Big Opportunities in Small Business

1. Growing Your Business With Affordable Disability and Life Insurance Benefits Tailored toSmall Employers

2. Big Opportunities in Small Business Patricia (Pat) Cronin, LLIF Assistant Vice President – U.S. Client Services LIMRA November 14, 2012

3. Overview • Characteristics of Small Businesses • Employee Benefits • Special Groups • The Future

4. Characteristics of Small Businesses

5. Small Businesses Are a Big Market Source: U.S. Census Bureau, 2008 data.

6. Stages of Growth Expanding: 19% Stable: 42% New: 24% Declining: 15% Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

7. Business Demographics Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

8. Employee Demographics Compared to those at larger firms, small business employees are: Less educated Less likely to be primary wage earner More likely to work part-time More evenly split by gender Somewhat lower household income Source: What is $1 Billion an Hour Worth? Employee Perspectives on Benefits, LIMRA, 2010.

9. Employee Benefits Landscape

10. Small Business Benefit Penetration Driven by the Economy Mid-Late ‘90s Boom 2008 Great Recession Percent of Firms Source: Small Business Surveys: LIMRA 1994, 2001, 2005, 2012

11. Insurance Benefits Offered Base = All small employers (2-99 employees) Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

12. Firms Offering at Least One Insurance Benefit by Region ME 53% 62% 39% 40% Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

13. Firms Offering at Least One Insurance Benefit by Size Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

14. Benefits Trends Over Time Base = All small employers (2-99 employees) *Disability Benefits were not reported separately in 1994. Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

15. Firms Offering Group Life or Health Benefits by Industry Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

16. Importance* of Benefits to Small Business Employees * Percent rating the importance of the benefit 4 or 5 on a 5-point scale. Source: What is $1 Billion an Hour Worth? Employee Perspectives on Benefits, LIMRA, 2010.

17. Special Groups

18. Family-Owned Businesses • Smaller (but not younger) • Lower revenue • Stable (but not expanding) • Less Likely to have group, retirement, or executive benefits 78% of Small Businesses are Family Owned Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

19. Home-Based Businesses • Younger • Very small • Still establishing themselves • Lower revenue • Less likely to have group, retirement, or executive benefits 33% of Small Businesses are Home Based Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

20. Female-Owned Businesses • Smaller • Lower revenue • Less likely to have group or retirement benefits • Less likely to be expanding 24% of Small Businesses are Female Owned Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

21. Minority-Owned Businesses • Younger • Still establishing themselves or expanding • Lower revenue • More likely to add group or retirement benefits in next 2 years 14% of Small Businesses are Minority Owned Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

22. What Does the Future Hold?

23. Plans to Add Insurance Benefits Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012 Top Benefits Under Consideration: Medical Life Vision Dental LTD STD

24. Plans to Add Benefits by Stage of Growth Age of Firm Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

25. Plans to Drop Benefits Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

26. What about Health Reform? Source: Kaiser Family Foundation, Explaining Health Care Reform: How will the Affordable Care Act affect small businesses and their employees?, 2012.

27. Employees Prefer to Obtain Insurance at Work Source: What is $1 Billion an Hour Worth? Employee Perspectives on Benefits, LIMRA, 2010. 27 Small business employees indicate it is important that benefits are available at work*: • Long Term Disability 55% • Short Term Disability 55% • Life Insurance 48% * Top two on a 5-point scale

28. Results from The Hartford’s 2012 Small Business Success Study align with LIMRA’s findings Small Business owners value their employees: “My employees are an extension of my vision, so they are really central to everything we do.” — Kelly Robertson, owner of Family Shoe Store, Brooklyn, NY. It’s common for owners to think of their employees as family, so much so that they often try to shield employees from the worries and headaches of running a business, and many consider the ability to pay their employees enough to live comfortably another key measure of success. Many business owners who offer employee benefits have sacrificed investments in expansion and even their own compensation to avoid cuts to those benefits. Only 24 percent of the businesses surveyed have shifted healthcare costs to employees and even fewer, 17 percent, have reduced the benefits they offer. See the full study and results at: http://www.thehartford.com/successstudy/

29. The Hartford has expanded our offering for brokers to better serve Small Businesses Summer 2012 Fall 2012 • Launch of Small Business Center witha dedicated team of pre-sales specialists to provide enhanced RFP service and response • Extended hours of operation to 8am-8pm EST • Single phone number and email • Same day call back and <48-hour turnaround on completed RFP’s • Consistent positive initial broker feedback • New Small Business website and e-marketing tools to enable more effective sales efforts • Online RFP submission tool • Product guides and e-collateral • Small Business webinar recordings • 10% more competitive pricing for all Small Businesses • Small Business premium now eligible for The Hartford’s Partner Rewards Program • Launch of centralized Sales Team to provide proactive relationship management for Small Business brokers • MyTomorrow coverage analyzer tool and Small Business Success Study survey results now available online

30. And we’re continuing to invest in our product and service offering to ensure your continued success Further enhancements already in plan and being considered for 2013 • Technology Industry Solution to complement our Physician and Attorney offerings • Tailored plan designs and value added Loss Control and Return-to-Work services • True 24x7 integrated coverage with Workers Compensation and P&C offering • “Businesses like me buy” recommendation tools and customized small business benefits content streamed to brokers websites • More flexible plan designs and employee participation requirements • Continuum of benefit levels instead of limited options • Participation rates aligned and consistent across all small business • Expanded voluntary benefits offering leveraging The Hartford’s product portfolio • Disability Flex, Critical Illness, etc. • Quarterly webinars; Broker Advisory Council; additional tips, facts and survey results