Fall 2008 / No. 77
Associations—A Good or Bad Market for Voluntary?
Earlier in 2008, Eastbridge conducted a Frontline Report survey on alternative markets for voluntary products. Associations of employers were the most commonly pursued alternative market with almost six in ten companies saying they market voluntary through employer-based associations. In addition, among those surveyed, 67 percent said the employer-based association market was “attractive” for voluntary sales.
Based on these results it was very surprising to us when, after we decided to pursue an in-depth study on the employer-based association market, we found that the market was really not as it seemed! Rather, many carriers have a love-hate relationship with employer-based associations. Our study found:
- Most companies surveyed do not see the market as a major factor in their voluntary sales.
- Voluntary departments often said they are only incidentally involved in association business.
- Many said they are in the market primarily because one or more of their key brokers are in the market.
- Even some companies that said the market was important to them also said that it wasn’t really a “worksite” market.
- Most of those we spoke with do not expect the importance of the market to increase in the future.
Indeed, the market seems to “fall between the cracks” for most companies. Neither the “association” nor the “voluntary” divisions of companies claim responsibility for the employer-based associations. In addition, many companies feel that the market is just not as profitable as other voluntary markets. Companies site higher expenses and lower results as reasons.
Despite the “bad” news, we suspect that we will continue to write business in this market. Carriers just need to understand the realities. Many brokers/producers have unrealistic expectations for employer-based association business. When approached, carriers need to insert reality into the conversations and move cautiously. Many aspects of the case and the marketing approach must be considered carefully. A strong, multi-faceted communications campaign and an effective enrollment methodology are critical to gaining any measure of success.
For more information on the dealing with employer-based associations, give us a call.
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