|
Benefits Products & Services
AUL's voluntary business propels growth
P-C agencies are a key contributor
By Thomas A. McCoy, CLU
A generation or so ago, property/casualty agency owners were hesitant to attempt to cross-sell life, health and disability products to their P-C clients. The prevailing sentiment among many of them was that these products required a different kind of sales process, and producers who were successful as life/health producers might be likely to jeopardize a P-C client relationship. While this thinking may have applied more to the sale of individual life, health and disability products, it also affected group insurance products.
Tim Staggs, a 25-year veteran of the employee benefits plan business, is regional vice president and head of sales for the Employee Benefits division of American United Life Insurance Company® (AUL), a OneAmerica® company. “Back in the day,” he says, “there was a lot of separation between products for employee benefits plans and property/casualty distribution. A kind of a cross-marketing paranoia existed.”
Today, he says, it’s a different story, at least based on AUL’s experience. “There is a great alignment between employee benefits and property/casualty brokers,” particularly on the commercial side. The P-C brokers are a natural fit for us. We’ve been able to be a true resource to P-C brokers and offer them turnkey solutions.”
The companies of OneAmerica provide asset-based long term care solutions, life insurance, annuities and retirement plan products. Indianapolis-based AUL has 12 regional offices throughout the United States, all of which have certified enrollment specialists for AUL’s group insurance products for employee benefits plans. AUL is currently rated A (excellent) by A.M. Best Company.
Staggs estimates that around 90% of AUL’s benefits plan business comes through independent brokers, a sizeable number of whom are affiliated with P-C firms. The company has no minimum business requirements for independent producers.
AUL’s employee benefits plan product portfolio includes group life, disability and stop loss insurance. It also provides access to group dental and vision insurance and employee assistance programs through other providers. It offers coverage to employers ranging from two employees up to multiple thousands; its average policyholder size is under 100 employees. It does not offer group health insurance.
As with many employee benefits plan product carriers, much of AUL’s recent growth has come from group voluntary insurance (employee paid) products. These products account for more than half of AUL’s employee benefits plan business, and last year its group voluntary life insurance sales grew 57% and voluntary disability was up 60%. (Overall the company’s life insurance sales grew 33% in 2009, and annuities were up 17%.)
“There is no question that employers are shifting more responsibility to employees—not only for health insurance, but for disability insurance as well,” says Staggs.
However, he notes that AUL’s growth in group voluntary insurance is the result of more than just taking advantage of market conditions. Its concentration on the voluntary market has been a conscientious strategy for a long time.
“Our products have always aligned well with the voluntary marketplace,” he says. “We did well in voluntary business in the ’90s. But the last couple of years we’ve really put a stake in the ground with our employee-paid products, primarily because more and more employers are shifting in that direction.”
Aside from new business growth, a carrier’s success in voluntary programs is measured by employee participation rates. AUL averages a 52% average participation rate for group voluntary term life insurance programs and 49% average participation for group voluntary disability insurance (2007 figures).
Chris Sailors heads up the property/casualty division of Fred Brown Insurance Brokerage, a Houston-based employee benefits firm. Most of its group insurance accounts fall in the range of 25 to 300 employees. Sailors says that in working with a provider offering products to employee benefits plans, it all starts with the carrier’s group insurance sales representative.
“Our AUL sales representative understands how their products can fit in with the needs the employer has. I feel comfortable with him, which is important because you don’t want to turn just anyone loose on customers that you’ve spent many years building a strong relationship with. The company also makes it easy to handle the enrollment process and the renewals.”
Staggs says, “We offer a turnkey solution for independent property/casualty brokers. They open the door—they have the relationship, but we literally can take it from there. We plan and conduct enrollment meetings with employees in accordance with the employer’s wishes, and we conduct the enrollments under AUL’s group insurance contracts for them.
“A lot of our business is take-over business,” he explains. “Most of the time when we take over existing group insurance coverage for a plan it’s because the plan has dropped significantly in participation. Our minimum participation is 25%; our average participation, when we conduct the enrollment and implementation for AUL’s products, is in the 45% to 50% range.
“After coverage for a plan is put in place, our account managers are responsible for keeping coverage under the plan at a healthy level of participation,” he continues. “Brokers don’t want to start out with 75% participation on a policyholder, start getting their commission on the policyholder, and then watch that dwindle down to 15% participation. So our account managers go back out to the broker or employer and schedule re-enrollment of the policyholder.”
Sailors, the Houston broker, emphasizes, “They do a thorough job with enrollments—first in getting the enrollments in, and then handling the renewals so that they maintain a high level of participation for AUL’s products.”
AUL’s business model is designed to work for brokers who have limited extra time to work with group voluntary life, health and disability insurance products because of the demands of their group medical business.
“We offer a solution that can help brokers build revenue,” says Staggs. “They don’t have to commit the same amount of resources to providing these products because we can do it for them. They have to trust us, and we know we have to earn that trust.”
|
