Host: Tim Martin
Guest: Chris Della Sala
Episode 17: Why Brokers Are Excited About Voluntary Benefits – Chris Della Sala Interview
June 13, 2014
Welcome to Success is Voluntary, a podcast devoted to helping you become the salesperson you were always meant to be, where it’s all about helping you learn the techniques and tools that will enable you to win in the increasingly competitive world of voluntary benefits. Welcome your host, a guy who has hired and trained over 2,000 voluntary benefit salespeople in his career, Tim Martin. Success is Voluntary, selling voluntary benefits.
Tim Martin: Yes, my name is Tim Martin, and you are listening to episode number 17 of Success is Voluntary. Today’s guest is Chris Della Sala. Chris is the regional broker market manager for Colonial Life. Chris has been in the insurance industry for 10 years, and I’ll have him introduce himself here in just a second. I have to tell you, I’ve watched Chris over the last year and a half, and he’s amazing at what he does. Every day, he’s out in the field helping his team drive sales by working inside the broker market, so welcome to the studio, Chris.
Chris Della Sala: Thanks, Tim. I’m glad to be here.
Tim: Well, thank you for coming to Phoenix. You’ve been in town the last three days out working with the team, and my team, and have had some pretty good success out there, it seems like, right?
Chris: We’ve had a great couple of days, absolutely.
Tim: You bet. Chris, like I said, I let you always introduce yourself, so tell me a little bit about yourself, how you ended up here. I think it was what you decided to do in grade school. Right? You were going to be in insurance.
Chris: Just like the rest of us.
Tim: Right.
Chris: Yeah. You know, it was kind of just a random play of events that led me here, obviously things that I hadn’t previously selected. I went to school for microbiology at UT and…
Tim: Microbiology.
Chris: Yep.
Tim: Yeah, you’re way too smart for insurance. What are you doing here? Just kidding.
Chris: It’s a great industry, and just kind of by happenstance, I met somebody in the business, and I was recruited into a career agency system, where I was selling voluntary benefits, did that for a little while, and then ended up going to work for one of the carriers that I represented and called on brokers for a couple of years. Then prior to coming here, I spent a few years working in both the benefits administration and the PEO space with brokers and carriers.
Tim: So you’ve kind of seen the whole industry from all the different angles. You were in selling voluntary benefits and then the PEO and the TPA side of it and then the broker side of it.
Chris: Yep. Yep. I’ve had a unique opportunity to look at things from various perspectives.
Tim: Interesting. Interesting. How long have you been in your current role?
Chris: A little over a year and a half.
Tim: A little over a year and a half. Kind of describe for our audience what it is your role does exactly. What do you do every day?
Chris: Well, I think we can all relate to the fact that no two days are the same. Every day is a different day and unique, but ultimately my mission is to insure that we, as a company, are being a best-support line for our broker partners, ensuring that we’re doing everything we possibly can to arm our broker partners with the necessary tools that they need to be successful and grow their business as well as support our field force and their mission to grow their business with their broker partners, as well.
Tim: So that’s kind of an interesting tension because you’re kind of right in the middle, aren’t you? The brokers, you definitely have to cater to them and make sure that their needs are being met, and at the same time, you have to balance that against the field force because sometimes their desires are counter to what the broker’s desire is. Ultimately, we have to do what’s right for the client.
Chris: Right. Absolutely. Part of that job really entails educating our field force on what is going on in the marketplace, and that can be anything from training events to going on broker calls, such as what I’ve done here this week in Phoenix with your team, to I have a number of speaking engagements across the region, where I talk about the market space and what we’re doing as a carrier, what the market space is doing, what brokers are doing, so there are a lot of different aspects of my job that help us to accomplish our mission with our broker sales.
Tim: Yeah, you gave me some statistics the other day, and I didn’t warn you that I was going to ask them, so if you can’t remember right off the top of your head, that’s great. How many lunch-and-learn/broker events did you do last year?
Chris: Ooh, last year, I don’t even remember.
Tim: Oh, how many this year, then, so far? Remember this is the end of May right now.
Chris: Yeah, I think year to date, we have done a total of 19 different lunch-and-learns. I believe I’ve had somewhere around 9 or 10 speaking engagements and sponsorship events, and then I think we’ve done a handful of large-scale broker events, where we host a bunch of brokers and kind of get the word about Colonial and myself.
