Who Are The Players in the US Employee Benefits Sector?

You asked, and Eleos Life has some detailed data FYI. Here’s the word; 

Eleos Life, a digital provider of disability and life insurance, has published rankings of the US employee benefits market, built by reading every employer benefit filing for the most recent complete year rather than by asking firms to submit their own figures.

Eleos Life read 1,010,279 filings to build them. The rankings cover employers with 100 or more people on their main health plan, the threshold at which a public annual return is required: 58,346 employers covering 80,291,339 people.

The rankings started as a different question

Eleos Life set out to measure how many American workers would have an income if they could not work. Every employer here already provides health insurance, so the question was what sits alongside it.

The answer was lopsided. Among these employers:

• Dental appears in 95.6% of packages
• Life insurance in 93.6%
• Both short-term and long-term disability together in only 66.3%

Cost does not explain it. Median annual premium per covered person runs $421 for dental, against $304 for short-term disability, $279 for life and $263 for long-term disability. The one employers never leave out is the most expensive of the four.

That makes the second question the more interesting one: who is actually selling these benefits, and on what terms. It is the question the two rankings set out to answer.

Top insurers

The ranking of the 50 largest group benefits insurers covers 820 carriers across $185.5bn of premium. The ten largest hold 71.7% of it.

Every one of the top five is a health insurer, because health is where the money is. Take health out and the table changes completely. Ranked by premium on contracts whose first benefit is not health:

Not one of these appears in the top five overall. MetLife, first here, is sixth on the full table and leads dental, life, short-term disability and long-term disability outright, four of the six main benefits. The other four sit between eighth and eleventh. Non-health contracts carry $67.3bn, a little over a third of all premium, and they are sold by a different set of firms.

Rank the same non-health contracts by employers reached and the order changes again:

• Guardian comes first, named by 9,333 employers, ahead of MetLife at 8,834
• Guardian is eighth on non-health premium at $2.7bn, and 14th on the full table

A life or disability policy covers a whole workforce for very little while health costs far more per person. So the carriers an employer actually deals with for income benefits are near the bottom of a ranking by money, and a premium table on its own would never surface them.

Top brokers

30,931 firms are named by employers of this size. The ranking of the 100 largest benefits brokers covers those named by at least 25 separate employers.

Rank the same firms by employers served and the table turns over:

1. Marsh McLennan Agency: 5,045
2. USI Insurance Services: 4,295
3. Gallagher: 3,813
4. Lockton: 3,103
5. HUB International: 2,976

Mercer, first on premium placed, is sixth.

Client size is what separates them, and it splits the top of the market into two businesses that barely compete:

• Aon: 1,307 employers, averaging 7,567 people each
• USI Insurance Services: 4,295 employers, averaging 640

Both sit in the top seven by premium placed, so they appear side by side in any revenue ranking, but one is a consulting business built around very large employers and the other a distribution business built around mid-sized ones. An employer shortlisting from a revenue table is mixing the two without being told.

The cheapest benefits cost the most to sell

• Ten largest brokers, placing mostly large medical accounts: 2.31% to 4.43% commission
• Guardian, placing many small non-medical contracts: 11.07%

Selling many small non-medical contracts to many separate employers simply costs more than placing a few large medical ones, and those are the benefits most often missing from the package. Whether the two facts are connected is not something filings can prove, but it is the question they raise.

Employers of this size reported $5.1bn in broker commission and $1.3bn in fees, with the ten largest firms taking 47.2% of it.

Kiruba Eswaran, Founder and CEO of Eleos Life, said: “We did not set out to rank anybody. We set out to find how many American workers would have an income if they stopped being able to work, and the answer was worse than we expected. Not because income protection is expensive, because it is not. Dental costs more per person, and almost nobody leaves out dental. So we went looking at who sells this and how, and found that the firm taking the most money is often not the firm reaching the most people. It shows up among carriers and among brokers, and an employer picking either off a revenue league table is reading the wrong number.”