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V i e w Poi n tFiVe trends to Help Brokers and Agents Adapt to a new Voluntary insurance MarketHealth care reform will someday be looked upon as one chapter in the story of America’s history where solving serious issues brought about innovation, new business models and public/private partnerships that not only safeguarded survival, but even fostered growth. this is particularly true for the health insurance industry and those who depend on it for their livelihoods. Brokers and agents are faced with disruptive market dynamics that, in turn, require a new way of thinking and perhaps operating.

Here are five trends that stand to greatly influence the voluntary market, and that represent opportunities for agents and brokers to demonstrate resiliency and inventiveness.

t H e S H i F t i n G B U t V i t A L R o L e o F B R o K e R S & A G e n t S *

The future of brokers and agents, and where they will fit in given the new legislative environ-ment, has been heatedly debated. However, there is little evidence that their roles will dis-solve entirely. On the contrary, a recent Aflac study “2011 Aflac WorkForces Report,*” con-firms that many HR decision-makers and their workforces will rely on brokers and agents to help navigate the growing complexity of health insurance.

Nearly half (49 percent) of employees surveyed agreed with the statement, “Even though I be-lieve health care reform is intended to give me greater control over my health care decisions, I don’t believe I will have greater control because it is too complicated to understand.” Another 34 percent said, “I will rely more heavily on my employer to educate me about my health care decisions as a result of health care reform.”

The problem is that many HR executives admit they don’t understand health reform, naming “understanding the changing health care land-scape” as their second biggest benefits chal-

lenge. Fortunately, more than half (56 percent) of employers use a broker or benefits consul-tant, and 49 percent of employees strongly agree they’d be more informed about benefits if they sat with a consultant or broker.

When it comes to voluntary benefits, even more education and guidance will be required, and brokers/agents will be counted on for this ad-vice. Many misconceptions occur among both employees and employers about voluntary in-surance. For instance, most companies (62 per-cent) mistakenly believe that payouts can only be used for specified medical expenses. Fewer than half (44 percent) agree that it does not directly cost the employer to make voluntary worksite benefits available, when in fact this is correct. One in four companies believes that the employer pays all or most of the premiums for voluntary insurance — which is not factual.

Clearly, a much-needed and important role ex-ists for brokers and agents, particularly when it comes to partnering with clients and educating workers.

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3/12Z120134 AFLAC // VIEWPOINT

D i S R U P t i V e M A R K e t t R e n D S L e A D t o i n n o V A t i V e B U S i n e S S M o D e L SIf innovation separates leaders from followers, then agents and brokers in the voluntary benefits business will need to start getting creative. To prosper in the new health reform environment, agencies will need to consider new business models, collaborate with other organizations and in some cases, fraternize with the competition.

The voluntary benefits market was already in a growth mode, which has since been accelerated by the health reform legislation. For broker firms and independent agencies that haven’t historically specialized in offering voluntary products, entering the market may seem difficult or a drain on time and resources. However, disruptive climates can produce unusual and innovative approaches to bringing in revenues.

For example, the leading provider of voluntary benefits, Aflac, has recently launched a new business model that blurs traditional competitive lines and instead offers a win-win model.

Across the country, independent agencies and brokerage firms have joined with Aflac to add voluntary benefits expertise as an adjunct to existing practices by having an Aflac agent join their organizations.

This allows agencies and firms to further diversify their product offerings and be equipped to meet the growing demand for voluntary benefits. While this type of collaboration does have an impact on profit margins, requiring a split where there might not have been before, the reality is that the revenue may not have existed in the first place. Furthermore, another anticipated outcome is happier, better-served clients who feel greater loyalty and appreciation for their agency partners.

At the end of the day, traditional mindsets will need to be replaced with open minds to better serve clients who are seeking more diverse benefits solutions and to protect the livelihoods of agents and brokers.

L e V e R A G i n G t e c H n o L o G y t o e n H A n c e S A L e S A n D i M P R o V e S e R V i c e D e L i V e R yWhen it comes to insurance agents and brokers, there is much debate as to whether the relation-ship between digital technologies and insur-ance is marriage material. Most agents and bro-kers would agree that selling health insurance is grounded in establishing a personal relationship and connection, while many argue that technolo-gy can improve existing business processes, and impact the sales and enrollment process.

As with any good marriage, the key is to reach a compromise. Many companies are seeking out ways to leverage the efficiencies technology can bring, and that many Americans expect, while still maintaining a high-touch, personal connec-tion. For example, Aflac recently introduced an iPad application that will be available for down-load by agents and brokers.

The application takes the company’s standard sales presentation (a cumbersome, 46-page book) and transforms it into a graphically dy-namic, customizable and interactive presenta-tion that can be delivered on iPad.

