Near the end of each year, we’re invariably asked about the trends for the upcoming year. This article gives us an opportunity to address this question and share some data, as well as our views, on the voluntary market in 2009.
Foremost in everyone’s mind is how economic conditions will affect voluntary benefit sales. While we have been tracking sales and other indicators for decades, we have yet to find a clear correlation between sales and any economic factor. High market demand and sales growth momentum may have overwhelmed changes in the economy. But that may all change in 2009, given the present state of the financial system. We may finally find that correlation.
Late in the year, those in the voluntary market are optimistic about their 2008 results. Of the carriers, brokers and third-party administrators surveyed in Eastbridge’s Voluntary Industry Confidence Index report, 82% said they believe sales will increase over 2007 rates.
When asked how their sales this year compare to their expectations for 2008, 42% of respondents said their results are higher than expected, while 33% said their results are lower than they expected and 26% said sales are about as expected.
One factor that may be driving the positive outlook is that 8 in 10 carriers expect to introduce at least one new voluntary product over the next 12 months or so, as shown in chart 3. Another Eastbridge study, Product Trends, confirms that 2008 and 2009 are going to have significant product development activity. Specifically, 78% of the carriers in the survey expect to introduce a new product. Additionally, almost one-third of the companies will be introducing more new products over the next year than is typical for them. Only 22% do not expect to introduce any new products.
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