Small Business: Hot Market for Benefits Providers

Written by: Patrick Leary , corporate vice president, director of LIMRA Workplace Benefits Research Program

August 2024

The small business market has experienced significant disruption over the past several years. The pandemic put many small businesses on the brink, with many closing either temporarily or permanently. However, since the pandemic, the number of small businesses has been growing, and those businesses are positioning themselves for success in a post-pandemic environment.

No different from other organizations, small businesses are competing for talent and looking to create value propositions to attract and retain the best workers. It is especially critical for small businesses to attract the best and the brightest, given the limited number of workers that any given small business employs. Each employee has a significant impact on the overall success of the business.

According to research conducted by LIMRA and EY, small businesses (defined in the study as having 10-99 employees and currently offering insurance benefits) look to workforce benefits as an important component of their talent management strategies:

• Almost 7 in 10 say that their company’s benefits package will be critical in order to attract and retain the best workers.
• Half indicate that they see themselves offering more benefits in five years than they do today; just 6 percent say they may offer less.
• Nearly half say their business will offer some or more insurance benefits to their freelance or contract workers in the future.

As such, small businesses present a significant opportunity for workplace benefits providers.

Compared to larger employers, fewer small businesses offer insurance benefits in general, and market penetration of specific insurance benefits such as life, disability and supplemental health is generally lower than is the case for larger employers. Yet, small businesses express high levels of interest in offering a range of benefits. According to the study, high utilization benefits, including medical, dental and vision, lead the way, while other insurance benefits such as ...

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