While the voluntary worksite benefits market is improvingoverall, there's better growth opportunity with mid-size employers(100-999 employees), experts at LIMRA say.

A study from the research and consulting firm found nearly 80percent of employers say they are interested in using voluntary worksite benefits because these plans carry no directcosts to the business.

“Compared with 2002, nearly all products are more readilyavailable today at mid-sized firms,” said Ron Neyer, assistantresearch director, LIMRA product research. “Marketing to largerfirms is challenging due to saturation and small firms often areless focused on benefits and offer a smaller pool of warmprospects. In contrast, mid-size firms, looking to be morecompetitive, are interested in finding ways to expand their benefitpackage without adding cost to their business.”

The study also found employers are not only motivated to offervoluntary benefits because of the cost advantage, but because it'smore affordable for their employees than if they purchased thecoverage on their own, and to provide them with a wider array ofbenefits.

According to LIMRA, employers may be underestimatingyounger employees' value of insurance coverage. Two in threeemployers believe a major medical plan is less important toemployees under age 40 and less than a quarter believes that lifeinsurance is truly valuable to their younger workers.

But research has found younger workers are more engaged inlearning about various benefits than in the past and most employees— both young and old — value benefits like medical insurance anddental insurance. LIMRA says this disconnect will likelychallenge worksite marketers to get plan sponsors with a youngerwork force to expand their benefit offerings.

LIMRA also found expansion of voluntary benefits offeringsgeographically. Traditionally, voluntary benefits were more likelyto be offered in the South, with Northeast employers considered tobe the toughest sells. But differences between regions havediminished compared with previous studies. Greater employerawareness of voluntary worksite programs and strong marketingefforts played important roles in building employerparticipation in the previously less-welcomingareas.

LIMRA found some signs suggesting that the short-term outlookfor voluntary benefits has dampened slightly during the recession.But there are also reasons to be optimistic:

• Participation rates of voluntary products have held relativelysteady over the past four years.
• More than 4 in 10 businesses are considering adding a newvoluntary benefit within the next two years.
• Employers who currently sponsor voluntary benefits are verysatisfied with their programs.
• Half of employers not offering (but aware of) voluntarybenefits are receptive to purchasing voluntary products.

“A great opportunity has emerged with employers who don’tcurrently offer voluntary benefits. They now display greaterawareness of the benefits and more likelihood of purchasing aworksite product than in the past,” noted Neyer. “Unfortunately, our research shows that the industry is targetingthese employers less frequently. Companies should consideradjustments to their strategies, product features, producerincentives, etc. to better reach and educate these employers, andcapitalize on this warming market.”