Why insurers should modernize their benefits capabilities
Take advantage of the growing demand for digitally-driven group/voluntary products
by Denise GarthMs. Garth is senior vice-president of marketing for Majesco, industry consultants with over two decades of experience in providing technology solutions, products and services for the insurance industry across lines of business – Property & Casualty (General Insurance), Life, Annuity, Health, Pensions, and Group & Worksite Benefits insurance. Reprinted with permission. Visit here.
September 12, 2019 — It’s a compelling case. Whether you look at trends among employers or trends among employees, you will come to the same conclusion. Group/Voluntary products are simply going to keep growing in appeal. The challenge is in preparing for the opportunity. By looking closely at the trends, insurers can gain the motivation and the direction for their group and voluntary strategies.
The case for increased employer interest
Employers are fighting for the best talent — both in their recruiting and in their retention practices. The Human Resources department needs a broad voluntary benefits package that appeals to everyone. They also need benefits that can be either easily administered or self-administered. Preferably, the process is automated, so that during open enrollment, an employee will simply select their voluntary benefits and their premiums will be automatically withdrawn from the paycheck.
Every dollar that goes toward a voluntary benefit, reduces an employer’s payroll taxes. Whether or not the company pays some or none of the voluntary benefit premium, they still stand to save money. Collecting premiums through paychecks keeps their admin costs down, reduces employee responsibility for payment and clearly helps insurers to collect consolidated premiums in a timely fashion.
The case for growing employee interest
The same time-crunch pressures that are currently driving digital engagement practices within individual products are also applicable to group products. On one day each year, employees can save themselves time and energy and make all of the decisions they need to make about protecting themselves and their families. HR representatives have done the work of the agent in explaining the benefits available. Now, all they need to do is check a box or fill in an online form to give their consent to a year’s worth of coverage and premiums. Easy does it. Simplified benefits can enjoy a simplified sales process.
Plus, the employer offering comes with one soft benefit that every other marketing effort can’t achieve — official employer endorsement. A group/voluntary benefit that has been selected by an employer saves the employee from going through a confusing and time-consuming insurance vetting process. With that psychological barrier down, employees are also likely to notice that their cost is much less within the group than it would be if they were to try to purchase the coverage on their own. With greater internal marketing for group benefits, policy growth through the employer channel is on the rise.
Voluntary Benefits seeing year to year growth
According to a recent Gartner/DirectPath study, voluntary benefits are seeing year-over-year growth, with some admirable numbers.
Supplemental life uptake, for example, grew from 45% in 2018 to 75% in 2019. AD&D grew in similar fashion (27% to 60%). Identity theft protection grew from 19% to 25% in just one year. This signals not only an interest in voluntary benefits, but also an increasing interest in a broader array of coverage — possibly driven in part by an overall increase in employee age. Another possibility for the dramatic uptick could be an overall increase in employee benefit literacy.[i] It is likely, however, that the greatest driver in employee interest is simply a greater cultural interest in security and simplicity, as we outlined in our 2019 thought leadership report, Building a Business Model for the Insurance Customer of the Future. Customers want the purchase process to be easy. They like it if a product or service can be bundled in with other products. They don’t want to spend time researching. All of these needs can be met within the employer channel.
The compelling case for insurer modernization
Just because the market is in growth mode, however, doesn’t mean that it is available to any insurer that creates a new product, particularly those on legacy systems with limited capabilities. Digital preparation includes transforming the channels and data capabilities that touch employers and their employees. The key to digital priorities for insurers (as it is in every other area), is to meet customer desires and needs. In this case, group and voluntary providers need to consider the needs and the wants of employers first, because employers are the gatekeepers. What do employers really need to consider adding a new group or voluntary product or service?
Usability and Administrative Assistance
First and foremost, employers need help. In fact, according to Willis Towers Watson, 78% of employers have identified ‘administrative burden’ as their main obstacle to offering voluntary benefits and services.[ii] HR departments are pressed for time and talent. They are, like every other area of the company, trying to do more with less. The enrollment and servicing process must be simple.
Next, the products and services must be attractive and easy-to-understand for the employee. Is there a mobile app that will help employees keep track of their coverage? Are there simple ways of gathering application information and keeping track of usage? The ‘digital questions’ will vary based upon the type of product, but the high concept is the same. Can group and voluntary providers create a straight-through process that streamlines data transfer with seamless connectivity utilizing the most up-to-date digital capabilities and interfaces?
Data and Feedback to HR Teams
In insurance, data is a two-way street. We need data to make great decisions, so we collect data. We use data to improve the service process, so we provide data. When working with outside HR teams, it might be best for insurers to view them in much the same way as they would view an internal team. They are also going to want metrics. They want aggregated data (or preferably analytics) and they will value feedback that will educate them about their employee population. Gartner puts it this way,
“The most popular employer-sponsored programs continue to be those that generate data that employers can use to adjust their benefit strategies and plan designs and create targeted communications messages…”[iii]
Trends, timing, technology and transformation. The case for moving now
The digital disruptions that are transforming insurance processes and products across all lines are just as applicable to group and voluntary insurers. Now is the time to transform in order to meet the growing demand. You can begin by asking some very crucial questions:
- Can the employee information you collect be easily integrated into an employer’s enrollment platform and is it easy for the employee to use for selection?
- What kinds of data and feedback can you supply to the employer that the employer might find valuable, even if it is in aggregate?
- Are you taking advantage of new technologies to develop and market group and voluntary products in innovative ways or are your ideas confined by the systems you currently have in place?
- Is it costly for you or your clients to administer your products?
- Are you at risk of losing current group or voluntary business because you aren’t providing some of the above?
If any of these answers are areas of concern, it’s time to transform. Majesco has the tools to help you turn trends and growth opportunities into products that will support employers in their goals to improve company performance and provide security nets to employees. Majesco’s L&A and Group Core Suite and Majesco Digital1st Insurance will allow you to digitize and optimize business operations and processes across your operations, while supporting the digitalization needs of your customers.