Despite Tough Times, Insurance Industry Employee Benefits Secure

Independent insurance agencies and carriers face a hefty list of concerns for 2010 — profit margins, cash flow, sales volume and marketing, the down economy and the possibility that it might falter again. Yet that doesn’t mean companies are cutting employee benefits to build up reserves. Instead, insurance industry businesses are using more social marketing to develop business, a recent survey reveals.

From 2009 to 2010, the majority of companies (68.4 percent) that responded to San Diego Insurance Staffing’s “Competitor Survey” said they had not discontinued any employee benefits , such as 401(k) matching, medical and vacation pay, in 2009. And most (55.9 percent) had no plans to eliminate benefits in 2010 that they used to offer either.

Additionally, nearly 75 percent of respondents said they were not implementing hiring freezes in 2010, and if they did have to reduce benefits, they would only do so with sick pay and flexible schedules.

Independent agencies likewise said they did not plan on decreasing or reducing employee benefits, but if forced to do so, they would only cut costs with the 401(k) matching program or paid employee vacation time.

In fact, to keep staff motivated during tough economic times, many companies (58.1 percent) said they were providing incentives for a staff bonus, and 51.6 percent said they were providing staff party/lunches.

“Nationwide a lot of people were laid off in the past two years, and we were surprised that insurance companies were not changing or discontinuing benefits to save money. We figured they’d be doing something,” said Julie Brown, SDIS president. Many companies (46 percent) even said they were continuing to give cost of living pay increases to their staff as well.

While benefits may be secure, however, many companies are expecting employees to take on additional responsibilities. Nearly 73 percent said they were relying on their existing employees and cross-training them to take on additional roles.

To keep small commercial line accounts profitable, the majority of survey respondents said they service these clients in-house. The profit margin for these accounts with less than $5,000 in revenue, is in the 3 percent to 5 percent range, most respondents said.

By and large, companies said referrals from current clients were the most frequently used method of developing business. But independent agencies in particular said they were using a lot more social marketing in business development than in other classifications.

For more information on SDIS’ Competitor Survey, visit