Ironically, even though the new and improved presentation capabilities reside on a high-tech platform such as the iPad, in actuality the pre-sentation fosters a very high-touch opportunity. It removes the proverbial two-sides-of-the-table scenario and replaces it with an intimate, inter-active, side-by-side conversation. In addition, the application is developed in a way to streamline and diminish the amount of time typically re-quired to customize the sales presentation to a particular client or prospect.

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44% of workers say a

company’s overall benefits package would be one of

the two most important factors

in deciding to accept a new

job offer.*

Consumers have not only grown accustomed to using their mobile smart phones for things like online banking and commerce, but they also expect such access. A wide range of industries are also taking advantage of the ability to conduct business on the go and to meet consumer expectations of real-time delivery of information. The health insurance industry is also following suit — seeking out opportunities to provide agents and brokers access to business applications via mobile devices.

Those who ignore the technology revolution altogether may find their businesses at risk of extinction. The reality is that consumer behavior and expectations, alongside pressure to conduct business more efficiently, are all contributing to the move to Web-based and mobile platforms. For health insurance providers, and the agents and brokers who work with them, the challenge will be to deliver technology tools and solutions that not only enhance productivity, but that also nurture personal customer interactions and promote excellent service delivery.

w e L L n e S S i n i t i A t i V e S w i L L B e c R U c i A L , i F e M P L o y e e S U S e t H e M Wellness will be an increasing focus for companies in 2012 and beyond, particularly given the attention it is receiving within health reform. While the new legislation affords many provisions to entice companies to build or enhance their wellness programs, the old challenge of giving workers incentives to take advantage of preventive measures still exists.

Many HR executives tasked with implementing wellness programs within their organizations will be pressured to deliver the much-anticipated cost savings that can be gained from effective preventive health care. And the success or failure to meet those goals will likely depend upon the amount of participation, or nonparticipation, on the part of employees. Even the Centers for Disease Control and Prevention (CDC) is offering employers consultation, tools and methods to help increase program participation.

Brokers will have an opportunity to help clients seek out creative, innovative approaches to boosting worker participation. For example, benefits advisors have guided some companies to lean on a universal motivator — money.

Imagine if employees were paid to go to the doctor for preventive procedures, checkups or vaccines. An increasing number of HR executives and workers are discovering that some voluntary insurance plans include a Wellness Benefit that may not only cover the expense of the preventive procedures (i.e., mammograms, vaccines, etc.) but but that may also pay policyholders cash benefits to use it. Other incentive programs might include an awards program based on points earned when achieving a wellness goal. The bottom line is that wellness plans are only as good as the number of workers who use them, which means brokers and agents will need to convey the importance of turning attention toward the incentive component of preventive health care programs.

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A company’s ability to dem-onstrate value

and goodwill to its workers by offering a ben-efits package unmatched by

competitors can mean the dif-

ference in high or low retention

rates.

*“2011 Aflac WorkForces Report,” a study conducted by Harris Interactive for Aflac, September 2010, February 2011.

y o U R c L i e n t S ’ B e n e F i t S P A c K A G e w i L L B e c o M e A n e V e n G R e A t e R D i F F e R e n t i A t o R *

With health reform and the establishment of minimum benefits standards, and the option to move from employer plans to exchange plans, major medical insurance coverage will likely become more homogenous than it is today. In addition, many companies are forecasting a grim outlook for benefits packages as a result of health care legislation. The Aflac study found that 42 percent of employers believe significantly diminished benefits packages for employees are a likely outcome of health care legislation, and another 32 percent say less robust but sufficient benefits packages are a likely outcome. All these factors can create an opportunity for a company to distinguish itself as an employer of choice by offering a more comprehensive benefits program than most.

And the issue of benefits packages should not be taken lightly by business leaders, given its effect on job satisfaction, loyalty and turnover. In the Aflac study, 89 percent of employers believe their overall benefits package influences employee job satisfaction, and 86 percent believe it impacts worker loyalty. Forty-four percent of employees themselves say a

company’s overall benefits package would be one of the two most important factors in deciding whether to accept an offer for a new job.

A company’s ability to demonstrate value and goodwill to its workers by offering a benefits package unmatched by competitors can mean the difference in high or low retention rates. At the same time, HR professionals will be pressed to offer health care benefits options that will soften the impact of the inevitable cost-shifting and rising out-of-pocket costs on its valuable workforce.

Making voluntary insurance policies available can allow companies to enhance their benefits offerings, differentiate themselves from competitors and offer workers choice in additional coverage that best suits their needs. These types of supplemental insurance policies and ancillary benefits offerings will be a greater differentiator than ever before in the battle to attract, retain and protect a talented workforce.

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