Among the five distribution channels through which voluntary benefits are sold, the employee benefit broker channel saw the largest market share gain in 2015.
InsuranceNewsNet recently reported that, last year, the channel accounted for 60 percent of all voluntary sales, an increase of three percentage points compared with 2014.
In the June article, Benefit Brokers See Share Gains In Voluntary Market Sales, InsuranceNewsNet Senior Writer Cyril Tuohy, who has covered the financial services industry for more than 15 years, reports sales of voluntary benefits rose 3.6 percent to $7.1 billion last year compared with 2014. In addition, sales through employee benefit brokers rose at more than twice that rate from 2014 to 2015. Tuohy referenced findings presented by research by Eastbridge Consulting Group's U.S. Voluntary/Worksite Sales Report. The report is compiled from data from more than 60 carriers in the group and individual voluntary benefits market.
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What did InsuranceNewsNet showcase as leading trends in voluntary benefits today?
- The employee benefits broker segment, whose primary business lines are employer-funded benefits with medical coverage high on the list, generated just under $4.3 billion in new voluntary sales in 2015, an increase of 7.8 percent compared to 2014.
- Brokers in the “classic” segment - brokers who focus on voluntary products as a primary line of business - saw their market share in 2015 rise less than 1 percent to make up 12 percent of voluntary benefit sales, the researchers reported.
- Voluntary benefits are paid for 100 percent by the employee through a payroll deduction. The benefits are offered in addition to shared benefits for which the employer and the employee contribute toward the premium.
- Employers, who make voluntary benefits available at their discretion, don’t contribute to premiums and simply elect to make voluntary benefits available to workers. Employees like the benefits as they allow workers to supplement coverage they already have, and are eligible to buy the coverage through group rates.
- Workers find these voluntary benefits valuable as insurance companies shift more of the cost of coverage onto employees.
- Term life sales, at more than $1.5 billion, rose 9 percent in 2015 compared with 2014. Universal life and whole life dropped by almost 10 percent last year compared with 2014, the Eastbridge report found.
- Critical illness insurance saw the highest year-over-year product line growth rate, with sales rising to $491 million in 2015, a 25 percent increase from 2014.
- Many industry analysts have attributed the year-over-year increase in sales of critical illness coverage to insurance companies narrowing primary health coverage and shifting the cost of primary medical onto employees.
- Disability insurance sales rose 3 percent to $1.4 billion in 2015 compared with 2014. Sales of short- and long-term disability insurance rose in 2015 by 2 and 3 percent respectively compared with 2014.
A great deal is happening in the voluntary benefits market, as more brokers and carriers enter the space, and employers realize supporting employees' overall physical, emotional and financial health, increases presenteeism and productivity.
Today's progressive enterprises are thinking more creatively and strategically about how to design benefit programs that are within cost constraints and attractive to employees. In this way, organizations are attracting and retaining top talent, thanks to engaging customer-centric initiatives.
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