Close Close

Life Health > Life Insurance

Study Says Worksite Industry Showed Double-Digit Growth In 2000

Your article was successfully shared with the contacts you provided.

Study Says Worksite Industry Showed Double-Digit Growth In 2000


Theres good news for the worksite industry. According to Eastbridge Consulting Groups annual worksite report, the worksite industry realized double-digit growth again in 2000. Total sales, which equaled $3.1 billion in 2000, were up 19% over 1999 results.

However, while this represented a nice rate of growth for the industry as a whole, the market continues to be very fragmented.

The top 15 carriers included in the study accounted for 57% of the worksite market; the top two carriers alone had a 30% market share. Only the top carrier had a double-digit market share. All but the top two carriers had less than 4% market share, with the majority having less than 2% market share.

This years U.S. Worksite Sales Tracking Report includes dataworksite sales, inforce premium, product line sales, and distribution channelsfrom 56 worksite marketing carriers. These companies accounted for almost 70% of the estimated sales volume for 2000.

As mentioned previously, the report estimates 2000 total worksite new sales at $3.1 billion (up from $2.6 billion in 1999). The chart shows the estimated sales for 1997 through 2000.

The report also looked at sales results by product platformindividual or groupand line of business. Group products accounted for 39% of sales in 2000 while individual products made up 61%. This represented a slight change from 1999 with 36% group and 63% individual.

As for sales by line of business, disability accounted for the largest percentage (almost 25%) of worksite sales, followed closely by life insurance (primarily whole life and universal life plans).

Accident, cancer/critical illness, and dental insurance also accounted for a significant percentage of sales (ranging between 14% and 18%). Long-term disability insurance sales ranked last.

Incidentally, the average number of product lines for those surveyed was five and the median was four. The most was 11 out of 12 tracked lines of business.

This year, the report also tracked sales by six distribution segments: career agents and five brokerage segments (as identified in Eastbridges 2000 Distributor Profiles study). The brokerage segments are: employee benefits brokers, classic worksite brokers, worksite specialists, occasional worksite producers, and producers in a worksite department of a large multi-line agency.

The analysis revealed that career agents (which does not include sales reps or brokerage reps) accounted for just less than one-quarter of all worksite sales. Within the brokerage market, which accounts for the remaining 75% of worksite sales, employee benefits brokers and classic worksite brokers each accounted for nearly 40% and 25%, respectively.

In-force worksite premiums for our 2000 participants were estimated at $4.4 billion, which reflects between 50% and 60% of total in-force premiums. Based on this estimate, 2000 in-force premium for the worksite industry as a whole is between $7.3 billion and $8.8 billion, which is a 9% to 10% increase over 1999.

(Note: Determining in-force premium continues to be difficult since many carriers cannot report this information.)

Almost one-third of the carriers surveyed reported some premium from joint ventures. For most, the percentage of premium was less than 10% of worksite sales. Six companies reported that over 10% of their worksite sales came from joint ventures.

The results from this years U.S. Worksite Sales Tracking Report are encouraging. But for those carriers trying to capture a larger piece of the worksite pie, more emphasis will have to be placed on finding ways to take advantage of the markets opportunities and seize employer and employee attention.

The Eastbridge study surveys were sent to all carriers known to sell worksite products. Eastbridge received replies from 33 of the companies and added estimates from an additional 23 companies using secondary sources such as annual reports, SEC filings, websites, and other intelligence gathering. The study was conducted May through July of this year.

heads the worksite practice area of Eastbridge Consulting Group Inc., Avon, Conn. She can be reached via e-mail at [email protected]

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 17, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Copyright 2001 by The National Underwriter Company. All rights reserved. Contact Webmaster