To craft the right strategy, life carriers need first to understand the nuances of what has become quite a complex marketplace.
Perhaps the key fact to note about the voluntary benefits market is that group voluntary products seem set to become the biggest sector. They accounted for 58 percent of the market ($6.03 billion in 2012), and are growing much faster than the sale of individual products.
Large companies, which are most likely to be promoting or offering group voluntary benefits packages, prefer to use benefit brokers. The latter accounted for 56 percent of sales in 2012, and counting. Agents remain most active in the small-employer marketplace.
A number of factors influence the propensity of employees to participate in voluntary benefits. Some of these include:
- Employer commitment to the success of the offerings.
- Employees’ affinity to their employer.
- Demographics of the group.
- Communication and enrollment strategy and campaigns.
- Geographic dispersion of the employer.
- Communication and enrollment frequency—the most significant influencer of employee participation.
Face-to-face enrollment in a group setting (with the availability of subsequent one-on-one consultation) appears to promote the highest levels of participation. This is particularly true for small and medium-sized companies, where a teaching approach works well: in larger employers with multiple locations, considerations of practicality make online communication and support via a call center the strategy of choice.
An important consideration for life carriers to understand is large employers’ growing sensitivity to “hard” selling and sophisticated direct marketing by voluntary-benefits vendors. Increasing concerns about employee privacy are part of the equation. As a result, voluntary benefits are typically offered when employees enroll annually for their core benefits or when new employees join. Participation seldom achieves double digits, in comparison to smaller companies, where 30 to 40 percent is not unusual.
Next time, I’ll conclude by suggesting five key actions that could help life carriers achieve success.
For more on this topic, download Voluntary benefits: A strategy for capturing the underserved middle market.