LIMRA recently reported findings from a study of insurance benefits offered by small businesses (“Small World: Trends in the U.S. Small Business Market”).
LIMRA’s study found that 47 percent of small businesses (two to 99 employees) in the United States offer benefits to their employees—the lowest level in two decades of the organization’s research. U.S. Census Bureau statistics show that 98 percent of businesses in the United States have fewer than 100 employees, accounting for approximately 35 percent of the U.S. work force.
According to Kim Landry, product research analyst for LIMRA, “The recession has had an impact on smaller employers’ ability to offer benefits, particularly those with fewer than ten employees. The weak economy caused a lot of small firms to close, while the new firms cropping up to replace them are less likely to offer benefits. Many small businesses are also hesitant to add new benefits until the economy improves.”
LIMRA’s study found that 78 percent of small businesses in the United States are family-owned, and 40 percent of these businesses offered insurance benefits in 2012 (compared to 47 percent in 2005).
Among small businesses that do offer insurance benefits to employees, medical and prescription drug plans are by far the most popular and tend to be the first benefits that companies bring on board.
“These benefits provide an opportunity for small business owners to obtain coverage not only for their employees, but also for themselves and their families,” noted Landry. “We also found dental and vision coverage to be common offerings among small businesses, as these products tend to be very popular with employees.”
LIMRA found that life insurance is frequently offered by small firms, whose preference for this benefit is most likely associated with its low cost and ease of administration. However, products such as long term disability, short term disability and accident insurance have fairly low penetration rates among small businesses, leaving employees at these firms potentially exposed to a variety of financial risks.
For this study LIMRA conducted a telephone survey of 754 private small businesses in the United States with one to 99 employees (including the owner) that had been in business for at least one year. Respondents were the individuals who made or shared in the firms’ decisions concerning business insurance and/or employee benefits. The sample was weighted by company size, industry and region to be representative of the total population of U.S. small businesses, based on data from the U.S. Census Bureau. [SAC]
