Monday, July 9, 2007

Distribution Channels of the Immediate Future, Part 1

In my opinion, distribution of insurance products is about to change in a BIG way. Along with the changes in demographics in the US, as well as the immense transfer of wealth creating a new breed of affluent investor, mortality and morbidity products will break out of the current box.

One of the most significant growth areas, I predict, will be in worksite marketing. Employers, for good reason, are scared to death of long-term health care commitments. The idea of having someone come into your office, sell in-demand individual products at essentially a group rate, and having to do nothing beyond providing the conference room and handling the payroll deduction... well, that's a good deal. And it's something I believe more and more employers will seek out in the years to come.

For so many years, margins in the worksite marketing arena have been so small that there has not been much of a market for truly automated technology. Everyone I talk to in worksite says that there just aren't many specialized, highly-automated solutions out there. My employer is in the process of building one out, right now. We've had an excellent foundation for a long time, and we're now bringing together everything that we've heard over the years to create the ultimate worksite system. I've been involved in some of the high-level design, and it looks like it will incorporate everything necessary for case setup, enrollment, payroll deduction, group management and billing, and portability.

The carriers that put themselves in a position to capitalize on this opportunity will have found one of the cheapest ways to reach a large volume of prospective customers with relatively minimal expense. Even as automation increases, and margins go up, this will still be about VOLUME. Make sure you're ready at the enterprise level to get your share.