|
BENEFITS COMPANY PROFILE
Get on board with voluntary benefits
Colonial Life helps P-C agents boost profits by offering employee-paid coverages
By Elisabeth Boone, CPCU
Whether the market is hard or soft or somewhere in between, independent agents and brokers are always alert for opportunities to build volume and profits by attracting and retaining desirable accounts.
An increasingly popular way to achieve these objectives is to offer planning, products, and services to meet the needs of commercial clients for comprehensive employee benefits programs. Many property/casualty agencies have established separate benefits divisions and are successfully partnering with life and health insurers to market benefits to their commercial clients.
For virtually all employees, the centerpiece of a benefits program is group health insurance. One of the biggest challenges for employers is the rapidly escalating cost of health insurance premiums.
Most employers would welcome the opportunity to offer their workers access to a menu of coverage options to meet their particular lifestyle needs—at no cost to the employer. A specialist in the market for these so-called voluntary, or employee-paid, benefits is Colonial Life & Accident Insurance Company of Columbia, South Carolina.
Founded in 1939, Colonial Life is a stand-alone affiliate of Unum Group, which is a leader in employee benefits and a top-ranked provider of group and individual disability income insurance. Focused on the rapidly expanding market for voluntary worksite benefits, Colonial Life offers a broad portfolio of disability, life, cancer, hospital confinement, and supplemental accident and health insurance, and serves approximately 60,000 businesses and organizations nationwide. Specialists in offices around the country work with agents and brokers to market voluntary benefits to businesses and their employees, and the company is enthusiastic about partnering with property/casualty producers to meet the needs of their commercial clients.
Changing trends
The voluntary benefits market has evolved in fundamental ways to address the challenges faced by today’s employers and their employees. Colonial Life’s president and chief executive officer, Randy Horn, is a 35-year veteran of the life and health insurance industry. He joined Colonial in 2004 after 30 years with Mutual of Omaha, where he had management responsibilities on both the group and individual sides of the business.
The employee benefits market overall has undergone dramatic changes over the last several years, and Horn has been a witness to that evolution. “One of the most significant changes I’ve observed has been on the major medical side, where rapid cost escalation has put a lot of pressure on the budgets of most employers, even causing many smaller employers to drop their medical plans altogether,” Horn comments.
As a consequence of this financial squeeze, he explains, “A lot of employers are seeing the need to shift the responsibility for choosing and paying for benefits to the employee. That has been a favorable development for worksite benefits providers like Colonial Life, because what we do is come into a company and help fill in coverage gaps by complementing what the employer can provide. Some of those gaps have widened,” Horn continues, “and employers have needed to make changes in the structure of their benefit programs.”
In response to this need, he says, Colonial Life is able to provide benefits counseling at the worksite. “That’s a big part of our value proposition: to meet one-on-one with employees at the worksite to help them understand the value of what their employer provides, and also help them identify the gaps in their coverage and recommend products to complement their employer-provided benefits,” Horn says.
As the trend toward voluntary benefits accelerates, Horn remarks, advances in technology are allowing the use of Internet-based approaches to enroll employees and provide ongoing service. “As recently as 10 or 15 years ago, many companies were still using a paper-based enrollment system,” he says. “Data entry was slow and cumbersome, and enrollment information had to be sent through the mail.
“Our latest enrollment system, called Harmony, allows us to do everything electronically, starting the moment one of our benefits counselors sits down with an employee to assess his or her needs and explain options,” Horn continues. “The counselor inputs information into a laptop and transmits it to us electronically, so very seldom does a human hand ever touch the transaction.”
An evolving market
Dan Hughey, senior vice president of national sales, has been with Colonial Life for 33 years and like Randy Horn has both breadth and depth of experience in the worksite benefits field. In the 30-some years since he entered the business, Hughey has witnessed major changes in the way voluntary benefits are designed and marketed.
“When I was new in the business, very few companies sold voluntary products at the worksite, and for most of them, that was all they did,” he comments. “Since that time, competition has really heated up. A lot of the group carriers have established worksite divisions and are selling voluntary products, so we’ve seen a dramatic increase in the number of companies that are offering these products.”
Pointing to another key trend, Hughey says, “The entry of brokers into the worksite market has seen a huge change. Just 15 years ago, probably no more than 10% of our sales were made through a broker, whether it was a health broker or a P-C broker. Now probably 70% to 75% of our new business premium comes through a third party in the form of a broker who represents the client,” Hughey says. “We partner with the broker to serve his client, and that represents a big change in the way we do business.”
Hughey also cites an evolution in the way worksite benefits are sold. “Many years ago, it was strictly a product sale,” he says. “We would go to the employer directly, not through a broker, and tell them about the products we had to offer. They would give us the opportunity to sell our products through payroll deduction—it was a simple as that.
“While every insurance company ultimately has to sell products to stay in business and ideally make a profit, we now put much more emphasis on partnering with the employer to develop a cost-effective and comprehensive benefits program,” Hughey explains. “Then we can help manage the enrollment process and assist employees in identifying their coverage needs through education and counseling.
“In today’s economy, many employers have had to cut back on their human resources staff, so they appreciate knowing they can count on us to provide enrollment and communications services. Throughout the process,” Hughey emphasizes, “we work closely with the broker, who is our point of connection with the employer.”
