Coming up roses: sales of voluntary insurance products at the work site continue to grow.A large number of employees are still looking to boost their insurance coverage by buying policies at work, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a study conducted by Eastbridge Eastbridge is a village in Suffolk, England. It is located approximately five miles east northeast of Saxmundham. The village is two miles from the North Sea. Located in Eastbridge is the Eels Foot Inn, an ale-house dating as far back as 1533. Consulting Group, which has tracked work-site results for carriers for the past five years. In 2003, work-site sales jumped 7% over 2002. Although that's less than the double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. percentage increases of recent years, it shows there's still a healthy appetite ap·pe·tite n. An instinctive physical desire, as for food or sex. Appetite The natural instinctive desire for food. for these products. "Work-site sales" as defined in the study include 100% employee-paid life, health, and disability products sold on either a group or individual basis, at the work site, with premium paid through payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. . In particular, Eastbridge examined the carriers' overall work-site sales volume, sales by platform and product line and trends in work-site distribution. This year's U.S. Worksite Study tracked work-site marketing carriers (both group and individual), which accounted for more than 90% of the total work-site sales for life and health products in 2003. Some highlights of the study are as follows: * Work-site sales for 2003 were slightly more than $4.3 billion. * The top 15 companies, in terms of work-site sales, accounted for 75% of the market. * Life sales outpaced disability sales, reversing the trend in 2002. * Supplemental medical and hospital indemnity plans indemnity plan, n 1. a plan that provides payment to the insured for the cost of dental care but makes no arrangement for providing care itself. 2. realized the highest rate of growth (greater than 50%). * The employee-benefits broker segment accounted for the largest percentage of sales of any single distribution segment. New Sales New work-site sales in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. for 2003 totaled an estimated $4.321 billion. Sales since 1997 (the first year tracked) have increased from $2 billion, almost a 120% increase over the six-year period. Just 15 companies accounted for more than 75% of total work-site sales for 2003, up from 72% in 2002 and 63% in 2001, and the top two carriers had almost 35% of the market. Three of the top 10 companies had slower growth in 2003, as compared with prior years, and in each case, some unusual event or situation accounted for the decrease, although each still had positive growth. But given the size of these three carriers, 2003 is the first year since 1997 that the industry did not realize double-digit growth. "Year-Over-Year Increase in Work-Site Sales" (page 89) shows the strong growth since 1997. On the other hand, several companies did have extraordinary growth in 2003. One company in the top 15 experienced a nearly 200% increase over 2002 results, and three others in this top group had growth of more than 20%. Sales by Product Platform Group products again saw higher growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. than did individual products. The rate of growth slowed for both, however. Group product sales grew 17% in 2003, while individual grew about 6%. In 2002, group product sales grew 36%, while individual grew just 5%. The mix of group and individual premium for 2003 continued the trend of the past few years. In 2003, group products accounted for slightly more than 44% of new work-site sales premium; individual products accounted for less than 56%. Group products continue to play a big role in work-site marketing. The increase in the number of group brokers selling voluntary products and the increased emphasis on voluntary by group carriers are largely responsible for the increase in group voluntary sales. Another factor driving this move is the belief that companies can get to market faster with group products because they are simpler and take less time to file. In today's work-site environment, the distinction between group and individual is diminishing di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. dramatically. Instead of focusing on platform, most carriers are listening to the needs of employers and employees who want voluntary products that are portable and offer guaranteed issue options. Today, some carriers offer products filed on a group platform that have individual-like commissions and full portability. Many companies offer a portfolio of both group and individual products, and some offer producers an option of heaped or level commissions on the same product. Sales by Product Line On a product basis, voluntary life sales outpaced disability sales in 2003, reversing the result seen in 2002. Disability insurance sales had been growing at a faster pace than life sales for the past few years and, in 2002, took the top share of the total work-site sales. But this year, life sales narrowly edged past disability sales. In 2003, disability accounted for 23% of new work-site sales while life accounted for 25%. Voluntary term life sales slightly outpaced universal life sales in 2003 (54% term life vs. 46% universal/whole life). This year, the highest growth rate (higher than 50%) was seen in hospital indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. and supplemental medical plans, followed by long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. disability and universal/whole life. Life and disability sales, however, increased at rates more comparable to the market overall and cancer/critical illness and dental dental /den·tal/ (den´t'l) pertaining to a tooth or teeth. den·tal adj. 1. Of, relating to, or for the teeth. 