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September 14, 2003 at 08:00 PM
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The vast majority of employers represent businesses with fewer than 500 employees. These businesses employ more than half of all private sector employees and pay nearly half of the total private payroll. And when it comes to job creation, small businesses far outpace their larger, nationally known competitors.
For insurance carriers, the potential of the small business market is clear. Whats not always clear is how to meet this markets benefit needs.
The large number of small businesses and the employees working for them present a potentially lucrative market, but understanding the needs of small business owners and figuring out how to connect with them can be a challenge. How do the needs of small business owners differ from those of larger employers and from each other? What services and benefits are most important to them? Whats most significant to them when choosing an insurance carrier?
Small business owners arent a homogenous group, which means pre-assembled “canned” plans wont work for all. Instead, experience has revealed three factors critical in meeting the needs of the small business market:
- Competitive pricing.
- Ease of doing business.
- Flexibility in meeting a range of needs.
More than half of small businesses have no group life or disability package, but they could benefit from one. Benefit packages featuring group life and disability coverage can help small businesses compete with larger companies in the struggle for talent. While the bidding war for employees has subsided somewhat due to current economic conditions, benefit packages still provide an incentive for existing and prospective employees.
Unfortunately for small business owners, the sheer cost of such benefits can be an obstacle.
Whats the solution? Offer a range of competitively priced employer-paid coverage and voluntary employee-paid coverage. This approach enables business owners to customize a benefits package according to their unique financial needs. If their budget allows, employers can cover all or part of the cost of coverage. Or they can offer voluntary, employee-paid coverage only.
Voluntary plans provide a win-win solution for both small business owners and their employees. Employers can boost their benefit offering at no cost to them. And employees get the insurance coverage they need, convenient payroll deductions and economical group rates–generally without medical forms or exams.
While competitive pricing plays an important role in the selection of an insurance carrier, its imperative to remember that the lowest price isnt the only key to meeting small business benefit needs. In fact, recent studies have shown most small business owners wont choose a given company just to save money. Insurers must sell the whole customer experience, not just the lowest-priced product.
Small business owners often play multiple roles–CEO, sales representative, human resources manager, customer service contact, marketing associate and more. Their time is valuable, and they dont want to spend too much of it administering their group insurance plan. The bottom line: Less hassle equals more value.
Carriers can ease this burden by offering a choice of service paths (phone, Web, interactive voice response lines, paper forms, etc.) that let employers do business the way they want, when they want. Some examples are:
