Two new reports add to growing evidence that voluntary benefits products are going to be hot commodities in coming years. According to a study from MetLife and an industry survey from Eastbridge Consulting Group, producers offering voluntary benefits packages will see profits soar as health reform causes commercial clients to rethink their approach to insurance.
Nearly 90% of survey respondents told Eastbridge they expect sales of voluntary benefit plans to increase in the next 12 months. Producers were especially confident, with almost half of participating agents and brokers saying they expect sales to “increase a lot.”
A full 70% say their expectations have been shaped by the Affordable Care Act. Not only do producers and other industry officials believe voluntary benefits are an affordable option for small businesses, they say voluntary sales will help make up for lost commissions due to the ACA.
Fortunately for producers, employers feel the same way. According to MetLife’s 2013 Study of Employee Benefits Trends, 58% of responding employers aid providing voluntary benefits is a “significant benefits strategy.” That’s up from 32% who felt the same way in 2010.
Furthermore, 51% of employees said they would be willing to bear more of their benefits costs in order to have a wide array of choices that meet individual needs. Nearly half of employers said they plan to meet employee needs in this way by increasing the number of voluntary producers they will offer in the next two years.
“It adds value for the employee as well as the employer,” said Ty Elliot, vice president of core broker sales for Aflac. “There will be an explosion in our market in the next few years.”
So which products are set to take off?
Elliot said gap products like critical illness and accident plans are already rising in popularity, in addition to common plans like dental and vision. These gap products will likely be a common employer choice due to increasing employee obesity and other chronic illnesses, he said.
“There is a much bigger picture on what’s going to come up,” Elliot said. “[Dental and vision] have a place and are in demand—there’s a lot of sales in this category. Cancer plans and accident plans have been thought of as secondary, but that’s not the case anymore.”
Elliot recommended keeping that in mind “as you’re approaching the client.”
The Towers Watson 2013 Voluntary
Benefits and Services Survey concurs. According to the report, the importance of voluntary
products in a company’s rewards strategy will grow 27% in that timeframe, while nearly 90% of producers surveyed by Eastbridge Consulting Group said they expect sales of voluntary
benefit plans to increase.
While the most common voluntary
products like vision, dental and disability will continue to see stable sales, however, Towers Watson said critical illness, financial planning and identity theft protection will see the biggest growth in employee and individual adoption as the ACA's effects continue to be felt.
You may also enjoy: "Top 3 voluntary products poised for takeoff in 2014"
"These voluntary benefits decrease workers' comp costs"
"Millennials ripe for disability insurance sales"