2. Of, relating to, or intended for dentistry. actually showed slight decreases over 2002 figures. This trend is again consistent with Eastbridge's consumer research, which shows that today's employers and employees are more interested in products that help cover deductibles and out-of-pocket expenses out-of-pocket expenses n. moneys paid directly for necessary items by a contractor, trustee, executor, administrator or any person responsible to cover expenses not detailed by agreement. than they were in the past. As evidence of this, more carriers than ever are offering hospital/medical supplement products. Sales by Distribution Segment The study also tracked voluntary distribution and found that employee benefits brokers claimed the largest percentage of work-site sales in 2003 of any single producer segment. That segment increased from a 29% share of voluntary sales in 2000 (the last year tracked) to slightly more than 34% in 2003. The work-site specialist and occasional broker shares were down somewhat from 2000, as seen in "Sales by Distributor Segment" (page 89). Eastbridge estimates that the employee-benefits broker segment accounts for 45% of all broker-sold voluntary business today (which equates to 34% of total market sales). It's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have not too difficult to imagine that, in the next five years, they will control 55% or 60% of brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. sales. Eastbridge continues to be very positive about work-site marketing and its potential for growth. Employers, employees, and brokers continue to find voluntary products a viable alternative to today's benefits needs. Agents Who Sell Work-Site Products Career Agents--These producers work primarily for a single company and sell primarily work-site products. Employee Benefits Brokers--These producers typically focus on employee benefits--traditional group and non-work-site individual. Work-site products are generally offered as an additional line. Classic Work-Site Brokers--These producers focus on work-site sales. Their operations may be small or medium sized, and they offer at least one support service (administration, billing, etc.) to their clients. Work-Site Specialists--This segment consists of large marketing organizations whose primary focus is work-site sales. In addition to having a large number of agents on staff, they work with many sub-brokers. The organization also offers a wide variety of support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services (administration, billing, customer service and claims payment). This segment controls significant blocks of business. Occasional Work-Site Producers--These producers are insurance generalists. They have a small agency that sells insurance products other than work-site-group, individual or property/casualty. Work-site products are a small part of their operation. Multi-Line Agency--The producers in this segment work in a work-site department of a large agency. The agency does not focus on work-site marketing. At a Glance: Work-Site Marketing Year-Over-Year Increase In Work-Site Sales Three of the top 10 insurers had slower growth in work-site sales in 2003 as compared with prior years, which kept overall industry growth in single digits. [GRAPHIC OMITTED] Mix of Sales By Product Line Voluntary life sales outpaced disability sales in 2003, reversing the result seen in 2002. Life 25% Disability 23% Accident 16% Cancer/Critical Illness 13% Dental 11% Hospital Indemnity and Supplemental Medical Plans 7% Other 3% Long-Term Care 2% Note: Table made from pie chart. Group and Individual Work-Site Sales While individual products account for more new work-site sales, group product sales are steadily increasing.
2001 2002 2003
Individual 64.7% 58.5% 55.7%
Group 35.3% 41.5% 44.3%
Note: Table made from bar graph.
Sales by Distributor Segment In the next five years, employee benefits brokers could control 55% or 60% of brokerage sales. [GRAPHIC OMITTED] Annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. New Business Premiums for Work-Site Sales Sales have increased almost 120% since 1997. [GRAPHIC OMITTED] Key Points * Work-site sales of voluntary insurance products in 2003 increased 7% over 2002. * Group products again saw higher growth rates than did individual products. * The highest growth rate (higher than 50%) was seen in hospital indemnity and supplemental medical plans. * The employee-benefits broker segment accounts for 45% of all broker-sold voluntary business today. Gil Lowerre is president of East-bridge Consulting Group Inc. |
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