The economy still may be stuck in neutral, but industry brokers, carriers and vendors are bullish about the future of voluntary benefits, which enable employers to offer a robust product suite at a minimal administrative cost associated with payroll deduction. One such barometer is Eastbridge Consulting Group’s latest Voluntary Industry Confidence Index, a semi-annual survey that gauges attitudes among market leaders.
The findings indicate that not only was confidence in this product line rising at the end of last year compared with the same time in 2009, but expectations for acquiring new business in 2011 also were higher. Another noteworthy result was that for the first time since the survey’s inception in December 2005, respondents who expected a positive impact on sales this year surpassed those who gave a negative forecast (47% versus 33%). The percentage of optimism had been about 30% since December 2008, representing a significant jump.
Index calculations are based on three key measures that include sales growth, industry profitability and employee enthusiasm about voluntary products. Two of those metrics were up from the mid-year survey, while the third declined slightly, reports Eastbridge VP Bonnie Brazzell, adding that there was a 38% spike in the number of respondents expecting a huge increase in sales and profitability, the highest level since December 2006.
“The index increased to its highest level since December of 2006,” according to Eastbridge President Gil Lowerre, who says the overall Confidence Index edged up to 102.1 at the end of last year from 99.9 in mid-year survey and sees a turning point in the economy’s impact. “We are pleased to see that those in the voluntary industry believe the economy is moving back to normal and opportunities for voluntary will be increased.”
The findings also showed that 88% of those responding to the year-end 2010 Voluntary Industry Confidence Index survey predicted new business growth, compared with about 83% in the previous year-end survey. In the 2010 mid-year survey, carriers were more optimistic about such growth than brokers (90% versus 79%).
The confidence index represents a single number that pegs current results to a baseline measure. Eastbridge points out that the inaugural survey in 2005 serves as the “base” year, which means the index was at 100 for that year. The next survey will be conducted in July 2011.
In related news, Eastbridge recently published “2020: Half Way There,” a new report that examines key trends during the past seven years and predicts how the employee benefits industry and voluntary products will take shape in the coming decade. The consulting firm notes that many of the predictions made in a 2003 report have come true, particularly in the area of distribution.
The report seeks “to stimulate thinking around key issues and trends that may impact our business,” according to Lowerre. “It’s not important whether you agree with us, but instead to create a vision of the future based on the ‘big picture’ trends in the industry as opposed to just extrapolating from one year to the next.”
— Bruce Shutan is a freelance writer based in Los Angeles.
