Workplace Benefits Carriers Identify Growth Opportunities

MarketFacts Home

Authors

Ron Neyer, M.B.A., AIRC, CLU, ChFC
Associate Research Director, Workplace Benefits Research
LIMRA and LOMA

Mary Trecek, Ed.D.
Associate Research Director, Workplace Benefits
LIMRA and LOMA

February 2025

As the workplace benefits ecosystem evolves, LIMRA embarked on a multifaceted research initiative exploring the impact of these changes on industry distribution efforts. We surveyed 28 carriers and 500 employers to obtain their perspectives and supplemented those learnings with interviews of 13 forward-thinking employee benefits brokers.

The Road Ahead

In many areas, carriers do not expect significant changes to current distribution models in the foreseeable future (i.e., five years). They project that their 2029 distribution channels, benefit funding arrangements, revenue and expense splits, and value-chain investments will all closely align with 2024 levels. Given this anticipated stability, it is not surprising that most will stay within their current lanes over the next five years. More than half feel that focusing on existing product types within existing market segments offers the greatest growth potential for their organizations (Table 1) but are also eyeing other opportunities for growth. Carriers most often view market expansion (i.e., introducing new products within established segments) as the second most lucrative strategy. Several are showing interest in adjusting their product mix over the next five years, while few are likely to tweak both their products and markets.

Table 1. Opportunities for Profitable Growth Over the Next 5 Years

Number of Companies Ranking Opportunity
	First	Second	Third	Fourth
Offering existing benefit types to current market segments	15	6	3	4
Offering new benefit types to current market segments	9	7	11	1
Offering existing benefit types to new market segments	3	13	10	2
Offering new benefit types to new market segments	1	4	3	20

While at a macro level most carriers will likely embrace a business-as-usual model in the near-term, their specific approaches are shaped by both familiar and emerging trends. Many see potential for their companies to better harness data and analytics over the next five years (Table 2). On a 7-point scale, 6 of 28 carriers rated this item a top score of 7, and all but one rated it 5 or higher.

Table 2. Company Growth Strategies Next 5 Years

*Average Company Rating Based on a 7-point scale*
	All Carriers	Those Eyeing New Opportunities*	Those Focused on the Status Quo**
Use of data and analytics to inform strategy, enhance the employee experience and make data-driven decisions	5.7	5.6	5.9
Expanding voluntary benefits and offerings	5.5	5.2	5.9
Bundling multiple benefits products¹	5.4	5.2	5.5
Claims integration/positioning the "claims process" as a "product offering"	5.1	5.8	4.3
Expanding into new market segments	4.9	4.4	5.5
Offering wellness (financial, mental, physical) solutions	4.2	4.3	4.1
Partnership opportunities with noninsurance service providers	3.9	4.2	3.5
Offering ancillary services in combination with a given product²	3.8	3.5	4.1
New strategies to expand the reach of workplace benefits³	3.6	3.3	3.9
Bundling coverage types into one product⁴	3.5	2.9	4.2
Integration of insurance, health, retirement/wealth offerings	3.4	3.4	3.3
Direct-to-employer distribution	2.3	2.3	2.3
The 15 carriers ranking “offering existing benefit types to current market segments” as their greatest opportunity. *The 13 carriers not ranking “offering existing benefit types to current market segments” as their greatest opportunity. ¹Two distinct products/services offered together by one carrier ²For example, beneficiary services with life insurance ³For example, marketing to gig/freelance workers, professional employer organizations (PEOs), and/or associations ⁴One product addressing multiple needs, such as critical illness and accident coverage

Harnessing Data Analytics

Other LIMRA research confirms the growing use of data analytics to improve the employee experience and the ongoing carriers’ efforts to develop additional uses. Employers and brokers also sense opportunities for further integrating data analytics into the workplace benefits experience.

When considering how various items impact their practice, the brokers we interviewed ranked the availability of data and analytics to identify opportunities, make data-driven decisions and enhance the employee experience ahead of all the other items discussed, except for the regulatory landscape. In a similar vein, nearly 3 in 4 employers feel that using their company’s and employees’ data to inform strategy, enhance the employee experience, and make data-driven benefits decisions has had considerable influence on their employee benefits strategy.

A Bright Future for Voluntary Benefits

Expanding voluntary benefits and offerings is another significant growth opportunity for carriers. This is by no means a new development. New sales of employee-funded insurance benefits have increased in all but two years since 2000. Combine that with the greatly expanded number of potential workplace benefits options during this time and the compounding higher cost of major medical insurance, the future appears bright for voluntary benefits solutions. In fact, 43 percent of employers think that their company's employees will be paying a greater share of the premium costs for insurance benefits in five years, versus only 7 percent predicting a smaller share.¹

Voluntary benefits options clearly remain an attractive way for employers to diversify benefit packages without incurring additional direct expenses. The carriers potentially eyeing new benefit types and/or market segments are even more bullish on voluntary benefits than those focused on the status quo.

Other Lucrative Opportunities

Carriers also sense high growth potential stemming from bundling their products/services. Other parties in the distribution chain concur. Over half of employers feel that using the same carrier for multiple offerings would have a significant impact on the success of their company’s benefits program, whereas both employers and brokers recognize numerous advantages of bundling coverages.

Claims integration and market expansion round out the top five near-term growth opportunities for carriers. Those planning to focus on existing products and client types express higher levels of interest in enhancing the claims process, likely looking for ways to differentiate themselves from competitors in their current market segments. About half of carriers already connect medical claims with their supplemental benefits in some capacity, most often to proactively notify a member of potential benefits that they have with the supplemental benefit coverage.

Conclusion

Implementing an effective growth strategy is a complex task in today’s rapidly changing landscape. Workplace benefits carriers must balance both long-standing and emerging trends in their approaches, while remaining flexible to quickly adapt to new market developments. Carriers that can expand their distribution footprint while increasing operational efficiency will be best positioned for success over the next few years.