November 3, 2020 | By Alan Goforth – BenefitsPro
Established providers with strong distribution networks, employee education programs and enrollment platforms will gain most from post-pandemic expansion.
The long-term future of voluntary benefits is bright despite the short-term effects of coronavirus-related unemployment, according to a new report from Moody’s Investors Service.
“Voluntary benefits are win-win products for both employers and employees, as well as for voluntary benefit providers,” according to the report. “For employers, voluntary benefits are inexpensive supplements to traditional health care and other employee benefits whose selection can be expanded with limited incremental cost. They also are an important recruitment and retention tool, particularly in tight labor markets such as the United States, pre-pandemic, in 2019.
“For employees, they are highly valued, customizable benefits that are typically less expensive and more readily available if purchased at the workplace than in the individual market. Finally, for insurers, voluntary benefits are products with little/less interest-rate risk and lower capital requirements than traditional life and annuity products. They can provide good revenue and earnings diversification from spread-based businesses in the current ultra-low interest rate environment.”
The report identified four current trends:
1. High voluntary benefit growth rates attract major players.
Voluntary benefit sales, at just under $9 billion in 2019, have expanded at a compound annual growth rate of 5% over the past 10 years as employer-paid benefits decline.