A key measure of consumer confidence in providers of voluntary worksite products edged up during the year past.
So reports Eastbridge Consulting Group in its Voluntary Industry Confidence Index, which increased in 2013 to 102.9 at year-end, from 102 at mid-year 2013 and 99.0 at year-end 2012. The index score is the highest recorded since the first survey was completed in December of 2005.
“Despite all the changes we’ve seen due to health care reform and the thrust into private exchanges, the majority of key players in the industry — carriers and brokers are still optimistic about the voluntary industry,” says Bonnie Brazzell, vice president of Eastbridge. “The industry appears to see the value in voluntary given the changes in the benefits environment, and the public is responding positively by purchasing voluntary products as indicated by the positive sales growth seen over the past six months.”
The index is calculated using three key expectation measures about the voluntary industry — sales growth, profitability and employee enthusiasm about voluntary products. For this survey, two of these key measures, sales growth and employee enthusiasm, showed significant increases while profitability remained relatively unchanged.
An overwhelming majority of respondents (94 percent) believe that sales of voluntary in the next 12 months will increase. This is an increase from 89 percent in the mid-year 2013 survey and from 90 percent in the year-end 2012 survey.
However, more respondents believe sales will “increase a little” (68 percent) than at mid-year 2013 (58 percent) compared to “increase a lot.” The percentage expecting sales to “increase a lot” went down slightly from 31 percent at the mid-year survey to 26 percent in the recent survey.
Just 3 percent expect sales to remain about the same and 2 percent expect sales to decrease. Interestingly, brokers are more optimistic than carriers with 29 percent expecting sales to “increase a lot” compared to only 21 percent of carriers.
As for profitability, 60 percent of the respondents said profitability will improve, a slight increase over the 58 percent in July. The percentage expecting profitability for the industry to decrease was just 7 percent.
Expectations regarding employee enthusiasm, another key measure of the index, were up with 82 percent expecting employees to be more enthusiastic towards voluntary over the next 12 months. This is an increase over mid-year 2013 and year-end 2012. Only 2 percent believe employees will be less enthusiastic.
The Voluntary Industry Confidence Index study is conducted semi-annually and includes responses from individuals active in the market — carriers, brokers, and vendors. Like other confidence indices, the index is a single number that compares the current results to a baseline measure. The first Confidence Index survey was completed in December of 2005; the results from that survey serve as the “base” year (meaning the Confidence Index was at 100 for that year).