The Vision for a Strategic Alliance-Interview with Aetna & Allstate

Both James Reid, head of Aetna Voluntary Plans, and David Bird, President at Allstate Benefits, have genuine excitement and enthusiasm in their voices. Upon the official announcement of the strategic alliance between Aetna and Allstate Benefits, Reid and Bird talk passionately about the decision to offer financial protection plans to Aetna’s more than 33 million members and why both companies seized an opportunity to partner two Fortune 100 companies with strong brand recognition.

David Bird puts it perfectly when he describes quotes his predecessor telling him, “David, you’ll never go broke splitting profits.” Bird explains of the gentleman’s advice, “It’s another good description of why this partnership was so interesting to us.”  Both Aetna and Allstate will benefit from the incremental income generated from Allstate workplace voluntary benefits.

James Reid describes the alliance similarly, stating “I think that Aetna and Allstate recognize the significant opportunity as well as the good synergies between both organizations,” and “when you look at a company that has traditionally played in the core medical benefits field with a company that played in the traditional voluntary medical field, you can see how those two get along very nicely.”
Read the full interview, exclusively with Voluntary Benefits Magazine.

Voluntary Benefits Magazine: Tell us about the unique partnership between Allstate and Aetna. How was it created and why?

James Reid:  We felt that in selecting them as a partner and vice versa, them selecting us as a strategic alliance partner, it was a good fit. When you look at a company like Aetna that’s been in business for well over 150 years and has played in the medical insurance field with individual and Medicaid, Medicare and group benefits, dental and group insurance, life and disability, we really thought there was a good opportunity for us to really look at the voluntary space.  We also wanted to look at an opportunity to form a strategic alliance that would allow us to offer new products to our customer base that really focuses on providing them with financial protection.

David Bird: One of the reasons it was so interesting to us [to partner with Aetna] is based on studies done by LIMRA, the Life Insurance Marketing and Research Association. One employer survey found that over 75% of employers said they would prefer to purchase their voluntary benefits from a broker/agent/consultant with which they are already doing business.  So if you think about that, Aetna’s already there in the workplace.  They are a trusted insurance provider. We think Aetna is well positioned to offer voluntary benefits products to their employer clients. Instead of watching them do this with someone else, we thought Allstate could offer a very attractive partnership with them in that type of program.

VBM: How would employers market the joint products to employees?

James Reid: There are a number of important elements that we are working on to make a smooth experience for brokers, employers, and their employees. Some of these key areas include -brochures and marketing materials, enrollment capabilities of how we receive enrollment data, whether that would be paper or electronic, online or a wire transfer, that we’re able to get it from the employer and the prospective member to enroll with Allstate.  We feel really good and confident that it should provide a really good experience for customers, brokers, and members.

VBM: For insurance agents, would there be a unique commission structure and how would it be tracked?

James Reid:  Our plan is to use options of the Allstate commission structure that they have in place.  More importantly, we are really excited about introducing these products to the insurance agents and brokerage houses that we’ve done business with over the years.  Brokers, as you know from what you’ve covered in your magazine so well, are looking for new solutions to provide their clients as well as new revenue streams for their own firms.  We plan on using the Allstate commissions and discussing those individually with the partners that we do business with, and then following up on case by case opportunities with the customers that will have these products offered to them.

VBM: What are some of the additional advantages to enrollment options because of the partnership?

David Bird:  These products are attractive to employers and employees because they provide financial protection and additional financial security to middle to moderate income working Americans and their families. The group critical illness and the group accident benefits are paid directly to an employee in addition to benefits from any coverage they have.   From an employee perspective, these products give them some level of financial empowerment to then go out and address their medical needs.  A recent article from Levi Marketing Research was titled, “50% of Americans Couldn’t Come up with $2,000.” That speaks to the need of middle –to- moderate- income Americans for financial empowerment that can come from owning these types of products and receiving benefits from them, in times of illness and injury.

