Tag Archives: employee benefits

Can You Automate Coffee and Donuts?

Before the pandemic, HR administrators often relied on personal relationships with brokers to find the right benefits packages. Coffee meetings, lunches and happy hours were typically how both groups shared information about pricing and plans.

Then came the shift to remote work, and many were introduced to the digital benefits marketplace for the first time. 

This nudge turned out to be a good thing for the benefits world: Brokers and employee benefits managers quickly realized how seamless the quoting and purchase process can be with insurance providers that leverage technology. By embracing digital tools, they now have better means to discover and compare packages than they would offline.

Here’s a look at how the digital-first benefits shopping experience works – and why it works so well.

Digital Platforms Enable Self-Service for Brokers and Employers

It’s a lot easier to make informed decisions about benefits packages when all the details you need are at your fingertips online. 

Benefits shopping used to revolve around presentations, normally involving a broker showing up with coffee and donuts to talk to HR teams or other decision makers about a benefits package for the coming plan year. It takes a while to communicate a complex benefits package, and the presentation may not cover all the criteria benefits managers and brokers need to evaluate the package. 

To compare multiple carriers and multiple benefits (like health, dental, vision, life and disability) simultaneously, brokers often put together a spreadsheet with the high-level view of each option, with a recommendation. Details and deeper comparison factors are not easy to surface, and real-time customization of plan design and price is nearly impossible.  

Instead, digital platforms from insurance providers via websites and apps give brokers and employee benefits managers a self-service option. They can get all the package information they need up-front, any time, anywhere. They can also refer back to the platform at any point in the decision-making process as they compare with other packages.

For HR folks and brokers who want more intimate customer service, many digital platforms still provide options to speak with someone over the phone or email for personalized support. But for those who just want to get in and out of a website to find what they need without talking to a salesperson, a digital platform is a much smoother experience.

Automated Underwriting Eliminates Back-and-Forth in Quoting

Getting a quote for a benefits package can be slow and frustrating. If an employer has custom product needs, it may take more time for an insurance representative to relay back and forth with the broker.

An automated underwriting process, on the other hand, streamlines the quoting process to provide self-service pricing information in real time. 

One example of simplified pricing online is our digital quoting tool. It enables brokers to input employer information, receive a quote and complete underwriting in seconds. Automation handles all the data analysis. The broker can iterate on the quote on their own with the tool, no need to contact a rep.

Automated underwriting also decreases the odds of human error in putting together a quote. Brokers can be confident that the quotes they receive promptly through digital platforms are accurate and dynamic enough to reflect the employer’s insurance needs and risk profile.

See also: Achieving Digital Balance in an Agency

Digital-First Insurance Providers Have Innovation Baked In

Another advantage of shopping for benefits online is that, when a provider prioritizes digital channels for sales, it’s usually a good indicator that the provider leverages technology to improve its product, especially if it’s an insurtech keen on disrupting the market.

Automated underwriting doesn’t just accelerate the sales cycle and create a better shopping experience for brokers and benefits managers – it can more accurately predict a company’s or individual’s risk profile to provide fair pricing.

And it can also be less biased. A number of insurance providers base underwriting on factors like race and gender that can lead to discrimination in package pricing. Underwriting with tools like artificial intelligence and machine learning can easily filter through the risk factors that matter most to identify the level of coverage needed.

Online Benefits Shopping Is Here to Stay

There’s no need to mourn the old-school method of benefits shopping for employee benefits managers and brokers.

Digital benefits platforms make the process easier for everyone. There may be no donuts involved, but they’ll give everyone in the benefit ecosystem so much time back that they can go buy some themselves.

Workers’ Comp Issues to Watch in 2019

We kick off 2019 by discussing 20 issues the workers’ compensation community should be monitoring. Our list includes both employee benefits and workers’ compensation issues, as these two areas inevitably overlap. Later in the year, several of these topics will be developed into individual “Out Front Ideas with Kimberly and Mark” webinars.

Just because an issue is not on our list does not mean it’s not important. Our goal is to highlight issues that we feel need more attention. Thus, while opioids are an important issue, we do not discuss them here because they are already receiving tremendous national attention.

Healthcare 2020

Two years into this administration, the Affordable Care Act remains the law, although lawmakers and the administration have reshaped parts of it through legislative, regulatory, budgetary and legal actions. Healthcare was a leading campaign conversation during the midterm elections in 2018, and expect it to top the list in the 2020 presidential election..

As of Jan. 4, all but 14 states have adopted Medicaid expansion. This is something we expect to continue into 2019.

Addressing the cost of prescription drugs will be a priority in 2019. While we are a long way from bipartisan consensus on how to address the pricing challenges, big pharma is bracing for smaller, but significant, regulatory changes.

