Partnership

How one Employee Benefit Firm solved income replacement gaps for their Employer clients, while generating $235,800 of additional revenue:

The two biggest challenges most Employee Benefit Firms face when it comes to providing a full suite of benefit solutions are shelf space, and specialization. And we have all heard the phrase “Jack of all trades; Master of none” …

Most Employee Benefit Firms dedicate their focus to and specialize in health insurance. Incidentally, ancillary benefits such as Group Disability and Group Life, do not get the complete attention they deserve at time of renewal. Gaps in definitions, plan design, and coverage limits over time can go unchecked. And rightfully so. Health Insurance is both one of the biggest budgetary items for Employers, and one of the highest revenue generators for the Employee Benefit Firm.

Then comes the “specialty benefit” programs. With ancillary benefits already falling in the shadow of health insurance, the “specialty benefits” are often not even on the radar. Specialty Benefits include Executive Supplemental Disability Insurance, Voluntary Supplemental Disability Insurance, Executive Supplemental Life Insurance, Voluntary Worksite Benefits, and Long-Term Care Insurance. These specialty benefits are the products that can truly enhance an employer’s benefit package, while addressing real shortfalls and gaps that exist in ancillary benefits.

Further, the specialty benefits can be an excellent source of additional revenue for an Employee Benefit Firm.

This Employee Benefit Firm recognized the importance of providing best in class solutions for their clients; but also acknowledged the lack of shelf-space to focus on anything other than Health Insurance and ancillary benefits. In the past, this Firm had experimented with offering Executive Supplemental Disability Insurance on their own, unsuccessfully. The Firm’s close ratio was not particularly good, to say the least. The combination of shelf-space challenges, and more importantly the lack of expertise - or specialization - in Executive Supplemental Disability Insurance, were the culprits. It certainly was not the lack of effort or desire to do their best for their Employer clients…

This Firm also recognized the need to find new sources of revenue but was not able to invest in creating a “Executive Benefits Division.”  To do so would be an expensive proposition, with no guarantee of a solid ROI.

Recognizing the power of partnership, the need to better serve their employer clients, and the opportunity to generate additional revenue, the Firm partnered with Navis Benefits Group, LLC, on a revenue sharing basis.

Early results have shown a strong close ratio, with the Firm generating $76,800 of new first year revenue in 2022 from Executive Supplemental Disability Insurance sales. This business will also produce a revenue stream via vested renewal commissions, of $159,000, over the following 9 years. The total projected commissions earned over the 10-year period for this new business is at $235,800.

The Firm was able to generate this additional revenue stream with no out-of-pocket expenses, and with minimal effort.

The Executive Supplemental Disability Insurance allowed the Firm to address income replacement gaps that existed for their Employer clients’ highly compensated Executives, which Group LTD alone could not protect.

This Firm’s willingness to bring alternative and creative solutions to their customers, their humbleness in recognizing they had not been successful trying it alone; and the recognition that there is power in partnership has resulted in a solid source of additional revenue, with minimal time and no financial investment.

Consider partnering with Navis Benefits Group, to provide better benefit solutions with Specialty Benefits, generate additional revenue, with minimal effort or investment. Navis Benefits Group, LLC helps the “Jack of all Trades” provide “masterful solutions” to their clients.

Words Mean Everything

Words Mean Everything

The word-choice we use in ever-day life can have a powerful effect on an action, outcome, perspective, or reality.   

This is holds true in the world of Employee Benefits

Consider that many employee benefits are provided via an insurance contract, word choice – commonly referred to as “contractual language” - can greatly impact the outcome or reality of a claim.

Some Words to Consider: “And” vs “Or”

As an example, let’s consider the words “And” vs “Or”. Group Long-Term Disability (LTD) Insurance contracts define a Total Disability in varying ways.  Employee Benefit Consultants and Employers, elect the appropriate language to meet the occupational and earnings scenarios of their employee population.   A definition of total disability that requires a “loss of earnings and a loss of time/duties” will be treated very differently from a definition that requires a “loss of earnings or a loss of time/duties”. 

The prior definition with the “and” requirement is well suited for a salaried or hourly employee, that will experience an income loss if he/she is not able to work or at the same capacity (loss of duties). 