Tim: Like a wine tasting or something like that?
Chris: Yeah, like a wine tasting.
Tim: Or you guys went up the tram in Albuquerque.
Chris: We did. We did. We went up to the tram to the peak of that mountain, and that was a really very unique experience, something I had never done before, and I think a lot of the brokers who ended up turning out for that hadn’t either, so that was cool.
Tim: Yeah, it was really cool. Then just countless meetings.
Chris: Yeah, I think year to date, I’m somewhere up around 60.
Tim: Sixty broker meetings already, year to date.
Chris: Yeah.
Tim: Yeah, we’re, like I said, five months in, so very good. Chris, Colonial Life, the company you work for, has a great reputation in the broker community. First of all, tell us what area you’re responsible for, and then what percentage of the sales in that area come from a broker channel versus an agent walking in and knocking on the door and getting in that way?
Chris: Sure. Yeah. My region is the Southwest, a hefty chunk of the Southwest United States, and the majority of our business down here is actually through the broker channel. About two-thirds of our business comes through the broker channel as opposed to the direct aspect, which is our reps knocking on employers’ doors and selling business direct.
Tim: Okay. Sure. Why do you think the brokers are so willing to work with us right now, with Colonial Life?
Chris: Well, I think there are a couple of ways to answer that question. I think the marketplace has actually been a big driver to influence that in the sense that healthcare reform has created some opportunities in the voluntary space that have kind of influenced brokers to steer more in this direction, and I think considering the fact that as an organization, the primary channel for us to go to market is through the broker channel. The majority of our business as a company, as well, is in the broker market.
We put a lot of energy and resources into making sure that we’re being a great partner. We listen to the feedback that we get. We make adjustments as necessary. I think, just in general, we’re a great partner for the brokers who are out there, and we do a really good job of listening to what they say and adjusting our business model to meet their demands.
Tim: Great. We were talking about this before we went on the air, so to speak, what’s kind of changed? Obviously, healthcare reform has made a big change, but it seems like brokers who wouldn’t even talk to us 5 years ago, 10 years ago, wouldn’t give voluntary benefits even a second thought, are very interested right now. I know some it is driven by comp. They have to get paid, and national healthcare cut their commissions, but there are other reasons too. What else is kind of driving that, do you think?
Chris: Well, I think part of it is just a natural evolution of the growth of the business. As more carriers jump into this market space, more products are available; more brokers are aware of it. I think, also, the fact that healthcare reform has created an opportunity for voluntary benefits, whether it is as a result of declining health commissions or public exchanges not hosting voluntary benefits, there are a number of reasons that there’s an opportunity now for voluntary benefits from a broker’s perspective.
I think, also, as a result of healthcare reform, employers are demanding more from the broker role. Five, ten years ago, I think you would’ve seen more of a specific type of business model, so a broker who was focused primarily on one line of business, or maybe two, and now brokers are consolidating their business lines, so they’re offering product lines. They are offering more resources and value-added services and things of that nature to provide more value, as a broker, to their clients.
Tim: I see. Well, of course. I’ve seen the studies on LIMRA a couple of different places. I may have the percentages wrong. Did you know 67.3 percent of all statistics are made up on the spot?
Chris: That sounds about right.
Tim: That sounds about right. I’m not making these up, but I don’t remember exactly. I believe it’s in the low 80s. If you only have one line of business into an account (if you’re a broker and you only have one line of business in there), it’s in the low 80s as far as your chances of keeping that account next year. You have about an 80 percent, low 80s percent, chance of retaining them as a client next year.
Now the second line drives it into the low 90s, and 3 or more, it’s almost always impossible to get rolled out of there once you start putting 3 or more lines of business in there. VB, in a very competitive world, can really help that broker.
Chris: Absolutely. Absolutely. It allows them to strengthen their ties with their clients, and if there’s an employer who has a different representative for different lines of business, there are multiple relationships that they’re juggling which means any broker at any given moment is vulnerable to a takeover by a broker who they may not even be aware is working with that group. Absolutely, the more business lines and product lines that a broker can offer, the more that they mitigate risk of a BOR, and BORs are on the rise right now.
