Brokers best positioned tocapitalize on opportunities understand the segment size nuances andtailor their product and strategies accordingly. (Photo:Shutterstock)

Employers of all sizes offer brokers the potential for growth. Brokers focusing on thesmall-case market look to expand up-market, andlarge national brokerage/consulting houses are looking atopportunities down-market. The voluntary penetration chart showsthe percentage of employers offering voluntary products andemployees who own them.

Small market (fewer than 100 lives)

Bonnie Brazzell and NickRockwell,
Eastbridge Consulting Group, Inc.

The small-market segment is underpenetrated and has the lowestemployee ownership. These case sizes represent around 90 percent ofall U.S. employers (when under 10 employee businesses are included)and a third of all employees.

Related: Disrupting the voluntary benefitsmarket

The largest obstacles in serving this market are findingcost-effective methods to reach the masses and being able to writea large enough volume of cases. The upside is that the market isless competitive. A broker can use just one carrier and offer paperenrollment, as most employers don't have a preferred enrollment method.

Small-market employers struggle the most to provide fullbenefits packages and often can't afford to contribute as much (ifat all) and to as many products. Substantial opportunity exists forbrokers to add a variety of products to enhance employers' limitedofferings.

Middle market (100–999 lives)

Around 80 percent of U.S. employers in the middle-market segmentalready offer at least one voluntary benefit, and middle-marketemployers are fertile with opportunities to add other products.This segment makes up just 2 percent of all employers, yet 19percent of employees. Brokers must be able to sell at both theemployer and employee levels and offer electronic enrollment ontheir system of choice, often the employer's ben admin system. Theymust be able to offer a variety of methods to meet employerpreferences and facilitate delivery of personalized communications.Employees have high rates of ownership of four or more voluntaryproducts, so brokers must deliver in needs-based sellingstrategies.

Large market (1,000 lives and over)

The large-market segment has average penetration, with around 55percent of employees owning at least one voluntary product. Itrepresents less than 1 percent of all U.S. employers, yet accountsfor 47 percent of employees. With few employers but a highpercentage of employees, brokers can expect fierce competition.

In addition to selecting best-of-breed products from multiplecarriers, brokers must excel in seamless technology integration andbe able to facilitate electronic enrollment of all products on theemployer's administration system.

Finally, brokers must be able to perform detailed portfolioreviews, articulate the value of voluntary benefits and offercost-savings strategies. Employers in this segment are also morelikely to make changes to their existing benefits.

All segments present opportunity for growth. The small-marketopportunity is massive yet tempered by financial constraints, whilethe middle market requires a strong combination of employer- andemployee-level sales skills. In the large market, brokers bestpositioned to capitalize on opportunities understand the segmentsize nuances and tailor their product and strategiesaccordingly.

Read more:

• Small businesses can be bigbusiness
• The evolution of voluntary: Finding the bestfit
• 5 strategies to help clients understand the valueof voluntary offerings