James Reid:  The advantage that we see for both parties is that we [Aetna] have customer  and broker relations with a significant amount of group business and already have enrollment, whether it be our medical products, dental products or vision products, and group life and specialty products.  We’re doing enrollment for a majority of those cases, whether for Small Group Business or Middle Market customers or National Accounts, so the advantage is really where we have the customer today.  We offer their core benefit offerings and now we can offer two new products through the group Critical Illness and Group Accident plans that can be part of that enrollment offering.  We have resources within our voluntary marketing team that will work with our customers if they decide to offer these products, to ensure that they develop customized marketing and enrollment strategies that meet the needs of each client and employee base.  Allstate, as you well know, has a suite of enrollment options, as well as we [Aetna} have, that we’re going to tap into.  Allstate’s capabilities, including administrative, are industry leading. We plan on using the existing relationship we have and hopefully bring in new ones with both national and regional enrollments, to make sure however the customer wants to enroll in these products, that we meet their needs.

VBM: Do you feel the Aetna/Allstate Alliance will spur other major health insurers like United Healthcare, Humana or Cigna to offer something similar?
David Bird: Humana has already done this, having acquired KMG Kanawha Insurance Company, which is in the voluntary benefits space. Via this acquisition, Humana has entered the voluntary benefits space and has these types of products available.  In terms of United Healthcare and CIGNA, I’m not sure what they have planned, but I would think that they would want to follow suit in order to remain competitive and on a level playing field with others in the industry.
James Reid: I really can’t speak for other carriers, but as I mentioned in your initial question, I believe that the opportunity and synergies between Aetna and Allstate are tremendous. Creating the Group Critical Illness and Accident Products, with our core products, provides new opportunities for customers to provide their employees some protection, so I wouldn’t be surprised to see other large carriers try to get into this space in a different fashion.

VBM: In your opinion, do you feel this alliance will change employee benefit plans in the future?

James Reid: I think that between both organizations, we hope it changes it significantly.  That is why we are partnering and creating this strategic alliance with Allstate, but I think that based on the trend that you’ve [VBM] seen and that you’ve [VBM] reported on, we’re seeing a shift in and convergence between the traditional core medical benefits coverage and the traditional voluntary plans, to get it to address some financial needs and affordability for consumers.  As consumer directed health plans become more rapid and are more uniform, we feel that consumers will see a degree of visibility and transparency on what they’re spending on healthcare and what their expenditures are. With this newfound visibility, it’s very important that these types of products are out there to meet the unique needs of each individual customer.  I think there has been a shift in the voluntary sales over the last ten years and you’ve seen a significant growth in these types of products and in that market space because that really addressed the needs of the employers, their members and their employees.  I think you’ll continue to see that over the next few years.

David Bird: I think voluntary benefits are becoming more and more accepted in the industry and accepted by employers and employees—they’re almost really starting to blur and transition in categorization from being voluntary to being part of the core offerings.  As the voluntary products we know today are being integrated with the medical insurance plans offered by companies like Aetna, I think that’s going to make them more prevalent and accepted in the industry.
VBM: What are the key components you feel Voluntary Benefits Magazine readers should know about the Aetna/Allstate Alliance?

David Bird: I think the key components are the things we mentioned, as I described in the partnership. Generally, the structure is the key and how unique the alliance is. We’re excited about it and I think Aetna is as well.    
James Reid: I would say really trying to provide best in class product, distribution, and brand.  I think that between the products that we offer historically at Aetna and partnering with Allstate, we can come into an employer and can really say we can meet the unique needs of you as an employer as well as the very individual needs of your employee.  When you think about brands, Allstate and Aetna are two brands that are known not just in the voluntary and the traditional medical business, but brands that are reputable and known worldwide.  I think that there is a significant opportunity in knowing how we structured the deal, but really an opportunity to make sure that we create return to our collective shareholders; our plan sponsor customers, the brokers that we do business with, and most importantly, the people that we cover.

VBM:  How do you feel the alliance brings value to the voluntary benefits industry?
James Reid:  We have to deliver on the value of proposition that both David [Bird] and I stated collectively for our organizations. From the beginning, I think that the alliance will create significant awareness and opportunity that the convergence of medical coverage and the traditional voluntary coverage are crossing over. This alliance highlights the fact that two companies are really coming together to make sure that they’re helping plant sponsors, helping members and brokers they do business with, and meeting the needs of their clients.