Group Benefits: the Winds of Change

The group benefits market (including true group, voluntary benefits, and worksite) has experienced a great deal of change in the past few years, thanks to a variety of factors:

• A shift of responsibilities to the consumer (Affordable Care Act); a shift from defined benefit to defined contribution plans; an increase in voluntary benefits versus true group; etc.
• Increased employment.
• A competitive market for talent that demands a broader portfolio of benefits options.
• Market competition with individual life insurers and health insurers entering group benefits, along with a renewed focus on group benefits by some multi-line insurers. Uncertainty around healthcare could extend the trend.
• And more recently, insurtech—and tech in general—is forcing carriers to update systems to keep up with the Joneses.

See also: Benefits: One Size No Longer Fits All   While these trends would be enough to keep any carrier on its toes, the combination of the changes happening now means we are trying to build a house in a hurricane! Our coming research, Strategic Priorities 2017: Knowing vs. Doing, explains how a range of external trends are influencing insurer strategies and pressuring them into action. The trends affecting group benefits insurers fall broadly into two key categories:

1. Speed to market for new products, and
2. Customer engagement with improved service for brokers, employers and their employees.

Let’s take a look at what is driving the winds of change. Market Trend: Speed to Market for New Products Cloud/SaaS: A rapidly growing number of carriers across L&A, group and P&C are opting to deploy new core systems leveraging the cloud. A cloud-based, SaaS subscription model allows for the flex that a rapidly changing environment needs and is arguably more secure than traditional systems. A cloud/SaaS approach substantially reduces upfront investment, dramatically improves the ability to avoid customization and enables a focus on integration and configuration. It is also driving a host of vital business impacts, such as….

• Speed to implementation and speed to value: The combination of leveraging cloud/SaaS, a highly configurable system, and focusing on new books of business before conversion can lead to quick implementation. Historically, implementation has been measured in years, and ROI has been difficult to achieve. However, starting with a system that is immediately available for configuration and integration on day one can dramatically change ROI timelines. Carriers are increasingly taking this path.
• New products/New business first: More carriers are choosing to go to market with new products first, followed by dealing with existing products and conversion. There are many ways to approach this: Write new business only on the system to start; convert policies on renewal; close off existing blocks of business and either leave them on legacy platforms, offload them to a BPO provider, sell them to another carrier, or have a reinsurer take over administration of the block of policies. Any approach that enables a carrier to start with a clean slate improves the likelihood of a quick ROI.
• Configurability of solutions leads to configurability and agility of your business: Though the value of configurability for achieving a quick go-live was outlined previously, it’s important to note that highly configurable systems (of which there are now a few) allow insurers to make the business highly configurable … and agile. This enables insurers to take new products to market faster, and also allows more unique or niche products, plus more flexible business processes, which taken together, improve the ability to compete!
• Product bundling, unbundling, single carrier marketplace: Perhaps the greatest gust of wind has come from the direction of a demanding marketplace. Employers and brokers are asking group carriers to do new and innovative things all the time. One example of this is product bundling/white labeling to provide a full suite of products (though they often do this via benefit admin brokers/portals) or, on the opposite end of the spectrum, providing a “single carrier marketplace” of products (cafeteria plans). Once again, the same expanded options for configurability will allow carriers to flex when packaging their products.

Market Trend: Improved Customer Service, Experience and Engagement The winds of change are driven by people. As their lives change, insurers adapt. When it comes to the customer experience, group carriers are pulled in multiple directions because they are concerned with so many layers of customers. Is it possible to meet everyone’s experience expectations — the partner, the brokers, the employer’s HR team and the thousands of employees? The answer is most certainly, “Yes.” There has never been a better time technologically to capture growth through experience management. Insurers can pay attention to these four customer trends in particular.

• Portals – Broker, Employer, Employee: Increasingly, paper enrollments are becoming less common, even at the worksite. As technology becomes more pervasive, with nearly every employee having at least a smartphone, activities ranging from enrollment to claims submission are increasingly happening electronically. However, carriers need to be capable of supporting this. Having the right portal, with a responsive, mobile first design, that is built around well-thought-out journey maps, is critical, supported by a modern back-end system that supports real-time processing.
• User Experience: Millennials are now employees, employers, and home office staff, and have much, much different expectations for user experience. They’ve grown up in a world where UX has been defined by Apple, Amazon, and Google and expect that our systems are built to those standards, not that our systems are merely an improvement over legacy systems.
• Customer Engagement via Wellness/Gamification: Getting customers engaged can help improve cross-selling. This can be achieved in part with gamification and wellness solutions. Examples of this include Life.io and Human API, both of which can provide access to data from wearables. Life.io can allow participants to earn rewards, achieve goals, etc., but tied back to employee benefits. This engages customers and helps to build the brand.
• Improved Underwriting Through Technology: Underwriting, either at a group level or at an individual level for small groups, can be significantly improved using technology. Technology to improve underwriting ranges from tools such as Force Diagnostics’ rapid health exams, to cognitive analysis of census data (e.g., Watson), to leveraging analytics to better evaluate experience rating.

See also: Gig Economy: 5 Benefits of Outsourcing   These market trends, as well as others, ensure that group benefits providers will stay busy for a long time to come. Equally important, they mean that the distance between carriers that have modernized and those that haven’t will grow rapidly, and that those that haven’t will be challenged to win new customers, and could be subject to adverse selection. Modernizing has never been more important, and it has never required doing more to get there! What is certain is that group benefits providers that haven’t started on a course of change need to hoist their sails and catch the wind while it’s blowing in opportunity’s direction.