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BENEFITS COMPANY PROFILE
Worksite marketing
Aflac's worksite marketing strategy helps independent agents penetrate the market
By Thomas A. McCoy
Employee benefits business—which has cushioned many far-sighted independent P-C agents from the ravages of the soft market—now is facing its own kind of softness. The economy is forcing some employers to pare their traditional benefits programs. The time may be ripe for agents with an employee benefits practice to consider worksite marketing—offering voluntary (employee paid) benefits.
Eric Leger, vice president of field force development for Aflac—one of the dominant carriers in voluntary business—says the company’s voluntary products “give employers more flexibility in selecting their employer-funded health program. They can decide what level of costs they (the employers) want to bear and what can be provided through the voluntary products.”
For more than 20 years, Aflac has included independent agents in its distribution mix, along with its own direct sales force. This year it has boosted its commitment to independent agents by launching a program called Aflac for Brokers, featuring increased enrollment and servicing capabilities for independent broker-related business. Aflac has 100 broker development coordinators who work solely with independent brokers.
“The Aflac for Brokers program has been a productive way for us to reach prospective clients,” says Ron Agypt, Aflac’s vice president of broker sales, USA. “Independent property/casualty agents are well suited for our voluntary benefits products.”
Aflac isn’t the only company seeking to distribute worksite marketing products through independent agents. “There is so much competition in worksite marketing now,” says Steve Williams, who heads the benefits practice of Heffernan Insurance Brokers of Walnut Creek, California, one of the nation’s largest privately owned P-C brokers. “I recently attended a CIAB Leadership Conference where I had 14 meetings in two days with different [worksite marketing providers. It’s unbelievable how much money and effort is going into this space.”
Williams’ firm has been involved in worksite marketing for 10 years. “When our consultants meet with our clients to review all of their current medical insurance needs, we bring up the voluntary products as an addition to their current portfolio of coverages for their employees. We’ve used the Aflac worksite products to fill some of the gaps in coverages and to help employers retain quality employees,” he says.
“The response to voluntary products just hasn’t been as good as we’d like to see,” says Heffernan’s Williams. He expects that may change, however. “We anticipate that with the economy souring and our clients ultimately changing and reducing their core benefits, there’s going to be a bigger need for these worksite marketing products.”
Education & services
About five years ago, Heffernan Insurance Brokers really began taking worksite marketing seriously. “We hired specialists in worksite marketing products to work with our benefits producers and property/casualty brokers,” says Williams. “We thought as employers were working on shaving some costs with higher deductible plans, higher coinsurance or eliminating coverages altogether that some of these worksite products would be more popular on the West Coast than they have been.”
Part of the problem on the West Coast, according to Williams, is that employer-paid medical coverage is considered something of an “entitlement” among companies with at least 50 employees. “In the East and Midwest, worksite products have provided a great solution in filling some of the voids.”
Independent agents who work with Aflac do so in partnership with an Aflac agent who is specifically trained to work with independent agents. Once they have obtained a buy-in from the independent agent’s business owner client to set up a voluntary benefits program, the employee enrollment process can begin.
“Generally, the independent agent will be with us during the enrollment for two or three clients until they are comfortable with how the Aflac agent handles the enrollment,” says Lance Osborne, vice president and Pacific territory director for Aflac. The success of the enrollment process depends on a number of factors, he explains. “A really big part of the employee benefit business today is benefit education. Plan design continues to change based on the cost of health insurance. And as you continue to make changes—maybe move to high deductibles—you have to educate your employee base on those choices.”
Aflac can provide the education and enrollment services both one-on-one at the worksite, and online. “We have more success, and I would say Aflac has more success also, when the enrollments are conducted face-to-face,” says Williams.
Marketing savvy
Aflac also counts on the duck to make its enrollment process successful. The company is currently spending approximately $80 million per year with ads that feature public personalities discussing the nature of Aflac’s products and the duck quacking the company name. The message driven home is that these products pay policyholders directly when a specific medical condition or life event occurs, whether covered by other insurance or not. Among those events are accident/disability, specified diseases, dental expenses, hospital confinement, and disability, both long-term and short-term.
All the worksite products except for group life insurance are eligible for pre-tax treatment of premium payments via payroll deduction under Section 125.
“We rely heavily on word-of-mouth consumer advertising also,” Osborne points out. “Since most of our policies center around a serious injury or accident, a lot of people within a company will know about a claim quickly. Because we have a good history of not raising rates or cancelling policies and most of our claims are paid within four days, our claimants become almost evangelists for our products.”
Aflac has been paying close attention to consumer attitudes and the current economic malaise. Earlier this year it commissioned an independent study of 1,243 respondents, performed by Accelerant Research, comparing consumers who do not have supplemental or voluntary health insurance to those who do. The percentage of those likely to skip doctor visits to save money was 31% among those without supplemental insurance vs. 16% for those with supplemental insurance. Aflac also found consumers without supplemental insurance to be more worried about the loss of insurance that would accompany a job loss (49%) than those who have supplemental insurance (32%).
“The study clearly shows that in today’s economic climate, consumers recognize the value of voluntary benefits,” says Leger.
In April 2009, Aflac expanded eligibility for its worksite products. The new standards extend eligibility for short-term disability to companies with as few as three employees and to those working as few as 19 hours a week. (Previously the minimum number of hours was 30.) They also extend eligibility for all worksite products to workers at fast food restaurants, parking garages and gas stations. And they include independent contractors (1099 workers) in four businesses—beauty salons, day spas, barbershops and physical therapy offices.
At a time when consumers’ confidence in financial institutions has been shaken, Aflac brings financial strength to the table. The company, known formally as American Family Life Assurance Company, is rated A+ by A.M. Best Company. It is a Fortune 500 Company, and a dominant carrier in Japan, where it has policyholders in 25% of the households (compared to 7% in the United States).
Aflac products are sold in the workplace in Japan also, and the Aflac duck appears in commercials in both countries. That duck, with all his appearances in television and print commercials, is making Aflac close to a household name in the United States. Company studies have shown a 90% awareness of the Aflac name among American consumers.
But to bring its products to consumers through the worksite, Aflac needs a buy-in from business owners and HR managers. And independent agents hold the key to many of those decision makers. “By working through independent agents, we help these agents to retain their business by giving them one more line of business tying them to their customer,” says Leger.
“Commissions to independent agents vary with individual products and the amount of work the agent wishes to have Aflac handle,” says Osborne. They include a “healthy first-year commission and life-time renewals.”
Aflac expects its commitment to the independent broker market to be a good match for those property/casualty firms, like Heffernan Insurance Brokers, that have made a strong commitment to benefits. “Our benefits practice is our fastest growing division,” says Williams. “It’s up 25% in earned revenue in the first five months of this year.” Currently benefits accounts for 12% of Heffernan’s retail operation revenue, and the agency’s goal is to raise that to 25% to 30%. Williams thinks worksite marketing will play a role in reaching that goal.
“We’ve probably had more success in voluntary benefits this year than in the past. As our benefits department continues to gain traction, we think our voluntary benefits business will grow along with it.”
For more information:
Aflac
Web site: www.aflac.com |