Tim: Yeah, for brand-new people to our podcast, or to the industry, I mean, BOR is broker of record. It’s a little bit different in the broker world, isn’t it? In the voluntary benefit world, that group, you go in, and you write it, and you make your commission, and somebody else comes in and takes it over for whatever reason, you still have your commission. That doesn’t happen in the broker world.
What happens in broker world? You go out. You do all the work. You get them all signed up, and then I’m the brother-in-law of the owner. I get a letter from my brother-in-law saying, “Tim is my new broker.” What happens to you?
Chris: You are at a complete loss.
Tim: You are.
Chris: Yep.
Tim: Yep. You’ve done all the work, and I’m going to reap all the benefits.
Chris: Yep.
Tim: That doesn’t happen in VB, but that does happen in the broker world. Again, for the newer agents who haven’t worked with brokers yet, what are a couple of things brokers are really concerned about? Obviously, they want to get paid, but really when I talk to brokers, that’s maybe the fifth or sixth thing on their list of importance. Right?
Chris: Right.
Tim: There is a bunch of things that are way more important than just their paycheck. What are some of those things that the broker is really concerned about?
Chris: Well, I think that differs based on the actual brokerages that you’re working with, whether it’s a smaller broker house, more of a mom-and-pop type shop, or an independent agency versus the larger broker houses that you see across the country. I’d say if you were to consider things that they would share as far as concerns go, I think one would be making sure that they are providing value for their clients. More and more, nowadays, they’re looking to the carriers to support them in that effort.
I think carriers, likewise, are also looking more into the broker channel as partners. We want to work together. We see the value that the brokers bring to the table, and I think brokers are recognizing the things that a carrier can offer from a services and a value perspective. I’d say that that’s probably one of the primary objectives. They want to make sure that their clients are satisfied and taken care of and have quality products with a quality carrier.
Tim: With quality service.
Chris: With quality service, absolutely.
Tim: Absolutely. Because the challenge is if that broker brought us in (brought the VB in) and the VB rep screws it up, it doesn’t look bad on the VB rep; it looks bad on the broker.
Chris: Yep. Yep. If they’re partnering with somebody who is going to misrepresent them, that’s a great way to get yourself kicked out of a group. If we’re not taking care of our clients and the brokers aren’t taking care of their clients, which is something that we want to make sure we’re supporting them on, somebody else will.
Tim: That’s right. I love that. I love that poster that was out in the 90s that said, “If you’re not taking care of your customer, somebody else will.”
Chris: Yep.
Tim: That’s absolutely right. Absolutely right. What should a broker be looking for? We’ll come back to what an agent should be looking for in a broker. What should a broker be looking for in a VB carrier? If I was a broker, what are the things I want to make sure that are in place if I’m going to work with a VB carrier?
Chris: There were two primary things that stand out, I think, to answer this question. One would be experience. You want a carrier that knows what they’re doing, that’s been around a while. They have experience with claims. They have experience with product development, product pricing, with the service, the back-office servicing. All of those things are critical to a smooth-running operation and longevity within a client.
I’d say the second thing is you want to make sure that the carrier is a good partner. Partnership, I think, is very important. What does that mean? I think that means being able to work with the brokers in order to support them, receive feedback well, and make adjustments where necessary and ultimately provide the right level of service and value that a broker is looking for to add to their platform for their clients.
Tim: Oh, okay. Very nice. Have you noticed the idea of best in breed in bigger houses? I’ve seen it just a little bit, and I just wanted to know if you think that’s a trend that’s going to continue or increase. Best in breed means they think that carrier X has the best accident plan, and carrier Y has the best cancer plan.
This other carrier has the best disability, so they bring in three different voluntary benefits carriers for three different products. That seems, really, to be a mess to me and confusing to everybody, but I’ve seen it a little bit. Do you think it’s a trend that’s going to continue, grow, or go away, hopefully? What do you think?
Chris: I hope it doesn’t grow. I do see it sometimes. My take on the situation is that, as far as product goes, if somebody is in need of an accident product, a cancer product, or a disability product, no matter where they go (for the most part) they’re going to get covered sufficiently. Okay?
Tim: Yeah. Yeah.
