Double-Digit Sales Increases Seen For Voluntary Products

By

Amelia Island, Fla.

Sales of voluntary benefits products increased 12% in 2001 and double-digit growth in this market is expected to continue in the future, said Bonnie Brazzell, a vice president with Eastbridge Consulting Group, which is headquartered in Avon, Conn.

Speaking at the JHA Dynamics of Disability Seminar here earlier this month, Brazzell said that based on research Eastbridge had done, new business sales premium in this market amounted to $3.5 billion in 2001, up from $2 billion in 1997.

This new sales growth has also translated into growth of in-force premium, which came to an estimated $9.4 billion in 2001, she said, up from $5.7 billion in 1997.

In 2001, Brazzell said, new life sales, with 21% of new premium, slightly outpaced new disability sales, which had 20% of new premium.

Group product sales increased at four times the rate of individual product sales in 2001, according to Brazzell, and group product new premium amounted to 39% of the total.

Noting a developing trend, Brazzell said, “More products have both group and individual features.”

The fastest growing products in the voluntary market in 2001 in terms of percentage increases were long term care, cancer/critical illness, accident, disability and dental. “But some of these like long term care are off a small [premium] base,” she noted.

Carriers expect these to be the “growth products” for the next few years, she added.

In terms of distribution, career agents account for 25% of sales, Brazzell said, while brokers specializing in the worksite account for another 36%, making the market share of these two channels about 60%. “Ten years ago,” she said, “this figure would have been close to 100%.”

The remaining 40% of sales come from nonspecialists in the worksite and employee benefits brokers, said Brazzell, with the last group appearing to be the fastest growing sales channel.

About 70% of employee benefits brokers now sell worksite business, she said, with 42% selling voluntary products occasionally, while 29% “actively” sell them.

Brazzell said that 64% of employers offer at least one voluntary product. “And if they offer one they usually offer more,” she said, adding that the likelihood of offering voluntary products varied with the size of the employer. “The smallest employers are the least likely” to offer them, she said.

Turning to employees, Brazzell said 35% of all workers own at least one voluntary product, and here too, ownership varies by employer size.

Among products owned, life insurance accounted for 19%; disability, 13%; drug/vision/dental, 13%; and long term care, 2%.

As for products workers are interested in buying, 34% said dental; 32% vision; 28% drug; 25% LTC; 24% long term disability. “This shows that life insurance is not top of mind” with employees, Brazzell noted.


Reproduced from National Underwriter Edition, March 24, 2003. Copyright 2003 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.