The Changing Landscape Of Voluntary Sales

In fact, total life sales for 2007 were down almost 6% over 2006. Disability sales were about even with 2006. Positive sales increases were also seen in the accident (personal injury accident plans, not accidental death and dismemberment), dental and vision lines. These product results seem to indicate a slow but deliberate change in product mix, mostly likely because more and more of the business written is in existing cases (employers that already have voluntary products). We anticipate that both life and disability sales will stabilize, and growth products will be in other lines.

As we have written in other articles, this doesn't mean that life or disability insurance is less important or less appealing. It just means that more and more employees already have these types of insurance and are spending their dollars on additional types of coverage. This is also evident in the fact that only about 17% of the new sales in 2007 were takeover sales (new sales derived from a carrier taking over or replacing the coverage sold by another carrier). Clearly, brokers are offering more varied types of products in their voluntary accounts, and employers are open to this.

The final change we see in the voluntary market is with distribution. Twenty years ago, the market was dominated by career agents of companies that specialized in voluntary products. For the past several years, however, we've seen the benefit broker segment (brokers who primarily sell medical insurance or employer-funded benefits) accounting for the largest percentage of voluntary sales of any single segment. In 2007, these producers accounted for 44% of all voluntary-worksite sales (about the same as in 2006).

Eastbridge has identified 5 distinct segments selling voluntary-worksite products–career agents plus 4 brokerage segments: benefit brokers, classic worksite brokers, worksite specialists and occasional worksite producers.

Chart 3 shows the overall results.

In addition to continued positive sales trends, we see penetration in the market deepening. Today, 54% of employers offer at least one voluntary product. If you look at employers with at least 100 employees, the percentage increases to over 70%. Additionally, 65% of all employed Americans say they own at least one voluntary product. And most of those own more than one. In fact, almost 30% own 4 or more voluntary products. We expect this trend to continue, since voluntary products are an increasingly important tool for helping both employers and employees deal with the costs of providing healthcare and financial security.

There's no doubt that voluntary sales will continue to grow at a faster rate than most insurance industry segments. And with the sheer volume of sales–most of which are new sales–it's a very appealing market. We forecast an average compound growth rate of 8% over the next 3 to 5 years, bringing the industry to over $6.3 billion in sales in 2010.