Although sales growth for voluntary employee benefits has slowed in the past two years, a number of worksite product manufacturers still report double-digit growth.
Data from Eastbridge Consultants show voluntary sales grew to about $4.4 billion in 2005, the latest year for which industry-wide figures are available. That’s a growth of only around 3.4% over 2004′s $4.2 billion.
Growth for the industry as a whole has slowed for the past 3 years, primarily because a few key players experienced sales declines, reports Eastbridge, which did not identify those companies.
By the same token, a number of carriers tell National Underwriter they exceeded the industry growth averages substantially in 2006 for a number of voluntary benefits.
For instance, Colonial Supplemental Insurance reports sales growth of 12.7% for the first 9 months of 2006, with third quarter sales growth of 17.8% over a year earlier.
“Sales are great,” says Tom Gilligan, senior vice president of marketing & branding for Colonial Supplemental, a marketing brand of Colonial Life and Accident Insurance Company, Columbia, S.C. “We were in the single digits last year but hope to maintain double digits right through the next. I think we’ve got good momentum. Our sales organization is doing a good job, and our products are doing well, particularly short term disability and group life insurance.”
The key for Colonial has been more about strengthened distribution rather than new products, Gilligan says. He explains his company has boosted recruitment of sales managers, agents and new brokers.
UnumProvident Corp., Chattanooga, Tenn., has seen steady worksite growth in the past year ranging between the mid-teens and 20%, reports Mike Simonds, vice president, market development.
“The most significant growth has been in the small employer and mid-market–under 2,000 employees,” he says. “But we’ve seen sales growth across all market segments. It has been strongest in our supplemental health products like critical illness, accident and supplemental hospital indemnity.”
One trend that he believes has spurred this year’s growth: Employers increasingly see voluntary benefits less as an add-on to their plans and more as a mainstream product. Simonds expects that development to continue next year:
Randy Stram, vice president, institutional business, Metropolitan Life Insurance Company, New York, also expects significant growth in the voluntary market segment next year. “It has been one of fastest-growing lines in our institutional unit,” Stram says. “It has been growing in the neighborhood of 5% to 10%.”
Voluntary dental and critical illness have been among the hottest products for MetLife, along with group auto and homeowner policies and prepaid legal services, he says.