Common reasons why COLI sales are attractive to an insurance manufacturer:

• Plans are often funded with variable insurance contracts, which tend to be very profitable.
• COLI insureds tend to be younger ages with preferable risk ratings.
• High persistency of COLI contracts
• Large premium contracts
• COLI can help offset carrier risk of having sold older age contracts.
• Large market with a $90 billion+ potential

Current distribution models:

Currently there are two basic models for insurance manufacturers to distribute their products to the end user, each of which comes with very unique challenges. Some manufacturers build an internal sales force and turn-key administration platform in order to market their products to corporate clients through financial professional intermediaries. Others merely develop a product and choose not to offer a turn-key model.

Let’s examine each:

Turn-key with Internal Wholesale Force Model: This model provides the corporate client with a fully bundled solution, which is paramount to selling an executive benefit plan. It is a plan that combines the different plan components--asset, legal and administration--in order to function properly and in compliance of Section 409A. The insurance carrier has control over their marketing efforts and sales force. This distribution model also comes with many challenges, especially for manufacturers that have not yet established this distribution model and have plans to do so.

Product-only Sales Model: The manufacturer stays focused on its core strength as a product manufacturer, with a low distribution cost structure. This model does not incorporate all components of an executive benefit plan and the corporate client or the financial professional must be extensively involved in plan administration, costing them time and money.

Manufacturer challenges and benefitRFP™ solutions:

1) Challenge: Cost In order to build a turn-key wholesale model a carrier will need to hire and pay for a full complement of wholesalers, internal wholesalers, administration and implementation personnel, case design specialists, and management personnel. Additional costs include marketing costs, administration platform costs, wholesaler travel expenses, office costs, and technology costs, etc. A small turn-key wholesaling platform can easily cost a manufacturer over $5M annually.

benefitRFP™ Solution: A manufacturer can participate in the benefitRFP™ turn-key platform without the cost of building an internal team, while participating in all the benefits of providing a fully bundled solution to their corporate clients. This will allow the manufacturer to reap greater sales results while at the same time eliminating any unnecessary cost.

2) Challenge: Time to Premium Building an executive benefits platform takes time. It can take between 18-24 months from the inception of a program until the first premium dollars finally pay the first plan policies. This is due to the time it takes to hire a capable team, roll out the platform to market, find the right producers, find the cases, sell the plan, implement the plan, enroll the plan and finally pay for the plan.

benefitRFP™ Solution: By participating in the benefitRFP™ platform a manufacturer can instantly plug into a fully assembled platform and pipeline. benefitRFP™ has already built a pipeline of plans that could fit a manufacturer’s product, leading to faster premium payment. This leads to increased profits and immediate ROE (return on equity).

3) Challenge: Product Only sales model Some manufacturers choose to only manufacture and sell products. This is a huge disadvantage as the executive benefit market is process driven, and the product is only one component of this process. The manufacturer is often reliant on inexperienced financial professionals to sell their products; this leads to low closing ratios and low premium results.

benefitRFP™ Solution: By participating in the benefitRFP™ platform a manufacturer now has the ability to instantly be part of a fully bundled turn-key solution. This allows a manufacturer to concentrate on their core strengths, which are building competitive and profitable products, rather than on the distractions of having to build and compete with a turn-key platform.

4)  Challenge: Participation Flexibility  Business needs and environments can change drastically. A large long term commitment of cash and corporate resources is needed in order to build an executive benefits platform internally. Due to this, a manufacturer does not have the flexibility to enter and exit the market, or make drastic changes as their business environment changes. This leads to unnecessary cost and risk exposure.

benefitRFP™ Solution: A manufacturer has a choice on an annual basis whether they would like to participate in the executive benefits market. If the business model and the manufacturer’s environment appear favorable, and in line with company goals, the manufacturer can plug into the benefitRFP™ platform and instantly be in business. If business needs change or the environment changes for the manufacturer, they can concentrate on other business lines in order to achieve their overall goals without having to unwind or mothball an executive benefits program.

5)  Challenge: Finding and hiring the best talent  The sales process of selling a turn-key executive benefits plan is very different from a product sale. The internal team usually has to sell a plan point-of-sale and manage the entire process from finding the right producer to enrolling a plan. There are very few people in the industry that have extensive experience in this type of sales environment. This becomes a challenge for a manufacturer as they are looking to build their internal teams. Oftentimes this leads to a high rate of underperforming team members. This increases the time to get the desired premium results and decreases overall goal performance.

benefitRFP™ Solution: Our team has years of experience managing the complete sales, implementation, and service process of executive benefit plans. This allows the manufacturer to leverage our experience to reach their business goals without the risk of potentially hiring underperforming talent. With benefitRFP™, a manufacturer can rest assured that only industry experts will work with their customers.

6) Challenge: Ongoing plan service platforms must be built and maintained – When an internal manufacturer team sells a turn-key plan, the manufacturer must be prepared to provide ongoing service on not just a product level, but also on a plan level. This means that the manufacturer must train and maintain an executive benefit plan service team that has the knowledge and service skills to properly service executive benefit plans, in addition to their current product service personnel. If a manufacturer decides to exit a fully bundled solution, they risk losing their policies due to poor service unless they continue to staff their executive benefits service team. This risk has an ongoing cost to maintain existing business, even if new business is not being sold.

benefitRFP™ Solution: Executive benefits is our core business so we will always have a fully staffed service team to handle the service issues related to a plan funded with a manufacturer’s product. The manufacturer will only need to provide policy level service, which is already in place, in order to maintain their business.

7) Challenge: A manufacturer sales team will always be viewed as biased – In a sales situation a manufacturer sponsored sales team will always be viewed as biased since they can only represent their solution. Despite the capability and fit of a respective product offered, an internal sales team will always have to contend with the disadvantage of being viewed as biased to their respective employer’s solution.

benefitRFP™ Solution: By plugging into the benefitRFP™ platform, a manufacturer will be part of our customized due diligence process. The manufacturer will be independently represented in all cases that are the best fit for the manufacturer. This results in increased profitability that is in line with a manufacturer’s business goals.

8) Challenge: Manufacturers cannot focus only on key accounts There are many distribution channels interested in using manufacturer resources to sell executive benefit plans. Many of these distribution channels lack the capability to supply a steady flow of business to the manufacturer, leading to lower yield ratios between corporate resources spent and premium dollars received.

benefitRFP™ Solution: benefitRFP™ only enters into exclusive relationships with the nation’s top firms that have the capability to supply a sustainable pipeline of profitable business. This ensures a high yield ratio of corporate resources spent and premium dollars received from a relationship.

Contact us to get more information on how we can help you succeed.