Also in this issue:
Group Company Myopia
Employer Attitudes toward Voluntary during the Recession
Tough Economy? It’s Conservation Time
The Product that was Supposed to Have Died!
Are We in the Voluntary Business or the Benefits Business?
Economic Lessons
Managing the Budget in Uncertain Times
Who Will Serve the Micro Group Market?
Return of Premium Term – Implications of a New Actuarial Guideline
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Winter 2009/ No. 78
Who Will Serve the Micro Group Market?
We’ve seen increased interest over the past few months in the very small group market (under 25 employees). Voluntary/worksite carriers are interested in how they can tap into this vast market. Indeed the numbers are huge. According to the U.S. Census, over 78 percent of all businesses in the country have fewer than 10 employees. That’s 4.7 million businesses. There is another 700,000 or more in the 11-25 employee market.
The problem with going after this market, for most carriers, is that they do not have a way to reach these businesses. For the most part, worksite/voluntary producers have moved away from this market, preferring to deal with businesses with 25 or more employees (where there are fewer concerns over participation minimums and the profit potential for the producer is greater). Sure, there are still producers in this market but, over time, many who start in the micro market tend to move up-market as they gain experience. The market tends (for many) to be a training ground.
So, who can serve this very large market? Medical producers are certainly one option. There are medical brokers who regularly serve this market. Maybe individual producers? Will direct marketing (telephone, web) work? From a carrier standpoint, there are challenges in managing the risk but for the carrier that can figure out both the access and the risk management, this market appears to be untapped.
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