Although growth in the voluntary benefits market has slowed in the past few years, there are still large opportunities, concludes Ron Neyer, a senior analyst at LIMRA International and author of its new report, “Analyzing the Size and Potential of Voluntary Worksite Benefits.”
As many as 363,000 U.S. businesses with 10 or more employees are thinking about offering a new voluntary benefit within the next 2 years, according to the report by LIMRA, Windsor, Conn.
That could translate into up to 45 million employees gaining access to new voluntary benefits in that 2-year time frame.
LIMRA’s study includes both existing voluntary benefit customers and employers that did not yet sponsor voluntary plans for their workforce.
The research suggests that many workers who do not yet have voluntary benefits might soon gain access to them, says Neyer. “In addition, employers that currently sponsor voluntary plans appear willing to add additional product lines,” he says.
About half of all large employers (1,000 or more employees) are considering expanding their voluntary benefit offerings, despite the fact that most already make at least one benefit available, LIMRA found.
The greatest opportunities for worksite marketers are among employers in service industries nationwide. Service firms now represent nearly half of all employers with at least 10 employees, Neyer points out.
LIMRA asked employers to express their interest in buying specific voluntary benefits within 2 years on a 5-point scale, with 1 being not at all interested and 5 being very interested.
Employers were most interested in adding dental, vision and supplemental medical products, LIMRA found. They also showed considerable interest in medical, disability (short- and long-term), life and cancer insurance.
Among employers with at least one voluntary product in their benefits plan, the strongest interest was in vision, STD and life insurance. Those with no voluntary products currently showed significant interest in dental, medical, LTD and cancer insurance.
Looking at specific industries, LIMRA found that service firms not only displayed greater interest in offering new voluntary benefits but also showed stronger market growth in such benefits over the past 4 years than any other industry.
Examining the market geographically, LIMRA found the hottest prospects in the Northeast. Among Mid-Atlantic states, 44% of employers registered some interest in acquiring a new voluntary line within 2 years, and 20% said they were highly likely to do so.
In New England, 42% showed some interest, while 7% showed strong interest.
“Since many New England employers are clearly uncertain of their future intentions, marketing voluntary benefits in this region could prove to be either very rewarding or extremely challenging,” the report states.
Employers in the South generally showed the least interest, although in the South Atlantic states, 30% showed some interest and 13% high interest.
Only 8% of employers in the West South Central region–comprising Arkansas, Louisiana, Oklahoma and Texas–showed high interest in voluntary benefits, according to the report.
Although small firms generally showed lower interest than larger ones, the sheer number of firms with less than 100 employees points to a large number of prospects for voluntary marketers, LIMRA suggests.
“Reaching even a fraction of these businesses would yield more than 100,000 new cases for the worksite industry,” the report estimates.
But carriers and producers may need to move quickly, LIMRA says.
“It may be only a matter of time before some of these firms decide that their benefit plans are inundated with voluntary choices,” the report states.