Employees are willing to pay for extra insurance, two recent studies conclude.
The studies-from Metropolitan Life Insurance Co. of New York and Conning & Co. of Hartford, Conn.-found that both employers and employees are enthusiastic about these so-called voluntary benefits.
The MetLife study, conducted by Roper Starch Worldwide, centered on voluntary benefits. The Conning one looked at opportunities for affinity marketing of property and casualty products.
MetLife surveyed 1,160 workers with household incomes of at least $35,000 and found that 66% were bullish on purchasing extra insurance.
"Employees really like this stuff and they think it's a good idea," said Robert E. Sollmann Jr., a senior vice president for MetLife's institutional business organization.
Fifty-five percent of respondents in the MetLife survey said they have bought dental insurance, 36% disability, and 35% vision care. Many said they're interested in other voluntary benefits like mutual funds, wills, financial plans, and auto and homeowners insurance.
When asked informally, MetLife's corporate clients said they are keen to offer new voluntary benefits including long-term care, vision, auto and homeowners insurance, and prepaid legal plans.
Employers like to offer the additional benefits because "it's voluntary and it costs them nothing," said Nancy Carini, a vice president who wrote Conning's study.
Employers are also using voluntary benefits to attract and keep valued employees at a time when the labor market is tight, Ms. Carini said. She said the same forces are driving the blurring of roles in financial services.
For example, State Farm is getting into banking to try to leverage more from their customer relationships, Ms. Carini said.
"If their customers are attached to them with more threads, it's more likely they won't move away from them." Ms. Carini said.
"My sense is it's the same with employers" offering voluntary benefits.
And as the cost of corporate-sponsored benefits rises, adding some voluntary products to the mix can help meet employee needs.
The voluntary benefit field is wide open to new players, according to Conning's 103-page study, "Affinity Marketing: Old Formula ... New Solutions." Conning estimates that less than a third of all property and casualty insurers are marketing their products through affinity groups such as employers and associations.
Insurers are planning to increase overall affinity sales, which Conning defines as sales through employers, associations, retailers, and banks, she said.
Agents told Conning that just 9% of their personal property and casualty sales are written through affinity groups. But they said they expect that number to rise to 21% by 2003.
The biggest growth potential for voluntary benefits is in the middle and small-business market, Ms. Carini said.
"Insurers have stayed away from the middle-sized and small-sized market thinking if you only have 20 or 100 employees it might not be cost- effective" to market there, she said.
And as technology makes benefits administration easier, new opportunities emerge.
But Mr. Sollmann said it's still an economic challenge and "you have to be really smart about how you do it."
He predicts that benefits brokers and agencies - the traditional marketers of these products - will increase these sales in the near term faster than banks will.
Banks are not heavily involved in these sales now, he added.
However, Ms. Carini said banks may be able to successfully harness the available technology to successfully sell through smaller employers.
Her report notes that Hartford Financial Services, which proved the potential of affinity marketing with its long relationship with the American Association of Retired People, reported a 100% increase in its affinity marketing business through banks in last year's third quarter.