A new study from BenefitsPRO and Eastbridge highlights the changing landscape of the voluntary benefits industry. Today, more and more brokers are flocking to voluntary benefits as a source of revenue. As these new players enter the market, its lead to several changes in how we see the voluntary industry and what brokers need from their carriers.
Diversity and profitability are on the rise
One thing that the study makes clear is that more brokers are selling voluntary and that voluntary is becoming a larger part of brokers’ revenue. In 2014, 21 percent of brokers were actively selling voluntary benefits, but in 2017 that number has jumped up to 37 percent. On top of that, the sale of voluntary benefits is making up a larger part of brokers’ revenue streams. Today, 31 percent of brokers said that voluntary accounted for 11 to 50 percent of their revenue stream compared with just 23 percent in 2014.
The increasing prevalence and profitability of voluntary has drawn many new players into the voluntary field meaning the line between a broker who specializes in voluntary and a traditional benefits broker is blurring. Today, benefit brokers account for 60 percent of total voluntary sales and 90 percent of benefit brokers are selling voluntary products. This change means that the products you get from a benefits broker are increasingly reflecting the products offered by brokers who have traditionally focused on voluntary.
The effects of the changing market
Brokers indicated that the two biggest threats to their voluntary business are takeovers and competition from other brokers. Based on the growth of the industry, that doesn’t come as much of a surprise. More players means more competition and increased risk of a takeover.
As competition heats up and the products offered by brokers becomes homogenized, many brokers are left looking for solutions to grow their business and differentiate themselves. The study also took a look at what brokers felt they needed to be more successful in selling voluntary. The most common response was that brokers were looking for more assurances regarding administrative and billing capabilities. This means brokers will, more and more, be looking for carriers that can provide comprehensive benefit solutions to benefit challenges. Service, rather than products, will become how brokers and carriers differentiate themselves when working with clients.
BenefitsPRO’s article dives into more of the study’s details, including information on private exchanges and common non-traditional benefits. But, what is clear from the study, is that the voluntary market is growing and there are new challenges that brokers will face and they will need new ways to differentiate themselves. Having a carrier that listens to them and addresses their concerns with complete benefit solutions will be paramount to success.
Source: “The 2017 BenefitsPRO/Eastbridge voluntary benefits survey”. BenefitsPRO. May 3, 2017.