And the study shows an even more promising market opportunity in the future. More than a third of small employers surveyed indicate they’re likely to add a new voluntary benefit in the next year or so, while a significant number plan to move a benefit from employer-funded to a voluntary basis.

Small market employees show strong interest in voluntary benefits

The voluntary benefits small employers are most likely to offer vary, but dental coverage is in the top three for employers in both the 10–49 and 50–99 segments. In addition to dental, the smaller group most commonly offers universal or whole life and vision insurance, while employers in the 50–99 category are most likely to offer accidental death and dismemberment and personal injury accident insurance.

Not surprisingly, dental insurance is also the voluntary product that small market employees are most likely to own. Vision ranks second for employees in the 10–49 category and prescription drug coverage is second for the 50–99 group. But look beyond the basics and you’ll see other strong potential sales opportunities. For example, fewer than 10% of small market employees own critical illness or hospital indemnity insurance, but both products rank in the top six types of coverage these employees are most interested in buying on a voluntary basis. They also show strong interest in cancer, long-term care, disability and even nontraditional products such as identity theft protection.

Small employers value high quality, competitive prices and easy administration.

Small employers look for many of the same capabilities in a voluntary carrier as their larger counterparts do, but it’s important to understand the nuances of this market to match potential clients with the best carriers to meet their needs. Price/value, ease of administration, reputation for quality products and service, and carrier support for claims integration across all products are among the top factors small employers consider. Ease of administration is more important to employers in the 10–49 category and claims integration is more important to employers with 50–99 employees.

Small employers also have big expectations for online capabilities. Benefits enrollment at small companies continues to evolve from paper to electronic methods, and self-enrollment on a website or mobile device is now small employers’ most preferred enrollment method. Meanwhile, self-enrollment on paper continues to drop in both use and preference for small employers.

And the demand for online service goes far beyond enrollment. One-third or more of small employers say they won’t select a carrier that doesn’t offer online administration, and roughly another third say the availability of online services impacts their choice of carrier. Critical online services for small employers include services and tools that help them and their employees, especially the ability for employees to file claims online.

Claims and product set-up cause small employers the most administrative pain.

Getting voluntary products set up on their enrollment or benefits administration system is a source of administrative pain for a significant number of small employers, cited by a third of those with 10–49 employees and a quarter of those with 50–99 employees. However, claims-filing problems lead the list of administrative concerns for the larger segment, with 41% citing this issue, compared to only 20% of the smallest group. Billing issues have become less of a major issue for the smallest employers, according to the study, but they’re still a concern for more than a third of employers in 50–99 category. In the better news category, only a small percentage of small employers say other technology problems cause administration issues.

Small-case brokers see a bright future for voluntary benefits

Ongoing uncertainty about inflation and its impact on employee wallet share casts a shadow on the sunny outlook for the voluntary industry. Small-case brokers surveyed for Eastbridge’s 2024 “Rising Tide for Brokers in Voluntary Business” Spotlight™ Report mention inflation almost twice as often as any other issue. But despite their concerns about inflation, most of these brokers say employees and employers will continue to be enthusiastic about voluntary benefits in the future.

Employee buying behavior appears to justify this confident outlook. The majority of employees in small businesses say they haven’t made any changes to their voluntary coverage in the last 12 months due to inflation, especially those in the smallest firms, where 69% report they kept their voluntary coverage intact. And another 12% of both small-case segments actually increased their coverage in the past year. Small market employees appear to be a little less optimistic about the impact of inflation on their voluntary purchases going forward, but still express strong interest in this important protection: More than half of those surveyed say they’re likely to keep their coverage the same or buy additional coverage in the future.
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Eastbridge has produced a “Voluntary and the Small Case Market” Spotlight™ Report for more than a decade. The report compiles research from multiple surveys to analyze the results and opportunities for selling voluntary benefits in the small employer market, defined as businesses with 10–99 employees. Find information about how to obtain a copy of this report on Eastbridge’s website or email [email protected] to learn more.