitting there waiting, and it isn’t tied up with the January 1 business cycle. It’s there today. What a great way to build your book of business!