Most in Industry Still Confident in Voluntary Market

The latest results of Eastbridge Consulting Group’s Voluntary Industry Confidence Index survey show that the majority of those in the industry continue to be positive about voluntary sales despite an overall decline in the Confidence Index.

Based on the survey results, the Index at year-end 2008 decreased to 88.8 from 96.2 at mid-year 2008. The index is calculated using three key expectation measures about the voluntary industry:

• Sales growth
• Profitability
• Employee enthusiasm about voluntary products

All three of these core questions were down, but the largest decrease was in response to sales growth for the industry.

“Despite the recession and financial turmoil,” say Bonnie Brazzell, vice president of Eastbridge, “many of those in the market are still optimistic—albeit cautiously so. Two-thirds of the respondents still believe that overall sales will increase, at some level, in 2009. Seventeen (17) percent expect sales to be level the next 12 months and 19 percent expect some decrease in sales.”

As for profitability, 35 percent expect industry profitability to improve, compared to 48% mid-year 2008. The largest percentage (40%) expects profitability to remain about the same.

Expectations for employee enthusiasm about voluntary benefits also decreased (but only slightly) in the most recent survey. However, the majority of respondents (60 percent) still believe that employee enthusiasm will continue to be high.

“So far, the impact on voluntary given our current economic condition has been minimal,” adds Gil Lowerre, president of Eastbridge. “But there is justification for some concern. Carriers need to be aware of the risks posed by reduced hiring and layoffs (i.e., fewer employees to buy). They also need to keep abreast of broker attitudes (i.e., becoming more conservative in terms of making changes to employer benefit packages).”

The Voluntary Industry Confidence Index study is conducted semi-annually and includes responses from individuals active in the market—carriers, brokers, and vendors. Like other confidence indices, the index is a single number that compares the current results to a baseline measure. The first Confidence Index survey was completed in December of 2005; the results from that survey serve as our “base” year (meaning the index was at 100 for that year).

The Voluntary Industry Confidence Index report is available only to Eastbridge Information Partner companies as well as to participants. The survey will be conducted again in July of 2008. For more information on becoming a participant, contact the company at www.eastbridge.com .