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Independent property/casualty agents seeking to diversify into the employee benefits market can turn to a variety of insurance companies for products. Except in the group major medical field, where the list is rather brief, there is no shortage of financially strong carriers offering benefits products-including life, disability, supplemental health, long-term care and retirement products. Many of these companies are household names, marketing individually as well as through benefits plans.
These benefits providers can bring to the table a solid product lineup and decades of experience in the employee benefits market. What they often lack, however, is a familiarity with the property/casualty agency business model. These carriers are certainly willing to work with a P-C agency’s benefits department, but they are more used to working with pure employee benefits brokers, consultants and financial planners.
This is particularly true in the retirement products market, where the lineup of retirement plan providers includes not only insurance companies but investment firms as well.
One exception to this scenario is The
Like many of its large competitors in the retirement market, The
“We feel that this is just scratching the surface,” says
He explains that The
“We surveyed our own independent P-C agencies a couple of years ago concerning their interest level and fears about the retirement market. We found that their number one barrier to getting into this business was their perceived lack of expertise in it. The retirement market can be complex and full of changing dynamics, including regulation,” Pumiglia acknowledges.
To deal with this uncertainty, The
The P&C Channel Development Team is backed by a sales force of 150 sales-assistance representatives, half of whom are located in the field to provide face-to-face sales support. There are an additional 70 retirement plan specialists who run employee meetings and coordinate other on-going communication once a plan is in place. “The assistance doesn’t stop when the plan sale is done,” Pumiglia says.
One property/casualty agency that has taken advantage of The
“I fell into about 10 or 12 employee benefits business accounts based on relationships I had. That, in turn, led to some 401(k) plans. I leaned heavily on The
When starting out as a “total novice” in the retirement plan world, Lee says he learned from one of his Hartford P-C reps that retirement plan sales and implementation assistance was available. He wrote his first retirement plan account by taking a team of these
“I introduced the
One of the keys to his success in working with The
“We refer to the 401(k) plan as a bicycle wheel,” Lee says. “One spoke is the custody and clearing platform- which would be The
“Only two of the retirement plans we’ve written have been start-ups,” Lee continues. “All the others have been existing plans where there was some neglect. In some cases the TPA services had kind of fallen apart, and the plans were having to refund some money because they didn’t pass the testing. So that has opened a lot of doors.”
Account rounding strategy
About two years ago, Lee partnered with a benefits firm, which handles the back-office work and administration on his benefit accounts. They also have an HR management software platform to provide payroll services.
“So we can say, ‘Not only can we do your comp and your benefits, your P-C, flex administration, your COBRA, but we can implement a 401(k) and have a direct feed from a payroll standpoint to the 401(k) provider.’ “
Pumiglia says The
He points out that the economic reasons for P-C agencies to be in the retirement business are convincing. “The agent’s first-year revenue from a retirement plan on a 50-life case will be, on average, roughly triple the revenue that the agency would receive on that client’s P-C business,” he says. “We pay a trailer commission on renewal every year. The business has a 95% retention rate, and the average plan lasts over 12 years.”
Regardless of what changes may come to the employee benefits business over the next few years, retirement plans are likely to remain the cornerstone of most benefit programs. The
“The agent’s first-year revenue from a retirement plan on a 50-life case will be, on average, roughly triple the revenue that the agency would receive on that client’s P-C business.”
Assistant Vice President and Head of Distribution Development