Bundled Employee Benefits Offer Cross-Sell Openings For Banks
Since the Gramm-Leach-Bliley Act was signed, many banks have been seeking ways to enter the insurance industry. Today, many banks offer a full array of investment and insurance products, ranging from mutual funds and long term care insurance to estate and business succession planning.
While these have been met with great success, the opportunity to sell bundled employee benefits has been left on the table.
A bundled employee benefit program provides the banking industry with a tool to cross-sell the more profitable insurance, investment and consulting services that are at the core of their fee-based business.
For example, a discussion of a group life insurance program with the controller or owner of a company will lend itself to dialogue on key person life insurance, business succession planning and long term care. Similarly, discussing a group long-term disability plan will create the opportunity to focus on key person disability insurance.
While life and disability insurance are an important part of overall planning, the purchase of these products usually grows out of separate conversations rather than developing as part of an overall employee benefits program.
Small business owners (generally with fewer than 50 employees) have been at a disadvantage because their individual buying power is limited.
For banks, however, this becomes an opportunity, because their strength is their ability to distribute products to this marketplace efficiently.
In working with banks, the insurance industry may discount pricing, increase guaranteed issue limits and loosen minimum participation requirements.
To gain such considerations from carriers, the bank should present them with an analysis of its small group customers. This should break down those customers by Standard Industry Classification Code in addition to other traditional general demographic data.
As a result of this analysis, carriers may offer bundled packages, which might include group life insurance rates at a discount and voluntary short-term and long-term insurance products. Dental and long-term care programs may also be available.
Depending on the geographic region, the offering may include health insurance with the same carrier. If not, the bank may negotiate ancillary health coverage on a stand-alone basis, separately negotiated with health carriers. The medical offering may include more than one carrier–again, depending on the region.
For the small business owner, the sizzle for bundled benefits is in the packaging. Regardless of the number of carriers, the small group buyer is also looking for ease of administration.
The bank will typically subcontract this work to a third-party administrator, or it may administer the program itself.
For the business owner, the simplicity of receiving all these programs on one monthly invoice is extremely valuable. It removes the day-to-day administrative headaches of adds and deletes, relieves the owner from the worries of COBRA and HIPAA compliance, and allows the employer to focus on what is most important to him–growing his business.
