Expansion in private health insurance coverage and the aging of the population will drive growth
New York, NY (PRWEB) March 31, 2015
Companies in the Benefit Administration Services industry assist organizations with establishing, maintaining and managing their employees' benefits. These benefits primarily include health and pension plans, in addition to individual retirement accounts, maternity leave, vacation time and sick time. Industry operators also provide third-party administration of workers' compensation for companies that opt to self-insure. Consequently, demand for industry services depends on conditions in the labor market and companies' propensity to outsource the administration of their employees' benefits. Over the five years to 2015, industry revenue is projected to rise at an annualized rate of 3.7% to $39.3 billion, bolstered by growth in the number of employees and corporate profit.
Unemployment has steadily declined over the past five years, expanding the pool of potential employees to which industry operators administer benefits. At the same time, corporate profit has increased, enabling businesses to outsource employee benefit administration services to industry operators. Moreover, healthcare reform has further extended private health insurance coverage to a greater number of individuals in recent years, contributing to industry growth. According to IBISWorld Industry Analyst Leah Goddard, “A rising number of baby boomers, or individuals born between 1946 and 1964, have reached retirement age over the past five years, boosting demand for retirement benefit administration services.” As these trends continue in 2015, industry revenue is forecast to grow 2.3% over the year.
Strengthening conditions in the labor market and rising corporate profit are anticipated to underpin industry growth over the next five years. “Expansion in private health insurance coverage and the aging of the population will further drive growth in demand for health and retirement benefit administration services,” says Goddard. However, industry operators will also compete with insurance carriers and self-insuring companies that manage benefits internally, without the assistance of a third-party administrator. Furthermore, as occupational accidents continue to decline over the long-term, the reduced frequency of workers' compensation claims could hurt demand for industry services in this market. Consequently, industry revenue is projected to grow over the five years to 2020.
For more information, visit IBISWorld’s Benefit Administration Services in the US industry report page.
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IBISWorld industry Report Key Topics
This industry is comprised of companies that provide third-party administration and management services of employee benefit plans, including health/welfare plans, pension plans and workers' compensation plans.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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