Chris: So it doesn’t really make sense to have one carrier for one product, another carrier for another product. You do see it out there. I don’t think it makes a whole lot of sense. When you stack products against each other, I think, also, it’s kind of relative as far as which one might be better. Somebody might have one opinion on which product is actually better, and another broker might have another opinion on which product is better, depending on what you value in a product.
Tim: Yeah, because it’s pretty hard to compare apples to apples. I mean they’re similar. A lot of the programs are pretty darn similar, but there always is some little difference, and not just for the broker, but it could even be down to the family level. You know, a family might be better off with one carrier’s accident plan, while the family that lives right next door to them could be better off with a different carrier’s accident program just based upon their family and those kinds of things.
Chris: I agree. I agree.
Tim: Okay, so large houses. If I’m a new agent and I finally am getting a little bit experience, and I feel like maybe it’s time to start working the broker market, I should just start contacting the big houses, right? The huge brokers out there. I mean, because there’s a lot of opportunity. They have hundreds and hundreds and hundreds of accounts. Boy, that would be just so fun. I’m sure they’re just going to give me their whole book of business. Right?
Chris: Yeah and you should walk in and ask for every account they have.
Tim: Yeah.
Chris: There’s definitely a lot of opportunity within a large broker house because, to your point, they do have a lot of accounts. They have a lot of relationships, and they have a lot of resources. I think because they have so many resources, a lot of the different value-adds and services that a carrier might bring to the table, they don’t necessarily value as much as one might like them to because of the fact that they are so large that they do have resources of their own that they can tap into.
At the same time, there is a lot of competition to work with the larger broker houses. They’re much better known. They have so many more clients that you’ll be standing in a long line outside their door trying to get a meeting with them, to sit down with them, just like many of the other reps out there from other carriers, so it can be a challenging avenue…lucrative if you make it work but challenging.
Tim: Definitely and it’s going to take a while to break in.
Chris: A long while.
Tim: A long while. Back to some of the things we’ve already said, if I’m a new agent, it is tempting; I want to go work with brokers, but those brokers smell new a mile away.
Chris: Yeah, yeah, they do. They do, and one of the biggest concerns, I think, that a broker is going to have when working with a new agent is…How do I know you’re going to be here in six months from now, in a year from now, to service the accounts that you’re working on? How do I know that I can trust you? How do I know that you’re going to do a good job? You have to spend the time and do the work and put the energy forth to develop a solid relationship and build that trust to grow a producing relationship with a broker.
Tim: Yeah, I couldn’t agree more. It’s not an overnight sale.
Chris: No.
Tim: What do you think is going in the VB market as a whole right now? What are some of the changes that you’ve seen? Again, you’re talking to brokers, so through their eyes, you get to see a lot of different competitor’s information and kind of glimpse under the tent a little, if you will.
Chris: Yeah. Yeah. One of the things that we’re seeing is the market is becoming more price sensitive, so carriers are relying more on competitive pricing. The margins on product are declining which is what is resulting, actually, in the decreased commissions for the health aspect of the business, which is where voluntary benefits is a great fit because it supplements that lost revenue from the health piece.
Another thing that we’re seeing is a lot of consolidation going on. A lot of the larger broker houses are shopping for some of the smaller, independent, mom-and-pop type firms to buy their block of business and have them work under their hood, kind of, so to speak. I’d say those are two of the most major impacts that we’re seeing right now.
Tim: Well, that’s in the industry. How about in the voluntary benefits industry? What is new in VB, would you say?
Chris: Two main things. One, we’re seeing tremendous growth, tremendous growth, right now. I think the deer-in-the-headlights phase is coming to an end. People are starting to make a move after the pause from the implementation of healthcare reform.
Tim: Yeah, there was a long pause there, where a lot of business owners were afraid to make a decision because they didn’t understand national healthcare reform, right?
Chris: Yep. Absolutely, and from their perspective, there was a lot of pushback on voluntary benefits. They didn’t want to hear about it. They didn’t want to talk about it. We’re still feeling a little bit of that in the market, but I think it’s starting to decline. Another thing that we’re starting to see is a lot of different carriers jumping into this market space from other arenas, health insurance carriers, for example, that are now developing and soliciting voluntary products.
