This Month:
Deconstructing the Misconceptions of Cross-Selling DI
Physicians reevaluate DI needs, look to group coverage to reduce costs




Deconstructing the Misconceptions of Cross-Selling DI

by Ronald A. Farr, Jr.

Ronald A, Farr, Jr., is assistant vice president, business development at Disability RMS, a disability risk management firm in Westbrook, Maine. He can be reached at 207-591-3000.

Benjamin Franklin once said, "By failing to prepare, you are preparing to fail." This statement holds true in many areas of business, but appears to have particular meaning in the area of cross-selling.

The concept of selling additional products to existing customers is not a new one, nor does it seem difficult to understand. However, sales initiatives often lack the critical planning stage that will take the cross-sell from merely an idea to a formal, ingrained sales process that yields results.

As is the case in most industries, cross-selling insurance products within a network of previously established relationships can dramatically increase the chances of a successful cross sale. With the tremendous opportunity that exists in the disability insurance market, there has never been a better time to develop a cross-sell strategy that includes a disability insurance product in the multi-benefit mix. Research conducted over the years continues to underscore the benefits of cross-selling.

The Misconceptions of Cross-Selling Misconception: Implementation is simple

Most often, sales teams are given the directive to cross-sell without any further education, support or resources. In fact, the conversation likely stops after providing an overview of the sales targets they are expected to meet or exceed. These declarations, while well intended, often fall by the wayside. Executing cross-selling initiatives can be complex and requires thoughtful planning and appropriate time dedicated to implementation. In fact, the only simple part of developing a cross-selling program is promoting the idea itself.

The first step in the cross-sell process is determining which products will comprise the most attractive cross-sell package. According to the July 2008 LIMRA report The Different Faces of Cross-Selling, brokers believe that the most popular combination of benefits for companies with more than 100 employees is life insurance and long- and short-term disability insurance. However, a strong argument could be made that cross-selling disability insurance with medical benefits may be a much more logical pairing given that medical carriers have information at the group level that would lend itself to a more informed product and pricing structure. Properly identifying group employers' plan needs and budgetary constraints will also help guide a customized benefits solution. Once the product mix has been identified, the following steps must be undertaken:


A go-to-market strategy that pairs top insurance brokers with firmly established clients presents the optimal platform for launching a successful program. Brokers need solid tools and attractive incentives including, but not limited to, compensation. Employers must also understand "what's in it for them." Brokers must explain disability insurance, the critical role it plays in protecting an employee's income stream, and that it is a necessary and affordable employee benefit. Additionally, sales representatives should be prepared to offer discounted premiums and/or enhanced benefits on the lead product to further influence the cross-sell.

Misconception: Concept to execution is instantaneous

With a sales cycle that spans anywhere from 24 to 36 months, implementing a cross-sell program takes time, as relationship building is at its core. Begin the process by strategically targeting tenured inforce customers, they are often loyal and more likely to purchase additional benefit products. The same LIMRA report indicates that selling products to new customers yields only a 15 percent chance of success, while targeting existing customers can increase the odds to 50 percent.

Using this information in combination with the articulated needs of the employer best positions the broker for cross-selling success.

With an inforce block of business, sales representatives and brokers also have access to critical data that is helpful in creating highly informed rate proposals. Once prospects have been identified, it is the responsibility of the sales representative to educate the broker on the value of adding a disability product to the offering.

Assessing strategies and identifying what is working and what is not, at defined stages in the timeline, is also important to maintain sales momentum. The cross-sell strategy is one that must continually evolve. If an employer is not immediately engaged in the cross-sell, it should not be dismissed from consideration for a future opportunity. There are numerous reasons an employer may not be ready to make a purchasing decision, including a current rate guarantee, budgetary constraints and competing business priorities.

Brokers must leverage all of the information they have captured (group health information, sensitivity to pricing, customer pain points, etc.) to deliver an attractive, customized package to employers. By doing so, brokers can significantly improve the dynamic of the sales model. Using this information in combination with the articulated needs of the employer best positions the broker for cross-selling success.

Misconception: Success depends solely on the broker

When selling multiple products, incenting brokers is often deemed the most critical component of a winning cross-sell strategy. However, motivating customers is equally, if not more, important. In fact, the majority of group insurance producers believe that focus on the employer should be paramount. According to LIMRA's The Different Faces of Cross-Selling report, only one-third of group insurance producers consider broker-focused incentives important when determining whether to present their clients with multiple products from one carrier. Alternatively, two-thirds recognize the importance of employer-focused incentives, such as rate adjustments to medical and non-medical products or adjustments to participation rates.

