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The Actuary The magazine of the Institute & Faculty of Actuaries

Sharp growth predicted for worksite service

According to new research from actuarial and management consultant Tillinghast–Towers Perrin, over the next two years there is going to be a dramatic increase in worksite marketing – the sale of financial services products through the workplace.

The research, which was carried out among leading financial services companies, revealed that around half currently generate up to 5% of their new business sales through some form of worksite marketing. By 2005, four out of ten estimate they will be generating more than 25% of their new income through this channel. 10% of companies said worksite marketing had exceeded their expectations, while 14% said that they had mastered the worksite marketing tools and techniques to allow for further expansion. Over 40% said that they had experimented in this area or were considering worksite marketing opportunities. Just 5% said that they had no experience of this distribution channel and no plans to develop in this area.

Tillinghast’s research revealed that simple product propositions that lend themselves to traditional direct marketing methods have predominated. According to the respondents, the main growth product areas over the next two years are expected to be critical illness/PHI, health insurance and banking products such as personal loans, credit cards and mortgages.

In terms of what financial services companies identify as being the most important factors in driving sales through the worksite, the biggest issue is the employer’s attitude to staff benefit provision. This is followed by their ability to develop a direct relationship with the employer, and the economic and socio-demographic profile of the staff. Employee access to (and their proficiency in) technology is also an important factor. According to the research, the main challenges they face in making a success of the worksite as a distribution channel are developing the necessary sales tools and techniques and a strong understanding of employee motivation for taking out financial products and services through their workplace.