Employers prefer to buy voluntary employee benefits from known carriers but also give great weight to the recommendations of financial advisors when deciding which products to offer in the workplace, research by LIMRA International, Windsor, Conn. finds.
LIMRA's study, Voluntary Benefits Selection: Examining Employer Practices and Preferences, looks at worksite benefits offered in 2006 by U.S. businesses with 10 or more employees.
It found that when choosing voluntary benefits, 65% of businesses prefer to deal with carriers that are providing at least some of their existing, employer-paid benefits, up from 55% in 2002. Only 15% chose voluntary benefit carriers they were not already dealing with for company-paid benefits, down from 24% in 2002. The remaining 20% said it did not matter whether or not they had dealt with the worksite carrier previously; about the same proportion that said so 4 years earlier.
When choosing voluntary benefit carriers, 61% of employers cited brand-name recognition as important, up from 55% in 2002, while 60% said producer recommendations were important, just above the 59% that said so 4 years earlier. Having a prior relationship with the insurance carrier was cited as important by 41%, compared to 38% in 2002. (Most cited more than one factor as important.)
Once they had decided to offer a voluntary benefit, significant numbers of employers turned to producers for expert advice on which insurer should provide the plan, LIMRA found.
"This is where professional agents and brokers add additional value to the worksite sales process," LIMRA's study report states. "Their experience, industry knowledge and carrier relationships are crucial in earning the client's trust."
LIMRA also found that a producer's previous relationship with a carrier was a significant consideration in an employer's decision to choose a carrier recommended by an agent or broker.
Whether voluntary or employer-paid, only 16% of companies said they used just one carrier for insurance products, 31% used 2 and 27% used 3. Most of the remainder used 4 or more carriers.
For retirement plans, 78% used only one carrier, 12% used 2, 3% used 3 and 5% used 4 or more carriers. (The remainder did not know or had no plan.)
As for advisors involved in their worksite benefit programs, 31% said they used only one, while 27% used 2, 22% used 3 and 17% used 4 or more.