Increased pricing stability, combined billing and consolidated customer service are clear benefits of a multi-product package. While these advantages are often obvious to the employer, brokers will need to arm employers with the additional information they need to understand the overall benefit of purchasing multiple products. Through focused marketing efforts and a clearly defined value proposition, customers will better understand the benefits and key differentiators thereby positioning them to confidently make a purchasing decision.

Developing a formal, thoughtful cross-selling program that will thrive long term is the ultimate goal. Companies need to embrace the complex process of ingraining cross-selling into day-to-day business operations. By instituting a formal plan that goes beyond the initial proposal, carriers and brokers can reverse the pitfalls long associated with cross-selling.

The opportunity to successfully cross-sell exists. If executed correctly, the benefits, for carriers, brokers and employers, far outweigh the challenges of implementation.



Physicians reevaluate DI needs, look to group coverage to reduce costs

by Patricia M. Pfeifer

Patricia M. Pfeifer, GBDS, is physician segment program manager for group disability and group life insurance for The Hartford Financial Services Group, Inc. She can be reached at patricia.pfeifer1@hartfordlife.com.

It takes years of education and experience for physicians to develop the finely tuned skills they need to effectively practice medicine. The probing diagnostic capabilities, gentle dexterity and common touch that successful healers possess are held in high esteem by patients and fellow practitioners alike.

But one skill that is often underappreciated is the ability to walk a tightrope. Today's doctors practice medicine while balancing between rising costs for malpractice and health insurance on one hand, and continued reductions in reimbursements on the other. The business of medicine is becoming harder to manage than ever before.

Those financial realities are prompting many physicians to reevaluate their costs for a wide range of insurance services; among the highest priorities being their premiums for disability insurance. Increasingly, physicians are considering group disability insurance policies as a low-cost option for quality protection.

Few people understand the value of disability insurance more than doctors, who see both the physical impact of disabling medical conditions and need to protect their most important asset, their ability to earn an income over a 30 or 40-year medical career.

With so much at stake, most doctors need significant amounts of disability insurance to protect their long-term earnings potential against disabling accidents or illnesses. They want coverage that protects their income over the long term, particularly as it relates to the special skills they possess.

Specialty Coverage for Physicians

The newest group coverage provides significant benefits and features especially designed for physicians at a fraction of the cost available through individual policies. Many group long term disability policies provide benefits of up to $15,000 a month. The better policies include "own-specialty" and "sub-specialty" definitions of disability, meaning physicians will receive benefits even if they can practice medicine in a different specialty, but not their original specialty. An insured is considered to be disabled if he or she is unable to perform one or more of the essential duties of his or her specialty or sub-specialty.

Extended and Progressive Benefits

The better group LTD policies include a physician-oriented benefit that take into account the special risks that medical professionals face, including infectious and contagious diseases, progressive illnesses, continued loss of income after a return to work, and loss of income to a practice.

When most salaried executives return to work after a disability, they typically earn the same salary as they did before becoming disabled. That's not necessarily so for a doctor, especially if he or she runs a small practice. It's common for doctors to continue to suffer from a loss of income after recovering from a disability. While disabled, many of their patients were probably referred to other practices, reducing their receipts. Even upon returning to practice, fewer patients may be referred them or their former patients may have decided to stick with a new practice.

nother income-related hazard that physicians face is exposure to contagious diseases. Doctors spend a lot of time around sick people and, despite being cautious, risk catching their patients' maladies. A benefit that protects a physician's earnings level, while they are not disabled, will help assure that they are financially protected. The likelihood of becoming disabled increases with age, and like the rest of American society, the population of physicians is getting older too. That makes them equally susceptible to progressive conditions, such as arthritis.

Doctors can help protect themselves from a continuing loss of income by securing a group LTD policy with an extended protection benefit. The benefit pays a portion of the original LTD benefit based on a proportionate income loss formula if the insured continues to see a loss of income beyond the triggering level.

Progressive illness benefits protect physicians if their income should slowly decrease due to a progressive, debilitating illness or condition. In instances where someone suffers a progressive illness, it's conceivable that the insured may never qualify for disability benefits because the decrease in his or her monthly income never reaches the loss threshold required to trigger payment. To counter this problem, it's possible to obtain a policy that establishes the insured's pre-disability earnings at the higher of his or her income when the diagnosis of a progressive illness was reported or their current income.

Portability Problem Solved

Many physicians, given their extraordinary need for high quality disability insurance, know nearly as much about their coverage as the agents who sell and service the policies. So why haven't more physicians gravitated to group coverage until now?

In the past, one of the reasons many doctors relied primarily on individual LTD policies is the portability factor. With an individual policy, the doctor owns the policy and can continue coverage even if he or she went to work for a new practice or decided to start his or her own practice. Group LTD policies also allow continued coverage without proof of insurability if he or she leaves the current practice. This can be critical, especially if a doctor suffers from a medical condition that could impact his or her future insurability.