Finally, physician-led accountable care organizations (ACOs), have continued to do well and are likely to increase in 2019. ACOs reward providers for desirable patient outcomes.

Legislative Watch

The 2018 elections may have a big impact on the workers’ compensation landscape in 2019.

There were eight states where the party of the governor changed in the November 2018 elections. Many do not fully appreciate the impact this can have on workers’ compensation, however, these governors appoint the workers’ compensation regulators and administrative law judges. These positions have a very significant influence on the practice of workers’ compensation in their respective states.

In 2018, there were over 100 national bills introduced to expand presumptions for first responders. Many of these bills pertained to post-traumatic stress disorder. We expect a similar trend this year. One newer area of emphasis that we expect to see is a push to continue death benefits for surviving spouses of first responders after remarriage.

In terms of specific states, we are closely monitoring the following for potential workers’ compensation legislative activity in 2019.


Bills to erode costs savings provisions in the workers’ compensation statutes pass the California legislature every year. The question is: Will incoming Governor Newsom veto those bills like the past two governors did? Governor Newsom is also very focused on creating universal healthcare for California residents, which could have a significant impact on workers’ compensation.


The Democratic Illinois legislature and Republican Gov. Rauner battled for his entire term over workers’ compensation. What will happen when Democratic Gov. Pritzker takes office?


In May 2017, a circuit judge ruled that Alabama’s workers’ compensation statutes were unconstitutional because of the caps on weekly benefit and attorney fees. Since then, a bipartisan task force has been working to develop reforms to workers’ compensation statutes that would address the areas that the judge felt were unconstitutional while, at the same time, preventing significant cost increases for employers. It remains to be seen whether legislative action on the task force recommendations will happen in 2019.


With the solvency of Social Security being a significant concern for the federal government, we have been waiting for Social Security to start looking into potential shifting from state workers’ compensation programs to their program. This appears to be happening now. There are currently 15 states that have a “reverse offset” allowing workers’ compensation benefits to be reduced if the person is receiving both Social Security Disability (SSDI) and workers’ comp. In all other states, SSDI gets the offset. Legislation could quite possibly take away this reverse offset.

See also: Why So Soft on Workers Comp Fraud?

Psychology of Pain

Treating pain is much more complicated than prescription medication and physical therapy. Pain has biological, psychological and emotional factors — often approached through what we refer to as the biopsychosocial approach to pain or the biopsychosocial model. When patients focus on pain, pain worsens. Anxiety, fear and a sense of loss of control contribute to pain. Research shows treating anxiety and psychological support reduces pain and the use of pain medication. And while we know that the psyche has a tremendous role in pain, few patients receive treatment for the emotional and psychological aspects of pain.

Worldwide, the need for more effective pain treatment has led the pain treatment community to promote comprehensive treatment of pain and multidisciplinary pain care. Unfortunately, access to skilled providers and comprehensive pain care is a challenge in many parts of America. In addition, receiving payer approval for care is equally challenging.

Understanding a patient’s response to pain earlier in the claim offers an opportunity to create a meaningful, holistic treatment plan. If the initial pain assessment reveals the patient has a high level of subjective pain complaints with limited objective findings, there is a likelihood the patient will end up in chronic pain in the future.

Here are a few suggestions to consider regarding the psychology of pain and workers’ compensation:

  1. Create a pain philosophy as part of your claims program. Engage the entire cross-functional claims team in the development of the program, including claims, clinical, legal, employer, occupational and orthopedic providers. The pain philosophy and associated documents become part of the client service instructions.
  2. Implement pain assessment tool(s); initial and continuing assessments are available
  3. Outline care pathways for holistic pain treatment
  4. Because patient-centered care is key to success, communicate clearly and often with the injured worker, Transparency and empathy are important.
  5. Identify a pain psychologist or clinical pain expert to consult, as needed, on pain cases and help guide the more complex cases
  6. Create a feedback loop or grand rounds approach to bring stakeholders together on a regular basis and assess the pain philosophy, outcomes and opportunities for improvement.

Politics of Permanent Impairment

When the AMA 6th Edition Impairment Guidelines were issued, experts hailed them as a significant improvement in the evaluation of physical impairment. But they have also led to litigation around the country as plaintiff attorneys challenge the constitutionality of the guidelines because they can produce lower impairment ratings.

This leads to the question that states need to be asking: What is the purpose of the impairment guidelines in their state? If the purpose is to provide a measurement of objective physical impairment, then the AMA 6th Edition is the best tool for this. But, if the purpose of the impairment rating is to provide a PPD award that considers more than just objective impairment, then the AMA Guidelines alone are not the proper tool. The AMA Guidelines measure physical impairment, not loss of access to the labor market, potential loss of earning capacity or other subjective elements that have nothing to do with recovery from the physical injury.

