One-third of all employees and nearly half of millennials said their insurance benefits are more valuable to them since the beginning of the COVID-19 pandemic. (Photo: Shutterstock)
In the post-pandemic world, the demand for expanded benefits will not be a short-lived trend, a new report suggests. The new study by LIMRA and EY finds that non-medical workplace benefits will grow by 20% over the next five years, and said that hybrid work arrangements, growing diversity, and innovations in technology will all contribute to an increasing demand for benefits options.
"Our study finds three-quarters of employers (76%) believe their employees will expect a wider variety of benefit options in the future," said Patrick Leary, corporate vice president and head of LIMRA Workplace Benefits Research. "Employers see benefits as a necessary tool to be able to compete in the war for talent. Despite 54% of employers reporting a decrease in revenue in the last year, the vast majority are not planning to cut back on benefits and almost half are considering offering a customized menu of benefits to help attract and retain talent."
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"Employee benefits" transforming into "workforce benefits"
The report says a transformation is taking place in the benefits world: with the disruption caused by factors such as the pandemic and demands for more equity and inclusion, companies are seeing significant growth in demand for benefits beyond the traditional forms such as health insurance.
"'Employee benefits' no longer accurately describes the breadth or complexity of the market, given that nonemployees comprise a substantial and growing part of the workplace," the report said. "'Workforce benefits' is a more appropriate name… Shifting demographics, a diversifying workforce, and new employee needs are expanding the benefits marketplace."
The demand is driven in part by an increased perceived value of benefits by employees. The new study found a growing appreciation for benefits—one-third of all employees and nearly half of Millennials said their insurance benefits are more valuable to them since the beginning of the COVID-19 pandemic.
Paid medical leave tops the list of employee priorities
The pandemic seems to be driving a new appreciation for paid medical leave, as well. That category of benefits topped the list when employees were asked what benefits they were most interested in (49% chose paid family or medical leave.)
Other areas of growth included career development support; identity theft protection; and financial, mental, and physical wellness programs.
The study found some misalignment in what employers thought their workers wanted and what they actually wanted—and concluded that patient education and engagement platforms will become increasingly important.
"Employees are looking for clearer information and recommendations about the benefits best suited to them," the study said. "Our results show that employers' current education approaches fall short—71% of employee respondents rely on them only somewhat or not at all. Respondents cited multiple challenges to understanding, from lack of time and overall benefit complexity to insufficient or poorly communicated information."
The role of brokers is evolving
The report describes a changing role for brokers. Employers still say that are very or extremely satisfied with the services provided by brokers (64%-75%, depending on the size of the company) but also expressed high appreciation for brokers that take on an additional role of advising clients. "Employers that receive support and advice from their brokers tend to be much more satisfied with the relationship," the report said. "Given these trends, it's not surprising that 46% of all employers and 67% of those that have more than 100 employees expect to rely on their brokers more in five years than they do today."
One area of concern for brokers: the trend to digital solutions and direct distribution of benefits. The report found that nearly half of small firms (45%) said they were likely to purchase benefits without the help of a broker in the future. The findings suggest that the value of brokers as advisors and educators will continue to play an important role when businesses make decisions on finding benefits solutions.
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