Summer is in full swing, the country is re-opening, and many New York, New Jersey, and New England residents are flocking to the beaches.
But brace yourself, because the employee benefits space is about to face a major financial storm front. This includes long- and short-term disability insurance, dental and vision, group life/AD&D, plus state-mandated short-term disability and paid family leave. If you sell insurance in any of these niches, read on for important information regarding what we can expect through 2022.
Winter may be challenging for P&C insurance brokers, and the time to prepare is now.
DBL Center President Michael Cohen shares his thoughts on inflation, the P&C insurance industry, and statutory benefits.
Storm Front Coming
Inflation is no joke. The cost of virtually everything is going up right now. But most statutory and group ancillary insurance carriers have kept rates flat. Rates are bound to increase. And it’s likely to happen just as small to mid-size business owners, including restaurants, bars, and other non-essential shops, are just starting to get back on their feet and show a profit after what was one of their worst financial years in recent history.
When DBL Center President Michael Cohen says a storm is brewing, he’s referring to a financial storm that will, in many ways, rival Hurricane Sandy in 2012. Of course, the superstorm was a weather event, but it impacted P&C insurance brokers in an irrevocable way.
Similarly, the coronavirus pandemic has been unprecedented in modern history. But with proper preparation, DBL Center brokers can position themselves for success amidst tumultuous change.
We chatted with DBL Center President Michael Cohen about how to take this summer to prepare for the coming months and what changes might be on the horizon.
Let’s cut right to the chase. We are seeing prices go up everywhere. Have the major statutory disability and group ancillary insurance carriers raised rates yet to keep up with inflation?
That’s a great question. After 15 to 18 months of rate passes from many preferred insurance carriers in the marketplace, we are beginning to see an uptick in activity. At the DBL Center, we have always requested our Group Ancillary Benefit renewals 120 days in advance to give our sub producers ample leeway time if they plan on marketing the risk.
What is a broker’s best move in this inflationary economy? What selling techniques will be most effective and what products should they emphasize?
Sell tiny increases. Each industry has a trend. If you can be at or slightly below that trend, you can generate additional revenue coming off the heels of a year when new business was slow and premiums dropped due to decreased payroll and headcounts.
If you own a brokerage firm and had a tough sales year, you can always rely on your residual income generated from renewals. I’m not saying to sell astronomical rates but as long as it’s around or less than trend it should be able to be sold – especially when everything around us in our lives is also going up in price. Just look at the costs of meat and lumber as two examples!
Can you explain how DBL Center gets brokers the best rates for their clients’ statutory disability and ancillary benefits plans?
By leveraging block size. We have 46 years of compounded organic growth and several acquisitions, which have enabled us to maintain strength with the preferred carriers that we continue to represent and partner with.
Plus, our method for tracking revenue through our Broker Dashboard, which is a free added resource for any retail agent, makes it easier for brokers to stay on top of renewals and minimize cancellations while tracking what they net on a monthly basis.
We’re obviously in an inflationary period. Why is it smart for managers, owners, and company executives, to increase their spend in enriched DBL?
Mainly to keep up with the new Paid Family Leave benefit law which is growing throughout the country.
I personally find it unusual that an individual claimant can receive more money to help a significant other than if they become personally sick or injured. Therefore, I feel it is in best practice to advertise the importance of enriching New York State’s mandated DBL Benefit. It has not increased since 1989 when our governor’s father was in office, Mario Cuomo.
Since you brought up PFL, let’s talk about that! Connecticut, Massachusetts, New Jersey, and New York all introduced some form of Paid Family and Medical Leave in recent years. What do you see for the future?
It’s definitely the shiny object in the room and the point of discussion. Multiple states threw their hat in the ring last election to offer paid family leave on a fully insured basis. Currently Colorado and Oregon are next on the docket. New Hampshire and Delaware are in talks, too. Excited to see who’s next!
As long as more states implement this into their legislation, we will continue to use this benefit to scale The DBL Center into the future.
How can brokers best prepare themselves for this future growth?
Call The DBL Center their Insurance Wholesaler and let us help open the door for other product lines that they may specialize in and help monitor your book’s retention for free!