Social Determinants of Health

In patient care, addressing social determinants of health is as important as the quality of the care that a patient receives. Social determinants of health are the conditions in which people are born, live, work, play, worship and age that factor into overall health. Social determinants of health include socioeconomic status, education and literacy, access to healthy foods and health services and social and physical environments. Increasingly, payers and health care providers are interested in more holistic care, with the goal of improving health outcomes.

Economy’s Impact on Workers’ Compensation

We are at record low levels of unemployment, and wages are climbing. Higher employment and wages mean higher payroll. Higher payroll leads to higher workers’ compensation premiums.

Higher employment rates also mean we have more workers in the workforce who are not adequately trained and may not be in good physical condition. Because of this, some carriers are starting to notice a slight uptick in accident frequency rates. It will be interesting to see the data presented at the 2019 NCCI Annual Issues Symposium to see if we are, indeed, starting to see an increase in frequency rates.

Twenty states increased their minimum wage as of Jan. 1. Higher wages could lead to more payroll and associated premiums. In addition, in states with a wage loss benefit, a higher minimum wage means decreased wage loss awards.

Employee Health Models

Benefits continue to be a talent attraction and retention tool for employers. Chief human resources officers understand that the health of an employee is directly related to productivity. The health and wellbeing of the employee population lead to productivity and, in turn, directly correlate to top- and bottom-line performance of the organization. Employee health models are evolving with employer-purchased care. This is happening because health insurers are not negotiating and managing costs in a way that employers can manage models directly.

Direct primary care (DPC) is a small, but fast-growing, movement of doctors who do not accept insurance and, instead, charge a monthly membership fee. Employers engaging direct primary care believe in the primary care health model from a treatment perspective and care coordination. Doctors have the incentive to prioritize prevention and provide high-quality, coordinated care. It is a cost-effective, value-based care model that avoids the fee-for-service traditional pricing model.

The National Business Group on Health estimates that over 50% of employers report having some form of value-based care in their health insurance program. Although we are hearing more about value-based care in workers’ compensation, be mindful of the difference between bundled pricing and value-based programs. “Value-based” care should have a quality care component and cost factor. “Bundled pricing” is a cost savings model.

Telemedicine is common in employee health benefits today. Over 95% of large employers offer telemedicine solutions. While adoption varies, consumers who use telemedicine typically report a high level of confidence and satisfaction in their care.

Mega Claims and Rates

Industry data reports that the number of claims over $5 million incurred is increasing, and the size of individual claims is also increasing. It was not that long ago that a $5 million claim was a rarity, and catastrophic injury claims tended to top off around $10 million to $15 million.

However, a combination of factors are leading to the increase in these numbers, including accident survivability, an increase in auto accident frequency and advancement in medical treatment. Carriers are now seeing individual claims as high as $40 million, and these long-tail costs have a significant impact on premium rates.

In terms of forecasting workers’ compensation premium rates for 2019, overall the outlook is that rates will remain fairly flat, with some states seeing slight rate decreases. However, both A.M. Best and Fitch have cautioned that increasing medical and litigation costs are eroding workers’ compensation carrier combined ratios and that 2019 will likely be closer to a break-even combined ratio than the last three years. If the data, ultimately, shows that accident frequency is increasing, that would be another factor that would affect the marketplace.

Leave of Absence

State and local laws, the talent war and employee expectations are leading more employers to implement leave-of-absence programs. Employers offering paid leave report that the benefit helps with employee retention and reduces costs related to turnover and employee training. Another contributing factor to leave policies is the federal Tax Cuts and Jobs Act of 2017, which contains a tax credit for employers that provide qualifying types of paid leave to full- and part-time employees.

As more leave programs exist, the coordination of leave administration with job accommodations and workers’ compensation continues to be an issue to watch.

Impaired Workforce

As we enter 2019, legal marijuana is more available than ever. In October 2018, recreational marijuana became legal in Canada. After the November elections, there are now 10 states and the District of Columbia with legal recreational marijuana.

In 2019, state legislatures in Connecticut, Illinois, Minnesota, New Hampshire, New Jersey, New Mexico, New York, and Rhode Island are all expected to consider legalizing recreational marijuana.

What does all this mean for employers? Some percentage of your workforce is possibly impaired at work. The challenge for both employers and law enforcement right now is that the science of marijuana has not caught up to the social reality of legal marijuana. There are no widely accepted standards or standardized tests to determine if someone is impaired from marijuana.

