Banks Urged To Sell Bundled Employee Benefits
Businesses with fewer than 100 employees can generate millions of dollars in revenue for a bank willing to pursue the market for bundled employee benefits, says William J. Leary, senior vice president, American General Financial Group in Houston.
Speaking at the recent Financial Institutions Insurance Association’s fall conference here, Leary noted LIMRA research showing that group medical plans among small employers rose from 52% to 71% between 1994 and 2000.
A good deal of the growth was spurred by the debate over a national health care plan early in the Clinton administration, he maintained.
“It awakened the need for health care coverage among small employers,” Leary said.
An advantage to banks in selling group benefits is that it strengthens their ties to small businesses. This can enhance revenue for a variety of other insurance lines offered by the bank, said Leary.
Again citing LIMRA data, he noted that group disability sales increased 8% from the first quarter of 2000 to the same period in 2001, while group life during that time grew even more impressively, about 42% for both term and permanent life.
Small businesses, needing a way to recruit and retain employees, want to offer benefits, even though many can afford to offer only employee-paid or voluntary benefits, Leary said.
American General has 34,000 small business employers for various group plans, mostly life and long- and short-term disability, he added. Of these, 31,000 have fewer than 50 workers. It sells the plans through a variety of channels, including banks.
With American General’s recent acquisition by AIG, the combined company is now number 12 in the employee benefits marketplace, he said.