New Colonial Life CEO sees growth in supplemental product

Tim Arnold, the new CEO at Colonial Life, sees the Columbia-based insurance company moving to seize what he considers abundant opportunities ahead for growth.ColonialLifelogo

The marketplace for supplemental insurance is becoming more crowded with competitors, Arnold said. But that market also is growing as more companies offer this kind of insurance, designed to address out-of-pocket costs that regular medical insurance does not.

That growth will be strong enough that Colonial Life doesn’t have to expand its market share in order to grow substantially. “The potential market is significantly larger than the one that exists today,” Arnold said. “We think the market opportunities are very, very good.”

Arnold moved up to the post of CEO of Colonial Life on Jan. 1, already holding the title of president. He joined Colonial Life in 2011 following a 27-year career with the company’s parent Unum Group, and previously served as the company’s senior vice president of sales and marketing and COO.

Arnold sees a company that has the right culture in place, especially with its emphasis on customer and community service. “It’s an incredible honor to have the opportunity to lead this company,” Arnold said. “The great news is that we really don’t need to change a lot.”

In the current market, more companies are moving to higher-deductible insurance plans, and that means more of a market for supplemental insurance to fill the gaps. Arnold describes getting a call from his father about his insurance changes, which included a move to a high-deductible health plan. “That’s going to happen to more and more people today,” Arnold said.

This continuing shift means more growth for all the companies in the sector, including another company that has built a major Columbia operation, market leader Aflac. Georgia-based Aflac, which has expanded greatly in Columbia since buying Continental American in 2009, has the largest share of the supplemental insurance market.

Arnold said he respects the other companies in the market, calling Aflac “a formidable competitor.” But he notes that much of the growth in the sector will come from reaching customers who haven’t previously had the option of supplemental insurance, not from taking market share from rivals. “You can keep the market share and grow considerably,” he said.

Many companies with 50 or fewer employees don’t offer supplemental insurance, but more may do so as they look at the new health insurance market and at their costs.

The insurance market seemed to pause in 2013 as the initial effects of the Affordable Care Act played out, and companies mostly kept their same benefits. In 2014, however, companies began taking action and exploring new options. To Arnold, that means more companies that will look to offer supplemental insurance and more employees who will get it.

The market opportunities also are strong, Arnold said, for other categories that Colonial Life offers: life and disability insurance. According to 2013 data from the LIMRA research group, 30% of U.S. households have no life insurance at all, and half of the members of U.S. households say they need more life insurance.

To keep growth going as CEO, Arnold said he’s counting on the Colonial Life staff as a major asset for the company. The company’s extensive field representative network gives it an advantage, especially in reaching out to companies that have not contacted an independent insurance broker, he said. “It’s harder to reach out to smaller customers when you’re working exclusively with a broker strategy,” he said.

Another way to connect with small-business owners: advertise on their favorite show. Colonial Life sponsored the CNBC broadcasts of “Shark Tank,” the show where entrepreneurs pitch their ideas to a panel of top investors such as Dallas Mavericks owner Mark Cuban.

“Our heavy focus is on growth so that we can continue to grow that job base here,” Arnold said.

Arnold calls the 1,100 Colonial Life employees at its Columbia headquarters a major asset for the company, noting that many staffers show impressive loyalty with decades of work. He said he’s amazed at how many retirement events he’s attended where a Colonial Life staff member is capping a career of 40 years or more.

The company’s staff is very involved in charitable efforts around the community, and Arnold said that reflects the larger service orientation of the Colonial Life corporate culture. Its brokers are trained to walk customers through their many options in the new world of medical insurance, even though Colonial Life does not offer that coverage. Combining that with their supplemental insurance, Arnold said, allows the company’s brokers to know that customers are adequately covered.

Despite the many online options to buy insurance, the company has found that most customers still appreciate someone to walk them through the process, whether in person or over the phone. “People still want a human being,” he said.

The company often receives letters from customers that thank the staff for their assistance and describe how their coverage helped them, often in a time of crisis.

Those messages, Arnold said, give the staff a reminder of how important its work can be to customers. “There’s tremendous social value to what we do,” he said.

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