Print this issue

Also in this issue:

Strategic Advantage, Part I

A Rose by Any Other Name

Strategic Advantage, Part II

The Small Case Market

Are You Tweeting Yet?

Let’s Buy a Voluntary Insurance Company

Don’t Go Through 2010 Blind

Enrollment Practices

Is the Worksite Business “Recession Proof”?

A Moving Target

Winter 2010, No. 82

Is the Worksite Business “Recession Proof”?

For many years, those of us in the industry have seen the worksite/voluntary market weather economic downturns with little or no impact. Recently, however, some are beginning to wonder if the industry’s reputation as “recession proof” will hold up in the worst recession since the 1920s crash.

In 2008, sales increased at a rate of 3.7 percent over 2007. Experts now tell us that we were well into the current recession at that point. This sales increase was lower than what we saw in 2006 and 2007 but higher than 2003, 2004, and 2005.

We don’t have the results yet for 2009, but based on a survey we conducted going into the fourth quarter, we are not counting the industry out. Of the 14 companies responding (which represent 64 percent of 2008 sales):

• 6 companies have had sales increases over 2008, with an average increase of over 19 percent
• 2 companies have had flat sales as compared to 2008
• 6 companies have had decreases over 2008, with an average decrease of 16 percent (although this is heavily influenced by one company whose results are not related to any current economic downturn; without this company, the average decrease is 9 percent)

Using the data provided by these companies, Eastbridge estimates that the industry has realized (at this point) about a 2 percent decrease in sales compared to the 2008 levels. However, since a disproportionate amount of business is written in the fourth quarter, we believe that severe losses among most companies will be rare and that we will end 2009 flat or perhaps with a small increase.