It may not quite be a case of the tail wagging the dog, but large employers have an outsized impact on the voluntary/worksite benefits market based on the number of firms in this category. The U.S. Census Bureau reports businesses with 1,000 or more employees represent less than 1% of U.S. employers, but they employ more than half of all workers — almost 63 million people.
Large employers offer a wide variety of benefits to their employees, almost always more frequently than other employer size groups. Voluntary benefits are no exception: A strong majority offer at least one voluntary product to their employees, and a significant number are considering adding more voluntary coverages. Add that up and despite their small numbers, large employers carry more than their weight in the voluntary market, accounting for 48% and $4.592 billion of sales last year.
That paints an attractive picture of market potential for benefits advisors, brokers and the voluntary carriers they partner with, but working with large employers can also involve greater complexity and additional challenges. Carriers surveyed for Eastbridge’s most recent “Voluntary and the Large Case Market” Spotlight™ Report often mention increased competition as a significant challenge in this market, along with price competition, keeping up with technology, and technology funding requests.
The large case market can create a lucrative revenue stream, but advisors who want to succeed in this market need to understand its nuances. Here are seven facts to keep in mind about the needs and expectations of large employers:
Large employers expect voluntary benefits to help drive increased employee participation in their overall benefits program.
Improved employee wellbeing and productivity is the most important outcome of offering voluntary benefits for employers of all sizes. But increased participation in the benefits program is by far the second-most important outcome for employers at the lower end of the large case spectrum with 1,000–2,499 employees, and ranks a close third for firms with 2,500–9,999 employees. In contrast, this outcome is much less important for smaller employers.
Large employers value price/value, a robust carrier website, and enrollment support.
Employers consider a long list of criteria when choosing a voluntary carrier, and say most of them are very or extremely important. Enrollment support is one of the most important criteria for large companies with 1,000–2,499 employees, while price/value ranks first or second for the other two large employer segments. A carrier website with access to claims forms, status and coverage information is the top criteria for employers with 10,000 or more employees.
Large employers are likely to be looking for discounted product bundles.
Most voluntary carriers sell multiple products — often in bundles with discounts for multiple product sales — to their larger customers. In fact, a majority (59%) say the practice has become table stakes, and most agree it’ll continue to increase in the future. Carriers usually offer products as a marketing bundle where employees can choose which products they purchase, rather than a true bundle where employees must purchase all products. Supplemental health bundles and bundles that include life and disability are most common. In addition, almost all carriers surveyed say they consider offering discounts for multiple product sales in the large case market, although not usually a formal program with a specified percentage but rather determined individually by each case.
Large employers often require special services.
Most carriers offer special services, such as a dedicated service team and support resources, to these large accounts. Carriers also tend to have more liberal underwriting guidelines for large cases, with higher guaranteed issue amounts, higher benefit limits, and lower or no participation minimums.
Online benefit administration is extremely important to large employers.
In fact, only a small percentage of employers surveyed say online services aren’t important to them, while a significant percentage say they won’t select a carrier that doesn’t offer these capabilities. Essential services include the ability for employees to file claims and check the status of their claim, employers to view and/or change employee coverages, and employers to view the company’s bill.
API/data integration is very or extremely important when working in the large case market.
Nearly all carriers serving the large case market say this capability is important. Only a handful say it’s not very important, and none say it’s not important at all. Claims integration also is more important to larger employers than to smaller ones.
Large employers show strong interest in nontraditional voluntary benefits.
Large employers offer nontraditional voluntary products such as legal plans and identity theft protection more often than smaller employers. They’re also more likely than smaller employers to offer other, often newer, nontraditional benefits such as mental health programs and financial wellness tools. And the list is growing, with large employers citing student loan repayment/refinancing as the nontraditional benefit they’re most likely to offer in the future.
The large case market can be an attractive and productive market for benefits advisors, brokers and carriers with expertise in voluntary/worksite benefits — especially for those who take the time to learn about this market’s unique needs and how best to position their products and services to meet those needs.
Eastbridge has produced a “Voluntary and the Large 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 large employer market, defined as businesses with 1,000 or more employees. Find information about how to obtain a copy of this report on Eastbridge’s website or email info@eastbridge.com to learn more.
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