What's New and Exciting in the Employee Benefits Industry?


business partners, partnership concept with two businessman handshake

That's the question we often hear from our contacts in the employee benefits industry. Talented, successful individuals in any industry typically consider career moves based on opportunities to increase responsibilities, authority, work-life balance, money, commute (or telecommute options), a better boss/team, or a more personally appealing environment.

You Have a Special Set of Skills!

As someone involved in the sales or service of employee benefits, either on the broker side or the carrier side, you have a highly specialized set of skills and relationships. This is a blessing and a curse. The blessing is that you are always in demand, and I have found this space to be better at weathering recessions and pandemics than many. However, the directions you can take in your career feel limited if you want to maintain or improve your income.  

What To Do With Them

You can move up into management, but as the pyramid narrows toward the top, and given that many companies are relatively flat, this option is only available to a few of you. Other options included switching sides from retail to wholesale or vice versa. In recent years, I've seen several client service people move from broker/consultants to service roles at carriers. Many carrier reps make the change to become producers. Some of you swerved slightly and joined a TPA or enrollment company, but the options always seemed limited if you wanted to maintain your earnings level.

That has changed over the last several years. That's due to the arrival of technology in the insurance space, which is due, in part, to the venture capital and private equity money that has found our industry.

New Companies To Consider In The Benefits Space

For those interested in seeing what's out there, I highly recommend subscribing to the weekly email, BenefitsAllyInsight. Every Monday, they showcase new companies by showing a three-minute video of what they do and what makes them unique. We recruit exclusively for employee benefits, and I'm always surprised by the number of companies presented that I have not previously heard of. You can see a virtual exhibit hall of past companies here

Moving to the Broker Side

Back to the somewhat traditional path of carrier reps becoming producers. That has been a good career move for many of you, but it's not easy. If it's something you're thinking about, here are some things to consider. 

If you think being one of ten carriers calling on a broker is tough, try being one of tens or hundreds of brokers trying to get the attention of an HR person or CFO! Then, to be their broker of record, you have to get them to fire their incumbent.

When I joined the broker side from the carrier side in the late 90s, I envisioned building a book to a point where you've created a big book, earning great money and all that's left to do is shake hands, kiss babies, and play golf. I realized pretty quickly it didn't work that way. As soon as you convert a prospect to a client, they instantly become someone else's prospect. You are paid renewal commissions, but you earn your keep. If you're not in front of your client strategizing, sharing good ideas, planning for the renewals, and handling the renewals, all in a compelling way, you will lose them to another consultant.

If you've read some of the industry books (The Price We Pay, Catastrophic Care, The CEO's Guide to Restoring the American Dream, among many others, and you're fired up about what goes on out there and want to make a difference, you love the subject matter and the consulting, then it's a job you can sink your teeth into. 

However, if the allure is in large part the recurring commissions and the ability to build a book of business, there's another way.

Another Path; General Agents

There has been tremendous growth in the number of GA's over the last few years in terms of companies and the number of reps at each company, especially with the non-medical companies. GIS was one of the original players, followed by Nelligan. Now Archon and Centro are both growing. At the same time, Alterity Broker Solutions and Emerson Reid are expanding, too. I'm sure there are several others in addition to them.

Why Would A Broker/Consultant Use a GA?

The benefit to your broker in working with a GA is that they can outsource a time-consuming but low payoff quoting process. As crucial as disability insurance is, the amount of time the consultant spends talking about it with their client (two minutes at the end of a renewal meeting after spending forty-five minutes on the medical and ten minutes on the dental) and the amount of revenue it generates for them, pales in comparison to the health insurance. However, the quoting process is time-consuming. They ask for the quotes, follow up on the late ones and the ones where the quote isn't what was asked for, field calls from reps asking what they need to do to earn the business, and make sure they understand the terms and strength of the contract, how it will be enrolled if contributory, and compile all the data to make the recommendation. Logically, a broker might want to outsource this to a knowledgeable sales rep who understands the disability contracts better than they do, especially if the cost to their client is the same whether they have used a GA or not

They have people in-house who do the marketing, but there is more work than hours available in most places, so I'm sure they can deploy the AM or coordinator in some other productive way.

Why Would You Want To Work For a GA?

As the sales rep, it enables you to get out of the race to zero and build a book without having to establish a whole new set of relationships. You are lucky to have a 10% closing ratio representing one company. However, if the broker wants to work with you and trusts your advice, your closing ratio should be 100%. If Unum is the most competitive, you can sell Unum, but if it's MetLife, you can sell MetLife through LFG, Sun Life, OneAmerica, and Symetra. Most of the GA's have contracts with the top 15 to 20 carriers.  

With some of the GA's, you get paid 3% to 5% of the premium inforce every year. That's the case as long as it's on the books. You have the mental peace of having that recurring revenue and not going from hero to zero every year. If you can sell $3M representing one company, couldn't you sell $4M or more if you got to sell whoever was the most competitive on the piece of business? In five years, that's a $20M block, and 3% to 5% of that is a nice income.

If You're Not First, You're Last!

This role is similar to being a broker in that if you're doing a good job, you are difficult to dislodge. Right now, a carrier may be doing a great job, but if they increase the rate at renewal and you have a more competitive price, you can beat them. As a GA rep, you can't be beaten on price because you have all the prices anyone else has. You have to be beaten on the service. The first mover has the advantage of getting in and providing good service.

If you're the third or fourth person to sell GA services in a given market, it will be increasingly difficult to find your niche and find brokers that haven't already chosen their partners. I often hear that 'GA's aren't a big thing in this market.' You might be fighting the last war. Just because they haven't been in the past doesn't mean they won't be in the future.

If this sounds intriguing to you, give us a call. We are working with a couple of these companies and can share more information to help you decide if this is a good direction for you.

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