PAYROLL DEDUCTION-THE BENEFIT
by Charles Robinson
The marketing of insurance in the workplace, allowing employees to pay for the policies by automatic paycheck deductions, is not new. In fact, payroll deduction for insurance began in the 1970s. Most of the firms allowing it were large employers with several thousand employees. Payroll deduction gained momentum in the 1980s as more firms automated their payroll systems.
With the availability of more products and better knowledge of underwriting them, agents began to sell not only Life insurance but other payroll products, such as Dental, Disability Income, and more recently Auto and Homeowners insurance. Because of automation's sophistication, payroll deduction today has become available even to smaller firms employing just a few employees.
Rogers and Gray Insurance Agency, located in southeastern Massachusetts, has focused on marketing insurance through payroll deduction since 1986. The agency has more than 50 client-firms, employing a range of 20 to 2,000 workers, that provide this benefit to their employees. Chuck Robinson, President of Rogers and Gray, says that selling insurance through payroll deduction is like fishing with a large net instead of a fishing pole. Over the last nine years, Rogers and Gray has developed a thriving business, now writing more than $35 million of premiums in all lines-but its fastest-growing segment is the payroll deduction profit center, through which the agency writes an average of eight to 10 new clients every business day.
Robinson says that payroll deduction is a great way to recapture the personal lines business independent agencies have lost over the years to direct writers. It also has proved to be a way of keeping the acquisition of personal lines business profitable.
Rogers and Gray's payroll deduction program has several features and benefits for both the employer and the employee:
FOR THE EMPLOYER:
- Enhances the overall benefits package
- Involves minimal investment and administrative expense
- Should help retain current employees and attract new ones
- Works directly with employees handling service, insurance counseling, questions, and claims
- Enhances employer/employee relationship
- Helps employees and their families gain financial security, thus making more stable employees
- Provides group purchasing, allowing employees discounts on certain products
FOR THE EMPLOYEES:
- Provide professional, personalized insurance counseling from Rogers and Gray's staff of highly trained personnel
- Extend the convenience of automatic deduction from payroll-as opposed to annual, semiannual, quarterly, or monthly billings
- Requires no large down payments or deposits
- Asks for no finance charges or services fees
- Provides greater ease in personal budgeting and cash flow management (because of stability of payments)
- Eliminates the possibility of being canceled for nonpayment of premiums
- Offers program flexibility, allowing the employee to participate voluntarily in as many or as few policies as desired
- Reassures the employee, since local service is provided by one of the leading independent insurance agencies in New England
In a new step, Rogers and Gray has set up a consulting firm separate from the agency for the purpose of working with other agencies throughout the country. It will provide everything an agency would need to sell and market insurance through payroll deduction. Besides the 'cookbook' (a manual on how to do payroll deduction selling), the consulting firm will offer all the tools necessary, including software, communication and marketing materials, and six hours of consulting and training. In addition to the consulting firm's product, Rogers and Gray will do joint work with agencies who want a more hands-on approach. For more information, call (508) 760-4617 or fax inquiries to (508) 760-4627.
We at IMMS have met with Chuck Robinson. We are convinced that his program will enable independent agents throughout North America to recapture personal lines business. Payroll deduction is a win for agencies and companies, a win for employers, and a win for employees.