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April 09, 2006 at 04:00 PM
Insurance carriers and brokers continue to be enthusiastic about the future for voluntary worksite benefit sales. While it will be a few more weeks before we have the final results for 2005, many in the market already are looking ahead to positive results in 2006.
In a recent survey conducted by our company, 95% of respondents say they expect voluntary product sales to increase over the next 12 months. Thirty-seven percent believe sales will “increase a lot.” The Voluntary Sales Growth graph shows the specific results.
Companies on both group and individual platforms are upbeat about 2006, as are brokers. There were only minor variations between the different types of respondents (that is, some were more or less positive, but all were positive).
Insurance carriers and brokers also expect to see growth in the number of new groups they acquire in 2006 as compared to 2005. An overwhelming 91% expect the number to increase in 2006, with 43% saying the number will “increase a lot.”
One reason for this optimism is carriers believe employees will be more favorable toward voluntary benefits. In fact, 68% of respondents believe employees will be more enthusiastic about voluntary benefits 12 months from now.
Another reason for the cheerful outlook (especially for carriers) is the increasing number of brokers selling voluntary benefits. Studies by our company show almost all benefits brokers now offer voluntary products–at least some of the time. In fact, the fastest-growing segment of producers selling voluntary is the employee benefits broker, and most voluntary sales now are made by those who do not specialize in voluntary, a big change from 10 years ago.
While important, sales aren’t everything. For our industry to succeed, we must have profitable sales. The carriers in our study do believe the profitability of industry lines as a whole will improve. Forty-five percent expect the voluntary line to be “a little more profitable.” Another 5% expect the industry to be “much more profitable,” while 40% expect profitability to stay the same.
The percentages significantly increase, however, when commenting on their own company’s profitability. Seventy-seven percent of those in our survey expect their company’s voluntary line to be “much more” or “a little more” profitable. This is 27% higher than their outlook for the industry as a whole. Clearly, carriers feel better about their own prospects than those of others in the industry. Our study did show, however, smaller carriers (those with less than $10 million in annualized sales) are less likely to believe their own companies would be more profitable in the next 12 months.
