While studies have shown that many companies are making a number of different benefit options available to their employees, this may not be particularly true of small businesses. Consequently, this might present insurance companies with considerable opportunities for growing their business.
While 98 percent of all employers in the U.S. have fewer than 100 employees and are therefore designated as small, the number that actually offer benefits to their workers is relatively low, according to new data from the Life Insurance and Market Research Association (LIMRA). Because these companies employ some 40 million people nationwide, accounting for about 35 percent of the U.S. workforce, insurance companies might be in a good position to take advantage of this coverage gap. However, they will have to be mindful of the reasons why these companies have not yet gotten involved in offering their workers comprehensive benefits.
For instance, 65 percent of small business owners polled about why they haven't offered these benefit options to workers note they simply cannot afford it, the report said. Many independent companies operate on extremely narrow margins, and with any offering of this type, the additional expense would make it very difficult for these companies to operate at a profit. This is where voluntary options might be beneficial for many small businesses - as well as insurers - because they can be extended with nearly no cost to the companies, and instead borne entirely by the workers who want them.
Interestingly, about two out of every three small business owners who do not offer their employees benefits say that they have not been approached by an insurance company within the last 12 months, even though 40 percent say they've at least considered extending such plans to workers, the report said. In addition, when approached, about half decided to meet with the insurer. About 60 percent of small business owners also said they were unfamiliar with the benefits of voluntary plans, meaning that a small effort by the insurance company to educate the small business owners could go a long way.
A project to tailor low- or no-cost voluntary coverage packages specifically to companies that believe they cannot afford to offer them might realize high dividends for many insurance companies going forward. Executives may want to start thinking about establishing and employing such a strategy as soon as possible.