AVON, CONNECTICUT, USA (June 21, 2005)-Voluntary products are becoming an increasingly important part of employee benefit packages offered in the workplace, with 94 percent of leading commercial insurance brokers offering those products, nearly double the number engaged in voluntary sales just five years ago.
A new survey of member firms of The Council of Insurance Agents & Brokers by Eastbridge Consulting Group, Inc. showed that the sale of voluntary benefits is growing rapidly. Only about 50 percent of the employee benefits brokers were selling voluntary benefits five years ago, said Gil Lowerre, president of Eastbridge Consulting.
In addition, 95 percent of the firms responding to the survey said they expect their voluntary lines business to increase in the future, and one-third of the respondents said the increase would be “significant.”
Short-term disability and term life insurance were offered for sale in the workplace by the highest percentage of brokers the survey showed, followed closely by critical illness coverage, dental and long-term disability insurance. In terms of frequency, dental insurance, term life insurance and short-term disability were ranked as the top three voluntary products sold by the respondents.
The popularity of disability and life products was not particularly surprising since they also are strong traditional employee benefit offerings, Eastbridge researchers said. But the increasing popularity of critical illness coverage was a significant difference from previous broker surveys on voluntary benefits.
Cancer insurance is offered by about 55 percent of the brokers, and long-term care insurance by just under half of the respondents, but these products were not among the most frequently sold products, the survey showed. Cancer and long-term care insurance were chosen as one of the most frequently sold products by only 17 percent and 14 percent of the respondents, respectively, compared with 45 percent for dental and term life insurance, 33 percent for short-term disability, 30 percent for long-term disability, and 24 percent for critical illness.
The products sold least frequently in the workplace were auto, legal and homeowners or renters insurance.
The Council represents the nation’s leading commercial insurance brokers who annually write more than 80 percent of the commercial property/casualty premiums and administer billions of dollars in employee benefit accounts. The survey findings include responses from 115 Council member firms that either have separate benefits sales operations or handle employee benefits products exclusively.
For the comparisons of the voluntary benefits experience of Council member firms and that of other employee benefits brokers, Eastbridge used the findings of a previous survey of traditional employee benefits brokers conducted in 2004.
The researchers said in The Council survey, all but two of the respondents said they sell worksite voluntary benefits, with 43 percent of the firms writing more than $500,000 in annualized premiums for voluntary in 2004. That is higher than traditional employee benefits brokers. The number of new accounts written every year is also larger than traditional benefits brokers, the researchers said.
The survey also offered some insight into why brokerages and agencies are not selling more voluntary products. One-fourth of the respondents (25 percent) said they don’t have enough time, and 22 percent said they did not think their customers were interested in the products. Eighteen percent said they were not in the habit of offering voluntary benefits as part of their workplace product package, and 15 percent said they thought selling voluntary benefits required too much work.
Those responses are typical of previous benefit broker surveys, Eastbridge said.
Asked what is needed to be successful with voluntary products, the three most frequently listed recommendations were:
More assurances from carriers regarding administrative and bill capabilities (49 percent)
More enrollment capacity (35 percent)
More expertise in cross-selling (34 percent)
The Council of Insurance Agents & Brokers is the voice of the market leaders and the premier association for commercial insurance and employee benefits intermediaries in the United States and abroad. From its headquarters in Washington, DC — with programs conducted throughout the nation and world — The Council represents leading commercial insurance agencies and brokerage firms. Only the top one percent of all agents and brokers meet membership qualifications. The Council’s members, in more than 3,000 locations, place 80 percent — well over $90 billion — of all U.S. insurance products and services protecting business, industry, government and the public at-large, and they administer billions of dollars in employee benefits. Since 1913, The Council of Insurance Agents & Brokers has worked in the best interests of its members, securing innovative solutions and creating new market opportunities at home and abroad. Web site: www.ciab.com
Eastbridge Consulting Group, Inc., is a marketing advisory firm serving insurance and financial services organizations in the United States and Canada.