Popular products
As mentioned earlier, Colonial Life offers a wide array of voluntary benefits products to complement the coverages provided by the employer. “Probably our most popular product is short-term disability,” Hughey says. “Most employers offer some kind of sick leave and vacation, and many provide long-term disability protection for employees. Some employers also offer a group short-term disability plan, but many do not.
“If you have 30 days’ sick leave and a long-term disability policy that kicks in after six months or a year, that leaves a gap that places a real hardship on the many employees who live paycheck to paycheck,” Hughey remarks. “Their biggest asset is their ability to work, and short-term disability insurance protects that asset.”
Colonial Life also offers accident insurance, which pays a lump-sum benefit to an injured employee.
On the life insurance side, Hughey says, “We sell whole life, term, and universal life. A lot of employers offer group term life, but it doesn’t always cover all of the employees and it may not be available in an amount that’s adequate for the employee and his or her family.
“The days when individual life agents called on people at home are all but gone,” Hughey continues, “so we offer what may be the employee’s only opportunity to supplement employer-provided coverage with an additional whole life or term life policy. Life sales are a big part of what we do.”
Another popular product, Hughey continues, is hospital confinement indemnity coverage. “It fills the gaps in major medical where there are deductibles and co-pays. The policy provides benefits employees can use to help pay expenses associated with a covered hospital stay, doctor’s office visits, and diagnostic tests,” he explains. “Employees also can use the benefits to pay their mortgage, utility bills, child care expenses, or any way they see fit.
“This is a major growth area for us because many employers have raised deductibles and co-pays to reduce the cost of their group health insurance. Typically our hospital product is paid for by the employee, but we’re seeing more employers pick up the cost to help make up for increased deductibles and co-pays in group health,” Hughey says.
“We also sell cancer and critical illness policies that pay the employee lump-sum benefits to help defray expenses that aren’t covered by major medical plans, or to use any way the employee chooses. About two years ago we introduced a limited-benefit medical plan. It’s not major medical; it’s designed for employers who either can’t afford major medical at all or don’t provide it for certain categories of employees, like hourly workers or part-time people,” Hughey says. “Our product pays for doctor visits and preventive care, hospital confinement, surgery, and pharmacy.”
Working with P-C agents
Overseeing Colonial Life’s worksite marketing sales through brokers is Jay Hutchins, vice president of broker marketing. Throughout his 24-year career, Hutchins has worked exclusively with brokers; he joined Colonial in 2005 after holding field management positions with TrustMark, Canada Life, and Colonial Life’s sister company, Unum US.
The voluntary benefits market, Hutchins believes, offers a tremendous opportunity to property/casualty agents and brokers who have commercial clients. “We’re seeing a lot more P-C agencies increasing their revenue stream by adding an employee benefits division to their agency,” he says. “They’re starting to realize that this is a great way to generate revenue in a lagging economy.
“In many cases the P-C agent has a much closer relationship with an employer than a health insurance broker does,” Hutchins remarks. “If we can get a P-C agent excited about offering voluntary benefits to his or her current decision makers, it can strengthen the agent’s relationship with the client.
“And the fact is, if an agent isn’t marketing voluntary benefits to his clients, someone else is going to do it,” Hutchins continues, “so this is a way for agents to distinguish themselves from competitors and keep them from knocking on the client’s door.”
What’s more, he points out, by offering voluntary benefits, “P-C agents can make themselves a one-stop shop for the client. Instead of having to refer the client to another source for voluntary benefits, the agent can do it himself or herself and protect that client relationship.”
Getting up to speed
Even for property/casualty agents who offer employer-paid benefits products to their clients, the world of voluntary benefits may be unfamiliar territory. How can Colonial Life help these agents get up to speed and start delivering worksite benefit options?
“This agent is a great prospect for us,” Hutchins says enthusiastically. “When we work with a P-C agent on voluntary benefits, we don’t expect the agent to be a guru; we’re like a free employee with expertise in worksite products and services. We have representatives in every state, so we can provide one-to-one training or group training to P-C agents. We also offer training through our broker Web site, and we do a lot of lunch-and-learn sessions where we talk about not just products but also what’s going on in the industry and what clients are looking for,” Hutchins explains.
As his colleagues have pointed out, enrollment is a huge piece of the voluntary benefits equation. “That’s our strength,” Hutchins asserts. “We’re really three companies in one: we have products, we act as consultants and benefits counselors, and we’re also a major enrollment company.
“We bring brokers into the home office so they can learn about our back-office support and understand how the enrollment process works,” he explains. “We have a variety of ways to teach P-C agents about our products and process and make them feel more comfortable, so they’re not hesitant to talk to their clients about voluntary benefits.”
The voluntary benefits market is now valued at some $5 billion and growing, says Colonial Life President and CEO Randy Horn. For a property/casualty producer who is eager to offer a voluntary benefits option to commercial clients but is concerned about the time and effort required to acquire product knowledge and handle the enrollment process, Horn says, Colonial Life delivers a turnkey solution that allows the producer to build a profitable book of business in a dynamic market.
“We were a pioneer in this business; we started doing worksite marketing in the 1950s, and that’s all we do. That focus brings us real advantages that we can share with our agent and broker partners, especially those on the property/casualty side,” Horn declares. “You don’t have to be an expert in worksite marketing to partner with us.”
For more information:
Colonial Life
Web site: www.coloniallife.com |