Tim: Yeah, I think it depends upon your state obviously, but Aetna has done that here in Arizona and other states. How is that going for them? I’ve heard very, very mixed reviews, not just Aetna. Let’s not pick on them, because they’re not here, so that’s not fair. For the health companies, how is that going for them, overall?
Chris: I would say generally speaking, it’s really hard to say. I haven’t seen any concrete data to support whether it’s being actually successful or not, but I can tell you what I’m hearing, and what I’m hearing is that it’s been a little troublesome and slow getting started. I think there are some complications that are presented by putting all your eggs in one basket, so to speak, but some of the carriers are offering a very good opportunity by saying, “Hey, if you use our voluntary benefits along with our health insurance, we will offer a 3 percent rate reduction, for example, on the health piece.”
It’s challenging to compete with as a voluntary benefits competitor. We’re talking about a lot of money in savings, but the challenge that you run into there is we don’t know what the impact is going to be long term on the pricing of voluntary, whether or not these carriers are going to stay in the business. I’ve heard some stories from a few brokers. They have pursued this avenue with some of their clients and chosen a health carrier and done voluntary and health with that carrier, and it has gone very badly.
Tim: Yeah. Well, let’s face it. Let’s back up for just a second. Here’s the challenge: You can build a product. Every product is filed at the insurance commissioner’s office. Aetna, or Humana (or whoever wants to) can go down, grab that product from a competitor, and basically copy it.
Chris: Absolutely.
Tim: They can launch it. The problem is they don’t know how to sell it.
Chris: Yeah, they don’t know how to sell it, and they don’t know how to service it.
Tim: Hmm, yeah, because it’s a different kind of service. They’re not dealing with physicians and getting master bills, and it’s all electronic…
Chris: Right.
Tim: They have no idea how to service it, how to pay claims, how to take care of it.
Chris: Absolutely. Right.
Tim: Interesting. Yeah, I didn’t even think of that side of it. All right. Again, I’m a newer agent. I’m finally getting some traction, and I’m feeling like I am ready to work with brokers. We said don’t go after the big ones, so how do you develop a relationship with a smaller broker? Who should I look for, first of all? Then how do I go about kind of developing a relationship with them?
Chris: It’s hard to say whom to look for. You have to identify the opportunities in your respective areas, and if you’re looking for the smaller brokers, look for names that you don’t recognize. If it’s something that’s a large benefits shop, it’s probably one that you’ve heard before, but what you certainly need to do is you have to stay in front of them.
You don’t want to be annoying. You don’t want to be a bug and pop in all the time. They’re very busy people. That’s another thing that’s critical to understand. You really need to understand what a broker’s life is like, what their world is like, the things that they deal with on a day-to-day basis.
Unexpected drop-bys (and this is my personal about this), while it can be beneficial at times, you want to be careful with them because if you stop by and a broker is in the middle of something and you sit down with them for an hour (they agree to meet with you), you don’t want them sitting there the entire time thinking about the fact that they just lost an hour of their day.
You really need to say in the forefront of their mind, out-of-sight-out-of-mind type mentality. Bring value to the table. That’s the most critical thing that I can emphasize, whether that be what you can do personally, your work ethic, your high level of standards, or if it’s services and values and your team and your support level, the things that you can do for that broker. They’re going to want to know A) What can you do for me? and B) What can you do for my clients? You have to build that trust factor.
Tim: Yeah, that’s nice. That’s good. I also teach never go anywhere empty-handed. So take a gift. It could be a lead for a major medical group. Right? I mean we’re going in and asking them for business. In fact, I’ve landed a lot of brokers over the years that wouldn’t give me the time of day until, all of a sudden, I had a case for them to bid on, and whether or not they won it, that’s up to them, right?
Chris: Right. Right.
Tim: They can go bid it, but it’s up to them to win it, but just by the fact of me bringing that case to them really kind of softened them up, their stance towards voluntary benefits and me. If they can see that working with you is going to bring value, then they’re going to want to do more business with you.
Chris: I think that’s a perfect strategy. When I was out knocking on brokers’ doors, I used to call it “dating brokers.” It’s like a marriage. It’s a give-and-take relationship. It’s not a one-way street, so there is absolutely nothing wrong with going in and offering up a group to bring the broker into to show them, “Look, I’m serious about this. I really want to work with you. I want you to see the value that I can bring to the table.”
