Organizations with more than 2,500 employees accounted for the largest mix of voluntary sales by far last year, according to Eastbridge Consulting Group’s U.S. State ESI and EPI Data for 2011 report. Still, the jumbo employer market remains underpenetrated, the firm indicates.
Total voluntary sales last year were an estimated $5.478 billion, up 4.5% from 2010, Eastbridge states. Sales to employers with more than 2,500 employees were $1.752 billion, or almost one-third of all voluntary sales.
The second-most-active buyers were organizations with 100 to 499 employees, which spent an estimated $1.120 billion. Interestingly, sales to small employers with 26 to 99 employees, at $781 million, topped those to organizations with 1,000 to 2,500 employees, which took the fourth spot with $662 million in sales.
However, when it comes to segment penetration and potential, sales numbers alone can be deceiving, Eastbridge executives say.
“If you look at the ESI (sales divided by the employee population) for each employer size, it becomes clear that some segments are underpenetrated while others are more penetrated,” says Gil Lowerre, Eastbridge president. “Specifically, the very large market (2,500 and over) is underpenetrated even though it accounted for the largest portion of sales given that there was such a significant difference between the sales mix and actual mix of employees for that size.”
The most penetrated market segment for 2011 was the 500 to 999 segment. While sales were just $587 million, the segment had the highest ESI, Eastbridge indicated.
However, the percentage of sales coming from any particular segment tends to change a great deal from year to year,” says Bonnie Brazzell, vice president at Eastbridge. For example, in the 2010 report, sales from the under-100-lives segment exceeded the percentage of employees in that segment (41% compared to 36%), but the 2011 numbers show a sales mix of just 24% compared to 36% of the total employees.
“So the under-100 lives-segment went from contributing a proportionally higher-than- expected percent of sales to lower than expected,” notes Brazzell.
Sales opportunities remain in every employer size category; none is reaching the saturation point, she told EBA.
This is the second annual report from Eastbridge that includes state-by-state sales and inforce data and provides two measures that relate these data to the number of employed Americans in each state. The ESI (Eastbridge Sales Index) and EPI (Eastbridge Premium Index) provide these measures of real sales coverage (ESI) and penetration (EPI) on a state level. In addition, it provides information on sales by employer size and inforce premium by line of business.
“The ESI/EPI report is not designed for brokers,” says Brazzell. “It is for carriers that are doing manpower planning and looking at possible geographic expansions.”
The report is an adjunct to Eastbridge’s annual “U.S. Worksite Sales Report” and is free but available only to carriers that participate in the survey.
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