AMID HEALTH CARE REFORM AND A SLOW ECONOMY, BENEFITS BROKERS AND CONSULTANTS OPTIMISTIC ABOUT OWN FUTURE BUT CONCERNED ABOUT INDUSTRY, ACCORDING TO METLIFE STUDY
– Many See Growth Opportunities in Voluntary Benefits and Health/Wellness Initiatives –
NEW YORK – August 15, 2011 – Despite the slow economic recovery and the uncertain impact of health care reform, benefits brokers and consultants appear optimistic about the future of their firms and see a host of opportunities to provide increasing value to their clients. According to MetLife’s inaugural Broker and Consultant Study released today, more than half (52%) of brokers and consultants with large clients (those with 1,000 or more employees) are very optimistic about the growth potential of their firms as are approximately one-third (31%) of those with small and mid-sized clients.
In contrast, however, only 25% of benefits brokers and consultants with large clients and 12% with small and mid-sized clients are very optimistic about the benefits industry overall. Three out of five respondents expect that employer-paid medical insurance will still be an important growth opportunity in the next three years, but 73% are very concerned about reductions in medical insurance commissions in light of health care reform.
“With new challenges for employers often come new opportunities for those brokers and consultants who can bring creative solutions to the table. While wary of how health care reform might change their own business operations as well as those of their clients, four out of five benefits brokers and consultants say their firms are actively exploring new models and strategies in order to stay relevant and pursue growth opportunities,” says Anthony J. Nugent, executive vice president, U.S. Business, MetLife. “The optimism expressed by many firms about their own futures indicates confidence in their ability to successfully meet these challenges.”
Nearly three-fourths of brokers and consultants expect their clients to rely on them even more three years from now than they do today. Virtually all respondents (97%) feel that they have worked hard to keep their clients up-to-date on health care reform developments.
Broker and Consultant Concerns
Over two-thirds of brokers and consultants in the study expressed concern that the slow economic recovery may cause employers to cut benefits – particularly small and mid-sized employers. What other items are of particular concern to brokers and consultants? Among advisers with clients with 1,000 or more employees, the top concerns are: 1) keeping up with legislative changes and their impact (68%); 2) maintaining/growing top-line revenue at the firm (63%); and 3) attracting and retaining clients (62%). For brokers and consultants with clients with fewer than 1,000 employees, the top concerns were: 1) reductions in commissions due to medical loss ratio (85%); 2) maintaining/growing top-line revenue at the firm (82%); and 3) keeping up with legislative changes and their impact (78%).
“The convergence of economic issues and health care reform is reshaping the benefits landscape, and demanding agile navigational skills from brokers, consultants, and their clients alike. The key to growth for brokerage and consulting firms will be the ability to differentiate one’s self from the competition – a concern expressed by two-thirds of survey respondents. The insights in the MetLife study should help benefits brokers and consultants reexamine their current strategies and explore new ones for future growth,” said Dr. Ronald S. Leopold, vice president, U.S. Business, MetLife.
Potential Strategies for Profitability
Brokers and consultants in the study identified a wide range of potential strategies that they believe could increase the overall profitability and sustainability of their firms. The most popular strategies are enhancing consulting services, selling more voluntary and ancillary products, and playing a greater role in health and wellness.
The study found that 58% of brokers and consultants see an opportunity to enhance or expand their broker consulting services. The same amount also see a potential to sell more voluntary benefits and ancillary products over the next three years as important initiatives to increase their firm’s profitability and sustainability in a post healthcare reform world. For example, brokers and consultants expect to see a rise in importance for these benefits on a voluntary basis:
The size of the client affects the level of interest in health and wellness programs. However, 58% of brokers and consultants with clients with 1,000 or more employees and 44%of those who primarily work with small/mid-size companies see greater involvement in health and wellness programs as a growth area for their firms. In addition, by 2013, more than half of brokers and consultants expect to see more opportunities to help clients with benefits administration such as enrollment, billing and claims.
Approaches to Adaptation
MetLife’s study identified four distinct adaptation profiles that offer insights into the different approaches brokers and consultants are exploring in response to the perceived changes ahead. The distinctions between profiles are more often gradations rather than absolute differences and as such, brokers and consultants may recognize aspects of themselves in one or more of the profiles, providing further insights into the choices they face.
- Core Strivers plan to adapt to the changing landscape by continuing to do what they are doing successfully now – focusing on traditional benefits. They anticipate an increase in employer-paid ancillary products, particularly dental and disability.
- Market Expanders tend to focus on medical and retirement products, primarily employer-paid. They plan to grow their business by expanding into new industries and geographical territories and are looking to innovate in the area of international benefits.
- Voluntary Volumizers feel strongly that employer-paid benefits will decline in importance and are placing a strong focus on a voluntary strategy and are looking to innovate in the area of executive benefits.
- Confident Consultants tend to be highly optimistic about both the industry and their firm. They see growth potential in voluntary products and complementary medical products such as critical illness insurance.
A copy of the study is available at www.metlife.com/brokerstudy.
The Broker and Consultant Study was conducted during the fourth quarter of 2010 and the first quarter of 2011 and consisted of a telephone survey fielded by GfK Custom Research North America and face-to-face interviews conducted by the Churchill Group. The survey comprised 502 interviews with brokers and consultants who sell group employee benefits to companies of all sizes. Face-to-face interviews were conducted with 24 brokers and consultants, representing various geographic areas in the United States.
MetLife is a subsidiary of MetLife, Inc. (NYSE: MET), a leading global provider of insurance, annuities and employee benefit programs, serving 90 million customers in over 60 countries. Through its subsidiaries and affiliates, MetLife holds leading market positions in the United States, Japan, Latin America, Asia Pacific, Europe and the Middle East. For more information, visit www.metlife.com.