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Health care reform will someday be looked upon as one chapter in the story of America’s history where solving serious issues brings about innovation, new business models and public/private partnerships that not only safeguard survival, but that even foster growth. This is particularly true for the health insurance industry, and those who depend on it for their livelihood. Brokers and agents are faced with disruptive market dynamics that in turn, require a new way of thinking and perhaps operating.
Here are four trends that stand to greatly influence the voluntary market, and that represent opportunities for agents and brokers to demonstrate resiliency and inventiveness.
Trend One: Shifting, But Vital Role of Brokers and Agents
The future of brokers and agents, and where they will fit in given the new legislative environment has been heatedly debated. However, there is little evidence that their roles will dissolve entirely. On the contrary, a recent Aflac study1 confirms that many HR decision-makers and their workforces will rely on brokers and agents to help navigate the growing complexity of health insurance.
Nearly half (49 percent) of employees surveyed agreed with the statement, “Even though I believe health care reform is intended to give me greater control over my health care decisions, I don’t believe I will have greater control because it is too complicated to understand.” Another 34 percent said, “I will rely more heavily on my employer to educate me about my health care decisions as a result of the health care reform.”
The problem is that many HR executives admit they don’t understand health reform, naming “understanding the changing health care landscape” as their second biggest benefits challenge.1 Fortunately, more than half (56 percent) of employers use a broker or benefits consultant, and 49 percent of employees strongly agree they’d be more informed about benefits if they sat with a consultant or broker.
When it comes to voluntary benefits, even more education and guidance will be required and brokers/agents will be looked to for this advice. Many misconceptions occur among both employees and employers about voluntary insurance. For instance, most companies (62 percent) mistakenly believe that payouts can only be used for specified medical expenses. Fewer than half (44 percent) agree that it does not directly cost the employer to make voluntary worksite benefits available, when in fact this is correct. One in four companies believes that the employer pays all or most of the premiums for voluntary insurance – which is not factual.1
Clearly, a much-needed and important role exists for brokers and agents, particularly when it comes to partnering with clients and educating workers.
Trend Two: Disruptive Market Trends Lead to Innovative Business Models
If innovation separates leaders from followers, then agents and brokers in the voluntary benefits business will need to start getting creative. To prosper in the new health reform environment, agencies will need to consider new business models, collaborative endeavors with other organizations and in some cases, fraternizing with the competition.
The voluntary benefits market was already in a growth mode, which has since been accelerated by the health reform legislation. For broker firms and independent agencies that haven’t historically specialized in offering voluntary products, entering the market may seem difficult or a drain on time and resources. However, disruptive climates can produce unusual and innovative approaches to bringing in revenues.
For example, the leading provider of voluntary benefits, Aflac, has recently launched a new business partnership model that blurs traditional competitive lines and instead, offers a win-win model. Across the country, independent agencies and brokerage firms have joined with Aflac to add voluntary benefits expertise as an adjunct to existing practices by onboarding an Aflac agent into their organizations.
This allows agencies and firms to further diversify their product offerings and be equipped to meet the growing demand for voluntary benefits. While this type of collaboration does have an impact on profit margins, requiring a split where there might not have been before, the reality is that the revenue may not have existed in the first place. Furthermore, another anticipated outcome is happier, better-served clients who feel greater loyalty and appreciation to their agency partners.
At the end of the day, traditional mindsets will need to be replaced with open minds to better serve clients who are seeking more diverse benefits solutions and to protect the livelihood of agents and brokers.
Trend Three: Leveraging Technology to Enhance Sales and Improve Service Delivery
When it comes to insurance agents and brokers, there is much debate as to whether the relationship between digital technologies and insurance is marriage material. Most agents and brokers would agree that selling health insurance is grounded in establishing a personal relationship and connection, while many argue that technology can improve existing business processes, and impact the sales and enrollment process.
As with any good marriage, the key is to reach a compromise. Many companies are seeking out ways to leverage the efficiencies technology can bring, and that many Americans expect, while still maintaining a high-touch, personal connection. For example, a leading voluntary insurance provider recently introduced an iPad application, which will be available for download by agents and brokers. The application takes the company’s standard sales presentation (a cumbersome, 46-page book) and transforms it into a graphically-dynamic, customizable and interactive presentation that can be delivered on iPad.
Ironically, even though the new and improved presentation capabilities reside on a high-tech platform such as the iPad, in actuality it fosters a very high-touch opportunity. It removes the proverbial two-sides-of-the-table scenario and replaces it with an intimate, interactive, side-by-side conversation. In addition, the application is developed in a way to streamline and diminish the amount of time typically required to customize the sales presentation to a particular client or prospect.
Consumers have not only grown accustomed to using their mobile smart phones for things like online banking and commerce, they expect such access. A wide range of industries are also taking advantage of the ability to conduct business on the go and to meet consumer expectations of real-time delivery of information. The health insurance industry is also following suit — seeking out opportunities to provide agents and brokers access to business applications via mobile devices.
Those who ignore the technology revolution altogether may find their businesses at risk of extinction. The reality is that consumer behavior and expectations, alongside pressure to conduct business more efficiently, are all contributing to the move to Web-based and mobile platforms. For health insurance providers, and the agents and brokers who work with them, the challenge will be to deliver technology tools and solutions that not only enhance productivity, but that also nurture personal customer interactions and promote excellent service delivery.
Trend Four: Your Clients’ Benefits Packages Will Become an Even Greater Differentiator
With health reform and the establishment of minimum benefits standards and the option to move from employer plans to exchange plans, major medical insurance coverage will likely become more homogenous than it is today. In addition, many companies are forecasting a grim outlook for benefits packages as a result of health care legislation. A recent Aflac survey found that 42 percent of employers believe significantly diminished benefits packages for employees is a likely outcome of health care legislation, and another 32 percent say less robust but sufficient benefits packages are a likely outcome.1 All of these factors will create an opportunity for companies to distinguish themselves as an employer of choice by offering a more comprehensive benefits program than most.
And the issue of benefits packages should not be taken lightly by business leaders given its effect on job satisfaction, loyalty, and even whether an employee takes another job offer or not. In the Aflac study, 89 percent of employers believe that their overall benefits package influences employee job satisfaction and 86 percent believe it impacts worker loyalty. Forty-four percent of employees themselves say a company’s overall benefits package would be one of the two most important factors in deciding to accept an offer for a new job.1
A company’s ability to demonstrate value and goodwill to its workers by offering a benefits package unmatched by competitors will mean the difference in high or low retention rates. At the same time, HR professionals will be pressed to offer health care benefits options that will soften the impact of the inevitable cost-shifting and rising out-of-pocket costs on its valuable workforce.
Making voluntary insurance policies available can allow companies to enhance their benefits offerings, differentiate themselves from competitors, and offer workers choice in additional coverage that best suits their needs.These types of supplemental insurance policies and ancillary benefits offerings will be a greater differentiator than ever before in the battle to attract a talented workforce, and protect them.
1“2011 Aflac WorkForces Report,” a study conducted by Harris Interactive for Aflac, September 2010.