Offering a health plan is no longer enough. Today’s employers are adding dental, life, long-term disability and other innovative ancillary benefits in order to attract and retain the best talent in the tightest labor market in years. This means brokers and carriers need to follow suit for immediate and longer-term revenue opportunities. Here are three reasons why:
1) Ancillary benefits are essential to maintaining momentum in the health-products space.
Benchmarks across numerous carriers found that in small and mid-size markets, retention of employer accounts can increase by 10 to 15 percentage points if health is bundled with at least two supplemental products.1 So although ancillary benefits may seem like a very small incremental opportunity for carriers, it’s an important area to drive persistence. The more products offered, the more likely carriers are to retain that relationship and the harder it will be for employers to switch. Like Amazon offering a single source to purchase almost any consumer product, carriers have an opportunity to be a primary source of ancillary benefits insurance, offering core health insurance plus some.
2) Well-rounded (and expanded) benefits are the new standard for employees looking for work. Employers are following suit to attract and retain the best.
New workplace expectations have employers expanding their offerings to attract and retain talent. Employee well-being is increasingly being defined as not just health but financial wellness, mental health, diet, stress and more with the notion that everything is connected.
Employers are taking note of the job market’s demands and are offering a wider selection of ancillary benefit offerings (including student loan repayment benefits if you read our recent report) in efforts to boost employee productivity and happiness. In fact, employers believe so much of expanding their benefits that more than two-thirds of employers (69 percent) believe voluntary benefits will be a very or more-important component of their total rewards strategy in three to five years.2
Employees still want to maintain choice on how those dollars are spent and employers are working hard to provide them with an integrated approach to benefit management as employees are growing more frustrated with the segmentation of health/vision/dental insurance and simply want a singular offering that covers everything.
3) Brokers and non-traditional competitors are gaining strength.
Brokers continue to lead the voluntary sales market; in 2017 brokers accounted for 59 percent of all voluntary sales.3 Brokerage and employee benefit consulting firms are playing an increasingly important role in helping direct employers and employees in the decision-making process.
For those who cover small market employers, ancillary benefits allow them to offer a broader range of products and appeal more to employers. Carriers offering more of these benefits and enabling their brokers with integrated healthcare solutions will reap rewards as brokers choose their primary partners. Almost 40% of brokers have switched carriers in the last one to three years as these brokers look for the best partners in a rapidly changing market.4
With clear growth opportunity in the ancillary benefits market, our analysts sifted through 1,000s of digital conversations from across the web to compile real-time intelligence on a few top carriers, brokers and disruptors to get an idea of what is happening in the marketplace. Grab the Q1 report where we share a few major market opportunities for carriers and highlight how integrated healthcare is an ever-growing demand from consumers.
Get our report for critical Q1 insights needed to carve your nice and combat competition in an increasingly complex ancillary insurance market.
1 Opportunities in Voluntary Benefits. Oliver Wyman Health, 2017.
2 Willis Towers Watson’s 2018 Emerging Trends: Voluntary Benefits and Services Survey 2018
3 Insurance Brokers & Agencies in the US Number of Businesses 2003–2024. IBIS World, 2014.
4 More positive signs for voluntary. Benefitspro, 2018.