2016: Half-Time Adjustment for Voluntary Benefits


Something is altering the basis of competition in the voluntary benefits marketplace

As we get ready for Super Bowl 50, there’s no better lesson for business than the half-time adjustments made by coaches and players.  Teams go into the big game with a plan that they’ve prepared and practiced all week and when they show up, they are ready to execute.  This is not too dissimilar to how some of the group benefits carriers have planned and prepared for the shifts within the voluntary benefits marketplace and have been putting up points. 

But great coaches don’t just execute their plan, they evaluate the other team’s plan as the game unfolds and, during halftime, they make adjustments to counter the surprises thrown their way by the other team.  The world of voluntary employee benefits is in need of such a half-time adjustment.

Through all the turmoil and disruption of the first half of this game, sales growth (or points if you stick with my analogy) for the voluntary benefits market continues to grow at unprecedented rates.  Over the past two decades, the industry has seen undisturbed growth in each and every year, bar one recession-related year.  Times have been great for those carriers who were well prepared and well positioned to be the recipient of this growing market.  Not as great for those whose game plan did not match the new form of competition.

Coaching for a new second-half game plan 

Some coaches (aka business leaders) have noticed an unfolding pattern in opponents’ game plans that could put their team at risk.  This particular pattern is subtle and hides itself well in new sales figures.  If this change continues, it could once again alter the basis of competition in the voluntary benefits marketplace. Now is the half-time show for the voluntary markets.  Winning coaches are preparing their teams to respond.

According to a recent study by Eastbridge Consulting Group, nearly 71% of all U.S. employers offer at least one voluntary product.  This, coupled with the consecutive sales growth trend mentioned previously, is great news for the carriers who have prepared themselves for the voluntary business; but 71% is getting close to market saturation.  In a different report, Eastbridge has identified that as of recently, more than half of all new sales are the result of takeovers.  And this number has been steadily rising. Some of the more astute coaches are re-evaluating their game plan for the second half because this takeover trend could be a warning sign that the competition is getting ready to unleash their own adjustments.

Some tacticians might say that with such great news on new sales, who really cares about the source of sales?  Our offense scored, let’s get the ball in the hands of our quarterback and put up more points!  But in football, points can be scored by offense, defense and special teams.  Each of these sources require a different set of skills and different capabilities.  Same holds true for voluntary benefits sales.  Sales can come from new cases, takeovers and better enrollment.

A “takeover-friendly” play needs defense and special teams

As in football, each of these sources requires a different set of skills and capabilities.  As points from offense gets harder and harder to come by, the defense and special teams need to step it up.  Similarly, as virgin cases become harder and harder to come by, takeover sales and better enrollment need to step it up.

Takeovers put a particular pressure on brokers and carriers.  Takeovers occur in an intensely competitive environment and carriers need much more flexibility to respond.  Some of the carriers who are getting ready for this type of sale are building products that are “takeover friendly.”  They have a minimal set of core features and brokers can tailor the products to match what the employer already has elsewhere.  These carriers can adjust their commission structures and underwriting rules to be more amenable to takeovers.  They are writing themselves a new playbook by creating new competitive capabilities in the form of their administrative and underwriting systems.

Scoring points when virgin sales become harder to find

There will be hard yards for those carriers who have not yet prepared themselves for the first half of the game because they are running with voluntary capabilities that mirror their group capabilities currently driven by aging and inflexible group-based administrative systems.  How will these teams compete when agility and speed are the new basis of competition?  While they struggle to put offensive points on the board in the form of virgin sales, their game plan for defense and special teams languishes. As virgin sales become harder and harder to come by, they will struggle more to get the ball over the line and be completely ill-prepared to land takeover sales. 

Great coaches aren’t fazed when they see their team suffer during the first half.  They see patterns and can rewrite their playbook.  If they can make the right half-time adjustments to address their administrative and underwriting capabilities, they can get out there and put their defense and special teams in a position to start putting points on the board and winning the game.

Did your team struggle to put up points in the first half of the voluntary game?  Are you preparing to make half-time adjustments to be ready for a more competitive second half? If so, reviewing your game plan should include exploring how a modern core system can create the needed competitive edge.