Spring 2007 / No. 71
Worksite executives speak out on
their
top concerns and the future of the market
by Bonnie Brazzell
In our most recent survey of top worksite executives, Worksite
Marketing: An Executive Perspective 2007, top executives
in companies active in the worksite/voluntary market are concerned
about their company's ability to attract quality brokers. Seventy-one
(71) percent of those surveyed said this is one of their top
three most formidable obstacles. The full “top three”
list included (in order):
- Attracting quality brokers
- Product competition
- Writing profitable business (tied for third place)
- Enrollment (tied for third place)
In our last survey (2004/2005), writing profitable business
was the number one obstacle cited, followed by administration
and billing (which fell out of the top three this year). In that
study, attracting quality brokers was number three.
Attracting brokers has been a long-standing issue for many companies.
The pool of experienced voluntary/worksite-focused producers
is not growing. And many carriers are trying to attract the same
group of producers. The benefits brokers are the fastest growing
segment of voluntary producers, but fully engaging these brokers
is a slow process and the competition here is growing rapidly.
The majority (81 percent) of respondents to the survey expects
their company will see some sort of change in distribution over
the next five years. Most believe the changes will be “minor,” usually
expanding distribution to a wider range of producer types.
In addition to being the number one issue today, many executives
believe that service to the broker will be the key competitive
advantage in the future. Most believe that the blending of the
right combination of products, services, and tools that match
the needs of the company’s targeted distribution and markets
will make a difference between the winners and
“also rans.”
With product competition being another key concern, it’s
probably no surprise that most of our respondents also say they
expect to see product and product mix changes over the next five
years. About 30 percent describe the changes as “major,” while
70 percent describe these as “minor.”
Interestingly, the types of changes expected were fairly similar
regardless of whether the change was described as minor or major.
Most respondents expect to add products to their portfolio. The
entire spectrum of products was mentioned; however, many expect
more development and/or focus on health-based products than in
the past. Carriers are also expecting changes in product platform
(see separate article on “Groupification”).
In addition to product type and platform changes, some respondents
foresee more fundamental changes occurring within products over
the next few years—changes focused on both the new realities
of the market itself and lifestyle/demographic changes occurring
among customers. Some expressed the belief that carriers will
need to provide a customizable slate of products and services
that will enable the employer to develop a benefits strategy
and to feel they can 'call it done' rather than subject themselves
to an unending stream of solicitations about the latest worksite
product. Others said that products will need to be altered to
accommodate the underwriting, rate, and commission realties of
employee self-election.
Despite obstacles, worksite executives are positive about the
growth of the market. The respondents expect sales to grow at
an average of 10 percent per year for the industry. (The actual
answers ranged from a low of three percent to a high of 25 percent.)
But our executives were even more positive about their own companies.
The average annual expected growth for the respondents’ own
company was 17 percent. Here the range was from a low of two
to three percent to a high of 50 percent. In general, executives
of medium-sized companies (new business annualized premium of
$10- $49) expect the highest growth rates for their company,
an average of 19 percent. Small companies aren’t far behind
at 16 percent. The lowest estimates for growth of both the industry
and their company came from large companies. They expect an eight-percent
growth for the industry and 13 percent for their company.
These findings and more are in the 2007 bi-annual study, Worksite
Marketing: An Executive Perspective 2007. Twenty-eight companies
participated in the study. The report was provided free of charge
to Information Partners, Insight Customers, and participants.
To learn how to become an Insight or Information Partner Company,
call us. |
