Voluntary Guarantee Issue Retrospective
I look back over the last year and a half and see many employers experiencing declining revenue. I would expect that decreased revenue would drive a need to decrease expenses. Employers may look at benefit programs they provide and decide to shift some of the cost of benefits to employees. Employee paid, voluntary guarantee issue (VGI) could be there to fill this need. While The Standard's quoting activity for all GI cases, especially voluntary opportunities, was higher in 2009 than in any previous year, VGI sales held steady and sold in the usual proportion to employer paid, mandatory guarantee issue, i.e., about half and half.
I think several things have happened that are having an effect on the sale of VGI. First, we have not yet seen many employers making significant changes to existing group LTD programs; most employers are not changing LTD replacement levels or lowering caps on LTD benefits. A VGI program needs space to fit in and that space is often occupied by a higher LTD benefit. Second, while VGI is an attractive option for employers looking to shift the cost of benefits, that fact alone wasn't enough to drive higher VGI sales. The need for VGI may have increased, but the number of insurance sales professionals who know how to sell this kind of program has remained more or less static. Employers may not know what to ask for if they need to shift disability benefit costs. We rely on you, our sales partners, to provide that information to them.
In The Standard's experience, successful VGI programs begin with a foundation of solid commitment and support on the part of the employers, especially where they emphasize employee education through mandatory employee attendance at producer information sessions. The challenge is that VGI sales call for producers who have the comfort, familiarity, and expertise to help employers bring a voluntary sale to completion.
At The Standard, we couldn't be happier to have the expertise of Managing General Agents (MGAs) in assisting producers as well as employers as they create custom VGI programs and enrollment strategies that best serve the employers. We rely on the expertise of the MGAs to coordinate, and in some cases direct all the moving parts and manage the overall timeline to help the employers and the brokers succeed in their enrollments. Honest, strong and agreed-upon communication plans from the beginning of VGI discussions are key to successful enrollments of VGI plans.
Looking ahead, we continue to see an employment benefits' market that will lean more towards voluntary disability benefits. The Standard is well positioned to provide the plans for these benefits. We look forward to your business.
As always, your regional directors and The Standard's home office GI team are on hand to assist you. The Standard also has many online and preprinted resources available to support your GI sales. If you haven't done so in a while, please view your latest GI resources. Click on Find Marketing Materials and then under Select your area of interest, choose the category GI & Multi-Life.
Best Regards
Mike Feuerstein
Manager, Guarantee Issue
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