Summer 2006 / No. 68
2005 worksite sales results
For the past nine
years, Eastbridge Consulting Group has been tracking worksite
sales/inforce premium data with the goal of creating a comprehensive,
reliable, and current source of data regarding the industry.
This year’s study includes
data on 60 carriers (both group and individual), representing
more than 85 percent of the total worksite sales volume for
2005. [Note: As in most Eastbridge reports, worksite is defined
as employee-paid products, either individual or group.]
Sales results
The worksite market has shown steady growth over
the past several years, often at a double-digit rate. From 1997
(the first year our company has tracked this data) until 2002,
the growth rate has ranged from 10 percent to just over 19 percent.
Beyond that, sales have continued to increase but at a slightly
slower pace (1.8 percent in 2003 to 3.4 percent in 2005)
as seen in the following chart.
New
worksite sales for 2005 totaled an estimated $4.366 billion,
a 3.4 percent increase over 2004 sales. This was the third
year in a row that the industry did not realize double-digit
growth. However, 68 percent of the reporting companies experienced
sales increases in 2005. And of these, 70 percent achieved
double-digit sales growth (with an average of about 11 percent).
Only a handful of companies had decreases, and five companies
accounted for 78 percent of the decrease. Thus, the data reinforces
that there’s no real fundamental changes taking place
in the worksite market and that the future outlook for voluntary
sales is still positive.
Inforce
premium
Inforce premium increased by about seven percent
in 2005, which is in line with historical averages (but a decrease
over the last two years—11 percent in 2004 and 13 percent
in 2003). We estimate the total market of inforce premium is
between $13.4 billion and $17.7 billion.
Product
and platform results
Sales results by product platform
did not change much from 2004. In 2005, individual sales
slightly led group sales (57 percent compared to 43 percent)
although the growth rates were almost identical. In the past,
group sales have grown at a much faster pace than individual.
But this year, the growth rate of group products really leveled.
The following graph shows the mix by product platform for
the last four years.
When looking at sales
results by product line, life insurance (mostly term) again
accounted for the largest share with 24 percent. Disability
came in second at 20 percent, followed by hospital income and
accident. The following graph shows the mix of sales by product
line.
Voluntary disability
sales were again weighted towards short-term products in 2005,
with long-term disability actually showing a decrease in sales
(29 percent). Hospital indemnity and limited benefit medical
plans both grew at just over 15 percent. Cancer sales in 2005
were over double the critical illness sales, although critical
illness showed a more impressive growth rate (13 percent compared
to 4 percent). Dental sales were down again last year, but
less than the prior year, and long-term care sales were again
flat in terms of new sales. Voluntary vision sales, albeit
small, showed a solid increase in 2005 (46 percent).
Based on this year’s
survey results and previous studies/results, we continue to
believe that the voluntary market will grow, though at rates
lower than the double-digits of the past. Specifically, we
expect the industry to grow in the five to seven percent range
in the foreseeable future.
Parties interested
in participating in next year’s study are advised to
email Eastbridge at info@eastbridge.com.
All participants receive a free copy of the complete findings,
including company-specific results. |
