A flurry of mergers and acquisitions (M&A) worked their way through the benefits market in 2014, with the most recent making the end of the business year uncharacteristically eventful.
Two of the higher-profile deals saw insurance giant Aviva’s £5.6 billion takeover of Friends Life and Sodexo’s £41 million takeover of incentive and recognition provider Modivcom.
For many benefits professionals, consolidation cannot come soon enough to help tackle market saturation, particularly in the healthcare arena.
As Jackie Buttery, an independent benefits consultant, said at the exclusive Employee Benefits/Aon 100 Club thinktank debate, which featured in a special supplement published with the June issue of Employee Benefits: “There are so many one-man bands in the health and wellbeing space, so how do employers choose between person A and person B? It’s like searching for a needle in a haystack.”
The proliferation of benefits providers in a number of market sectors results, in part, from a move by some organisations to reposition themselves to stay in business following regulatory changes.
For example, a number of childcare providers have been busy expanding their product and service propositions ahead of the introduction of a new tax-free childcare voucher scheme, to be run by a single administrator, NS&I, rather than the range of existing voucher providers, from autumn 2015.
Hopefully, market consolidation should help to streamline product choice and, in the process, reduce employers’ administrative costs.
A reduction in the number of market players may also help to make beauty parades for provider appointments less labour-intensive, and even encourage employers to become more proactive in keeping their benefits offering fresh and aligned to their employees’ needs.
Benefits professionals who fear provider monopolies should take heart from the potentially increased product and service ranges that newly enlarged providers will offer, although their value for money remains to be seen.