What are the two biggest reasons why agents prefer selling group plans over individual plans? Group policies have bigger payouts, and educating individuals on different plans eats time for smaller returns.
That's enough reason for many agents to focus all their energy on selling group plans, referring away their individual leads, or only handling the business when it lands in their laps. Yet some national trends in the individual market are starting to turn those group-centric heads.
Trend #1: Small businesses can't keep up
The amount of businesses offering health insurance to their employees sank 9 percent in the last five years, from 69 percent in 2000 to 60 percent in 2005. According to the Kaiser Family Foundation, 98 percent of all businesses that have 200 or more employees offer health insurance -- meaning most of the coverage is not coming from small businesses.
Group coverage is becoming too expensive for small businesses to keep offering it.
Trend #2: Individual coverage is becoming more affordable than group
America's Health Insurance Plans (AHIP) released a study in August that demonstrated individual plans are increasingly cheaper on average than their group counterparts.
AHIP found that in 2004 the annual premium for single coverage averaged $2,268 and the average annual premium for family coverage was $4,424. By comparison, annual premiums for employer-sponsored health plans during 2004 averaged $3,696 for single coverage and $9,948 for family coverage.
Employers are spending more on insurance that is cheaper on the individual market.
Trend #3: Individual plans hit popular media
With the rising cost of insurance in the national spotlight, conservatives and liberals agree that the government needs to change something quickly. The chance that policymakers will manage a massive health care overhaul anytime soon? It's pretty slim, so some are suggesting that frustrated individuals adopt a more immediate solution.
According to author and economist Paul Zane Pilzer, group plans will be mostly eliminated in 20 years. Pilzer's popping up everywhere from Newsweek to CNN, urging consumers and small businesses alike to dump group coverage for money-saving individual plans.
According to Pilzer, those small employers struggling to pay for group insurance should take advantage of new legislation that allows them to fund their workers' individual plans with pre-tax dollars. The difference could be almost $3,000 annually per healthy worker.
And employees could benefit, too: They get the same coverage with individual plans as they did before, but their new plans won't be cancelled when they leave the job.
The case is made for small businesses and employees to rethink individual plans.
Embracing the individual insurance shopper
You may not want to give up on group just yet. But consider these two ways that you can seamlessly fit individual prospects into your existing closing and marketing strategies -- without getting swamped.
o Automate the education process. Individual prospects do require more handholding for less return. The solution is a Web site that gives them instant access to all the information they need to make an educated buying decision, seriously reducing the amount of time you need to spend with each customer.
By having a Web site that integrates automatic quoting, your carriers' plan information, and downloadable applications, your prospects will be able to come to you when they're further along on the buying spectrum. A good Web site lets people do their own research 24 hours a day and apply for policies -- without ever needing to talk to you.
o Automate the follow up process. Don't think you have the time to follow up with all those individuals who've been to your site, learned a lot, even talked to you, but who just couldn't commit?
An email auto-responder program is the easy answer for closing would-be buyers. Auto-responders allow you to automatically follow up with persistent, scheduled email campaigns. With just a one-time set up, you'll be touching your database on a regular basis, letting them take action when they're ready to. Some technologies actually include the proposal right in the email, providing a fresh insurance quote from your carriers. When your prospects are ready to buy, they'll already have your proposal in their hands.
There's no need to abandon group insurance. But adding individual plans to your portfolio with minimum effort will give you a much needed safety net and increase your value to a much wider range of prospects.
Jeremiah Desmarais oversees the marketing initiatives for Norvax, a company whose technology helps insurance agents consistently increase sales and cut administrative time. He is also editor of the Norvax Newsletter, which delivers helpful tips and marketing strategies to 15,000-plus insurance agents monthly. For more information, visit www.norvax.com.