However, this same word punishes employees that have trailing income/accounts receivables. As an example, an Attorney that is paid while physically disabled (loss of duties) years later from a big lawsuit he/she won while healthy, would not meet the requirement of the “and” definition. Such attorney would likely not receive a disability benefit while earnings are received, even if the income resulted from duties performed prior to being disabled.  The “or” definition of disability would have resulted in a disability benefit payment to the attorney, since the definition requires a loss of time/duties OR a loss of income, but not both.  This same “or” definition, however, does not have an application for a salaried employee who does not have “trailing income”.

The Final Word

Words and definitions have a powerful ability to shape outcome, particularly in the insurance or employee benefit space. Try to pay attention to the phrases and ask yourself what they imply. Words mean everything.

Benchmarking: Common Characteristics of Employers Offering Supplemental Disability Insurance Plans

While over 50% of Fortune 500 Companies, across all industries, offer Supplemental Disability Insurance (IDI) plans, there are several industries that most commonly offer this benefit program to their employees. Supplemental IDI plans can be employer-paid, employee-paid, or shared contribution.

What industries are they, and what are their common characteristics?

Who are they?

·       Law Firms

·       Healthcare

·       Financial Services

·       Pharmaceutical & Bio Technologies

·       Manufacturing

·       Engineering

·       Accounting

·       Sales Organizations

Employers in these industries share common characteristics:

• Incentive compensation is – or becoming - more prevalent in these industries and represents a sizable portion of employees income. Pharma/Biotech, Sales Organizations, Financial Services are examples.

  •   Most Group Long Term Disability (LTD) insurance plans only cover base salary by intent and design. In fact, 78% of Group LTD plans do not cover bonus compensation

• Employees in these industries have a considerable proportion of highly compensated employees.

  • Group LTD monthly benefit maximums may only protect a small percentage of income, much less than the intended 60% replacement target.

• Recruitment and retention of top talent is a central focus; and Employers in these industries are in a competitive environment with their peers for talent.

•  Employees, Executives and Partners in these industries have a strong understanding of the importance of disability insurance.  Notable industries include healthcare/physicians, law firms, and financial.

•  Employers offering Executive Employer-paid Supplemental Disability Insurance, already have a culture of rewarding top Executives with strong Executive Benefits in place, such as with Executive Life Insurance

•  Financial Wellness, including income protection, is a central focus of the Employer’s benefit package and messaging. 

Does your Open Enrollment feel like the benefits experience of the past? Or do you offer the modern benefits experience your employees deserve?

Human Resource Professionals, by re-thinking the open enrollment process and changing your approach to the way benefits are enrolled, you can have a positive impact on your employees benefit experience and their feeling towards the employer.

The Great Resignation has created a heightened awareness around employee appreciation, recognition, and ultimately retention.  Now is the time to showcase both your new benefit offerings, and better communicate what you already offer, to attract new talent and retain your current valued employees.

Embracing modern technology and digital solutions to better engage your workforce, will allow you to focus more on your people and support your business objectives, while reducing time consuming benefits administration tasks. Technology can be complemented with face to face or virtual benefit counselors, or a call center, to provide a more human touch to the open enrollment process.  Human assistance during the Open Enrollment process can also be a way to introduce a new benefits enrollment or benefits administration platform to your employees.  Benefit counselors can help employees learn to navigate and use a new enrollment platform, while educating and enrolling employees on the benefits program.

Digital solutions that can also be leveraged to better communicate the enrollment event, process, and benefits program; and may include a company benefit landing page, text messaging notifications, personalized emails, auto-scheduling tools, silent voicemail drops from Human Resources, and a benefit video library.  Most digital solutions are smart phone ready, meeting the employee literally “where they are”.

A well-designed digital communication campaign, coupled with a modernized benefit enrollment platform and human assistance via counselors or call center, can be a game changer.  As a result, your employees will feel confident in their benefit decisions, have an improved understanding on how to navigate the new benefits enrollment platform, become better consumers of insurance, and acquire a heightened sense of value and loyalty to their employer.

As a Human Resource Professional, employing modern technology for communication, enrollment, and administration will help reduce time consuming benefits administration tasks, streamline, and minimize your open enrollment distractions, and change the way you feel about the Open Enrollment season.