Making worksite marketing work

Agent strategies for delivering employee-paid personal lines products via employers

By Sandra Carcione

Property/casualty agents agree that worksite marketing is a good source of profitable, easily renewable business if handled correctly.

Thinking of getting into worksite marketing? It might be a good move, if you take it slow and approach this venture strategically. Worksite marketing usually involves selling voluntary (employee-paid) insurance products in the workplace with the approval of employers, and with premiums paid through payroll deduction.

A growing number of property/casualty agents are selling personal lines products—and other insurance products—via worksite marketing; and they agree that this approach is a good source of profitable, easily renewable business if handled correctly.

How does worksite marketing operate for these agencies? Most of the agents we spoke with start out by holding group meetings during work hours and then following up individually with those who are interested in buying.

The “why” of worksite marketing

Many agencies see worksite marketing as a way to cross-sell commercial accounts as well as tie the companies more closely to the agencies. Also, an increasing number of insurance carriers want to use independent agents as a distribution channel, because of their ties to commercial businesses. Many insurers have even implemented dedicated divisions to help agents market their products.

Some agencies, such as the RHK Group in Dublin, Ohio, and the Sinclair Insurance Group in Wallingford, Connecticut, got into worksite marketing because it is more efficient to sell personal line products “in bunches” rather than through one-on-one telemarketing or direct mail.

Other agencies, like the 110-year-old Mang Insurance Agency in Norwich, New York, which represents 20 companies, started selling voluntary benefits when the economy took a dip a few years ago. “We have 12 offices, all in small towns, and many companies couldn’t afford to offer company-paid benefit packages to their employees,” says Dennis Mirabito, vice president. “We filled a need in these communities by providing voluntary benefits.” Today more than 100 companies buy insurance products through payroll deduction from the Mang Agency.

Studies confirm an increase in demand from employers and employees for payroll deduction voluntary benefit programs. A survey conducted in 2003 by LIMRA showed that more than half of the nation’s employers offer at least one voluntary benefit and that another 25% are interested in either introducing or expanding offerings. In a similar study by MetLife, nearly one-third of employees surveyed said they are interested in having their employer provide a wider range of voluntary benefits.

The key to successful implementa-tion of worksite marketing, agents say, is to lay out a solid strategy regarding what products you want to offer initially, what agency resources you are willing to commit, which carriers you want to partner with and how you will handle enrollment—internally or through a vendor. It’s equally important to test the system before rollout.

Mang Insurance, for example, used its own 70 employees as test cases for worksite marketing. “We hired a payroll person to set up the system and work out any administrative bugs. Then we used our own employees to test the process,” says Mirabito. “We then opened it up to a couple of our commercial accounts. They were very patient with us.”

Ron Mooney, owner of the RHK Group, agrees that agents should take it slow at first and temper their expectations. “You may spend a fair amount of money to get it started, hire someone to take care of administrative responsibilities, and then find that you need to present to a lot of groups before you begin to see good penetration,” he says. Mooney’s agency has eight employees and about $6 million in premium. It has been involved in worksite marketing for six years and now has 40 companies of various sizes whose employees buy auto, homeowners and other voluntary benefits through payroll deduction.

Too many agents have jumped into worksite marketing with expectations of immediate profits, according to David Sinclair, president of the Sinclair Insurance Group, which has $26 million in auto/homeowners premium volume. “When agents don’t get immediate stellar results, they jump right back out,” says Sinclair. “You need a lot of patience.” Sinclair’s agency partners with local Chambers of Commerce and community banks to sell personal lines products to members and customers, respectively.

Mooney agrees that patience is a virtue when it comes to worksite marketing. He says it probably takes two to three years to do it efficiently.

Selling a broad mix of products

An agency will have more opportunity to reap profits from worksite marketing if it sells a wide range of voluntary benefit products. In addition to auto and homeowners, some P-C agencies are selling life, disability and other voluntary employee benefit products through payroll deduction.

Auto and homeowners were the initial products that RHK Group sold through worksite marketing, but today the agency also sells disability, life, and dental insurance. He adds, “We provide all product lines directly through our agency and do all enrollments and ongoing service-related work.”

In addition to RHK Group’s own employer groups, the agency also partners with life and health agencies in its territory to bring auto and homeowners products to their employer groups, often making joint presentations.

Success rates

Sinclair’s agency gets the business of about 20% of all those solicited, but his method is a bit different from the other two agencies. In his relationship with banks, Sinclair talks first to senior management. Once he gets permission to solicit the business, he makes appointments at the bank or goes to the client’s house. “We follow up with letters and phone calls,” he says. “The key is to reach the decision makers in the household.”

According to Mooney, the success rate depends on the product lines. “We’ve found that our success rate depends on what coverages we have available,” he says. “For example, we get a high percentage of employees buying disability coverage. Dental is second in popularity, with auto, homeowners and life coming in third.”

Mirabito says his agency’s success ranges from 20% to 60%. The Mang Agency has had its greatest success with smaller companies (50 to 100 employees).

What’s the best size company to target? Agents say that it depends on your marketplace, your commercial client base, as well as the carriers you deal with. In upstate New York, for example, the marketplace is mainly rural. So the companies that Mang Insurance serves are groups that range in size from 15 employees to 1,800 employees. “Maybe in the larger markets you can find a niche in certain employer segments but, with small towns, you have to be versatile,” says Mirabito. “We sell our products to white collar, blue collar and no collar employees. You have to step up or step down presentations to meet the needs of different groups.” The average size is about 100 employees, he says.

Another question is whether an agency’s commercial clients should be targeted first. The agents we interviewed said, “Yes.” They began solicitation with their own commercial client base and then expanded the program’s reach to other companies in their marketplace.

The problems are varied

According to agents, fostering and maintaining consistent communication with employers and with insurers is usually the greatest issue.

“It’s sometimes hard to get our employer companies to let us know about employee terminations or new employees,” says Mooney. “We’ve worked really hard to educate clients in this regard.”

According to Mirabito, some agencies depend too much on technology when it comes to worksite marketing. “Historically, agents have an idea and purchase a technology tool to make the process work,” he says. “They don’t put in the required time and energy. Many are not successful because they don’t make the necessary commitment.”

Industry experts add that the processing aspect of worksite marketing can be overwhelming to agents at first. The enrollment process can be time-consuming, and there may be plenty of additional questions from the insurer during the underwriting process. Some carriers will contact the applicant directly to get answers to questions, in order to ease this burden for agency partners.

At the RHK Group, the agency gets some enrollment assistance from the disability, life and dental providers. However, Mooney adds, “We do not typically get help from the auto and homeowners carriers. They are just not set up to support us on this process.”

Increasing momentum

Overall, agents see worksite marketing as a growing source of new personal lines business, a good way to anchor commercial clients and a way to pull in new business with excellent renewal potential. Sinclair notes that retention is very high—90% or more. “When the money is taken out of your paycheck, you just don’t notice changes or premium increases as much,” he says.

Dennis Mirabito sums it all up: “If you pick good people in your agency to help you with this marketing venture—those with energy and a positive personality—it can certainly add momentum to the program. Overall, we’ve found worksite marketing to be an excellent source of business. We really love this concept!” *

The author
Sandra Grant Carcione is a Chicago-based business writer/editor with more than 20 years in the financial services industry. For nearly 12 years, she worked for CNA as an editor of agent and broker publications.