The era of voluntary benefits?

By Brian Summers

Colonial Life


As health insurance companies begin to slash commissions and the uncertainty of health care reform looms over the industry, one constant has remained — voluntary benefits.

According to an Eastbridge Consulting Group sales study, voluntary sales increased 3.3 percent to $5.4 billion in 2009, up from $5.2 billion in 2008.1 Sales of critical illness insurance, for example, nearly doubled between 2008 and 2009.2 This surge could indicate employees finally recognize the need for additional insurance to help with the rising medical and non-medical expenses that won’t be covered by traditional employer-sponsored benefits plans.

As more and more employers increase cost-sharing by raising deductibles and co-payments, employees are left with more financial exposure and coverage gaps that widen even further. By integrating voluntary benefits with a company’s core group offering, employers can help employees protect themselves. If the burden of that financial exposure falls on employees, doesn’t it make sense to offer them an option to purchase coverage to protect themselves? The concept seems so simple, yet many brokers in the past have chosen not to offer voluntary benefits.

I met with a lot of brokers this year who told me they’re going to focus on voluntary benefits in 2011. They tell me voluntary benefits will be a large part of their offering because they need to recoup the predicted loss in commission from traditional health carriers.

In the past, a common theme among brokers when discussing compensation was how much money the agency makes on health and employer-paid products, and that compensation from voluntary benefits would pale in comparison. While this may have been the case with many brokers, there are plenty of other brokers we work with who earned a lot of commissions offering voluntary benefits to their clients on a proactive basis.

Whether you offered voluntary benefits sporadically in the past or marketed them proactively to your clients, now is the time to sit down and decide how you will offer voluntary benefits in 2011. Are you going to take advantage of services such as core enrollments that can be offered to your agency at no cost to you?

Recession, reform and revolts
Over the past few years, we’ve all been through a lot. We’ve survived a devastating recession, pondered the future of health care reform, and watched the news as people around the world demanded change.

So as we begin 2011, are you going to wait and see how health care reform affects your bottom line or will you partner with a voluntary carrier to maintain your business?

Greater financial exposure for employees. Traditional health insurance carriers cutting commissions. Increased voluntary benefit sales. Dare I say it? Is this the era of voluntary benefits?

1 Lowere, Gil and Brazzell, Bonnie, “The Voluntary Market Keeps on Going,” National Underwriter, July 27, 2010.
2 Eastbridge Consulting Group, Inc., “Voluntary Industry Confidence Index-Mid-Year 2010,” An Eastbridge Frontline Report,” July 2010.