Published by Joe Goolsby on October 5th, 2018

A study from Eastbridge released last year reported that 80 percent of carriers have seen their voluntary takeover volume increase in the previous three years. On top of that, 95 percent expect the volume of takeover business to increase in the coming years.1 From what we’ve seen, that forecast seems to hold true; takeovers remain a significant part of today’s voluntary landscape. If there is a better product available or a carrier isn’t the right fit for an employer, then by all means a takeover may be the right thing for a client. But, with so many takeovers happening in the voluntary industry, the question is: “Is that a good thing?”

Too many voluntary takeovers

As we noted, in the right situation, replacing coverage with that of another carrier can be a good thing. However, there is a risk involved; too many takeovers can easily lead to drawbacks for all parties involved:

Employees lose coverage – One of the greatest challenges that we face in the insurance industry is education; employees may not always be completely familiar with their coverage. If there is a takeover and portability is an option, they may not know how to keep existing coverage if payroll deduction is no longer supported. In these cases, employees can end up losing coverage they may have liked, they may end up paying more for purchasing coverage at a later age (or it may be a more expensive plan) and they may lose any accumulated value they’ve accrued in a life insurance policy. 

Employees will also have to familiarize themselves with a new policy. That presents its own challenge which can lead to frustration or disappointment if they are losing features they valued or simply aren’t familiar with what the new product offers.

Employers lose on service – We’ve often discussed what an important part service plays in the voluntary equation. And, when you’re introducing a new carrier’s benefits,that means that you might also be introducing new service solutions and processes for an employer to enroll and administer. This can throw existing processes and any sense of familiarity and comfort into chaos. It is much harder for employers to manage their benefits when the carriers that they are working with are constantly changing. For many employers, service is a deciding factor for why they change carriers and brokers. Too many takeovers can contribute to shaky service and not just impact employers, but brokers as well.

Brokers lose business – Even if you set aside the fact that many takeovers occur as a result of an employer changing their broker of record, there are still road bumps for brokers when it comes to takeovers. As we noted above, the change in carriers can hurt service and ultimately hurt the relationship with brokers and their clients. It’s not just service either. Too many takeovers can start to reflect poorly on a broker in other ways. If you constantly have to replace the voluntary products that you introduce to an employer, there is an implication that the products you initially introduced weren’t the best. It easy to see how takeovers and, subsequently, the constantly changing product offering can quickly erode confidence in a broker.

Long-term solutions

At Trustmark, we’ve always been focused on long-term solutions. Takeovers may be part of the insurance landscape, but we try to forge lasting relationships with our clients because it’s better for us and it’s better for our clients. When you have a carrier you trust, a tried and true solution for managing benefits and innovative products that provide the protection that employees need, takeovers become unnecessary and the associated risks become a non-factor.

1Eastbridge releases latest report on takeover trends and practice of voluntary/worksite carriers. Eastbridge Consulting Group, Inc. 2017.