Tim: You bet. I had a gentleman who taught me this a few years ago, and I really resisted it at first, but I started doing it, then I started teaching my team to do it, and we had great success. One of the things that I would recommend, if you’re ready to start working with brokers, first off, work with your manager. Make sure that they understand that you’re ready to work with brokers, and I would take them with you, especially those first few calls. Make sure that you’re speaking the broker’s language, because they speak a whole different language. We could spend an hour on that. Right?
Chris: That is true.
Tim: We call our disability 0/7, and they call it 1/8. I mean there are all sorts of differences in there. That’s a little one. There are big differences in there, as well, but one of the ways that I got in front of brokers is I just started calling all my clients and said, “Hey, you know what? I’ve never asked you, who is your broker?” They usually would have two or three different brokers. Somebody did their fleet. Maybe somebody did their regular property and casualty. Somebody was their major medical broker, right?
I would call all three of them, because I figure, if they’re doing their fleet, they probably have some major medical groups too. You never know, but I’d start with the major medical, and I would say, “Hey, Joe, this is Tim Martin. We have a client in common. I just found out about it because I just asked yesterday, but I didn’t even know you were in there. I feel bad I didn’t pay you. I’d like to make sure that I pay you on a go-forward basis.”
Now I’ve already written all the business that I’m really going to write. We’re going to have turnover business and new hires and things like that, and so I’ll split that all day long, but I have to establish the relationship with the group. There’s no reason I can’t establish a relationship with that group’s broker, and if they have that one case, I’m guessing they might have another one.
Chris: Yep. Yep. That is a great inroad to developing a relationship with a broker, and for those agents out there who are calling direct, I think, more and more, we’re going to encounter situations where they do say, “I have a broker that I work with,” or, “This is our broker. You need to contact him.”
It’s a great warm introduction and a great way to build a partnership by saying, “We have this client in common.” I think as we move forward in this day and age, we’re going to see more and more of that as the broker role becomes more important, more critical, and I think there’s going to be much more opportunity from a broker perspective.
Tim: Yeah, I couldn’t agree more. Do you know, whenever I told them I wanted to pay them, not one time did they say didn’t want to meet with me? Not one. It’s weird, isn’t it? “Hey, I want to pay you from now on. Can we get together for coffee?” “Yes!”
Chris: “Yes. How about right now?”
Tim: Exactly. Weird how that works. I don’t know. Oh, that’s funny. All right. Well, what other advice would you give people who are already working in the broker market and then those people who want to join working in the broker market? What are kind of your top two, three items of advice? I think we’ll wrap up after that.
Chris: I would say for those who are working in the broker market, know your limits. Know your capacity to work with a broker. What is the old saying?
Tim: Under promise, over deliver?
Chris: Yeah. Yeah. Something along those lines.
Tim: You have to.
Chris: In my experience, one person can really only manage a handful of successful broker relationships, so find out who those true partners are and build a business with them. Don’t try to manage 100 different brokers, because it’s impossible. We can’t spread ourselves that thin.
Tim: That’s great advice.
Chris: Then for those who are looking to get into this market space, I would say stay at it. Continue to bring value and stay in the front of those brokers’ minds. Eventually, things will turn out, but keep in mind that you have to stay in front of them. You have to bring that value to the table, and you have to build that trust. You definitely want to have a little bit of a direct side of the business because growing a broker-focused business can take some time, and you have to eat.
Tim: You have to eat along the way. It’s somewhat important. Right?
Chris: You have to eat. You have to survive, yeah.
Tim: Make sure you’re not giving up on direct is what you’re saying?
Chris: Absolutely.
Tim: That’s critical. Thank you. Thank you for saying that because that’s important. I have horror stories about that over the years.
Chris: Yep.
Tim: Good. Good. Hey, Chris, I really appreciate you being here.
Chris: It was a pleasure being here. Thanks for having me, Tim.
Tim: Man, I think you have given us a lot to think about, and I think that our listeners will have grown dramatically.
Chris: I hope so.
Tim: All right. We’ll talk to you soon.
Chris: All right. Thanks.
Remember everything is voluntary, including success. Take it in your hands now. Head over to www.successisvoluntary.com/iTunes/, and stay up to date with all the latest tips, news, and techniques in the world of selling voluntary benefits.