Talent Training and Development

As an industry, we are experiencing an unprecedented amount of turnover due to the aging workforce. With turnover comes the need to train and prepare the next generation of claims handlers. It is important that we carefully examine training programs to ensure that they are adequately preparing people with the necessary skill sets to handle claims. Not only are statutes and rules important to learn, but soft skills are more important than ever. Rules and regulations are trained consistently, and system training is extensive, but soft skills training is lacking and, often, absent.

Workplace Violence

Workplace violence continues to get worse. We are not talking about mass shootings, which are rare. Instead, our focus is the day-to-day threat of violence faced by many workers.

Physical assaults on the job are a growing problem in many industries – especially healthcare, K-12 schools and retailers. Most are not aware of how bad the problem is becoming because it is not widely reported. Some workers feel the violence is part of the job, so they don’t report the incidents. In addition, businesses and schools don’t want customers and the community to think they are unsafe, so they don’t talk about the problem.

We cannot begin to fix the problem of workplace violence until we acknowledge the extent to which it is happening and talk about the societal causes of the behavior. This is a very complex problem for employers.

Unconscious Bias

In recent years, the discussion of diversity and inclusion has become mainstream. Conferences and conference sessions on the topic flood our inboxes, and many of our organizations have hired diversity officers. While the discussions are important and meaningful, we also must spend time digging into ways that we can train our staff to be more inclusive. One such way is to tackle the topic of unconscious bias.

Unconscious biases are learned stereotypes that are automatic, unintentional and deeply engrained in each of us. Because many of these prejudices exist beyond the conscious level and are a result of being brought up in a culture that harbors biases, we must first acknowledge that they, in fact, exist. Simply learning about our hidden biases is not enough. We must train colleagues to identify these biases and build skills to overcome them.

Employee Classification

The determination of whether a worker is an employee or an independent contractor is a challenge that has been around since the start of workers’ compensation. This issue is getting more attention now because of the gig economy. States and the U.S. Department of Labor are very focused on this issue.

This is a very complicated problem for employers. The rules regarding what constitutes an independent contractor not only vary by state, but “independent contractor” can also be defined differently under a state’s workers’ compensation than under wage and hour rules. In addition, IRS definitions of independent contractor are often different than the state regulations.

The Sharing Economy

When we speak of the sharing economy, organizations like Uber, Lyft and AirBnB come to mind. However, the biggest potential impact of the sharing economy in workers’ compensation comes in the form of data.

Larger companies used to have a tremendous competitive advantage because they had access to so much more data, which enabled them to make more informed decisions. However, many insurtech companies are data aggregators, gathering information from multiple sources and compiling it into something useful that can be analyzed and acted on. The wide availability of data is a benefit to startup and smaller companies because it can help to level the information playing field. More data enables better analytics and better decision-making.

Globalization of Risk Management

We live in a global economy and, as a result, risk management is becoming more globalized. Employers with operations in multiple countries are well aware of the challenges associated with globalization, including complying with a growing number of laws and regulations. However, even businesses that do not have physical operations in other countries can be subject to international laws and regulations if they have an online presence or work cowith vendors in other countries.

See also: How Should Workers’ Compensation Evolve?  

The Consumer Experience

Organizations placing a high priority on consumer experience and engagement are changing the way they create and design products, address customer service issues and measure experience and engagement across stakeholders. These organizations often discuss design thinking as a strategy for innovation. “Design thinking” involves internal and external stakeholders, satisfaction and engagement levels and efficacy and quality. How often do you find injured workers at a conference sharing their experience with the system and claims process? Do injured workers have a voice at the table regarding processes and communications in which they are involved? Would turnover and employee satisfaction improve for claims organizations if the claims adjuster had a central role in workflow and product design?

As we consider the future of work, talent attraction and retention, evolving from process to an empathetic engaging industry, we believe emphasis on the consumer experience is paramount to success.

Measuring Success

The adage, “what gets measured gets done,” is also true in the workers’ compensation industry. But the question becomes, are we measuring the right things?

We are excited to once again be moderating the opening panel at the WCI conference in Orlando in August. This session will be a discussion among employers, industry leaders and regulators on measuring success. What metrics are important, and what is obsolete? How can we drive the desired outcomes by adjusting the way we measure success? We hope you will join us in Orlando this August at the WCI conference for this session to hear what stakeholders think about this issue.

Future of Work

The future of work is an important conversation for all of us to consider in 2019. When you think of the future of work, what comes to mind? Machine learning, automation, technology, digital? How are our work cultures changing?

Employees today want to feel connected – connected to each other, connected to their community and connected to passions. Employees also want to perform purposeful work and to feel valued.

As workplaces evolve, our industry will also need to evolve to attract and maintain the workforce of the future.

Natural Disasters

Without question, we are experiencing more frequent and more catastrophic natural disasters than ever. Last year, we saw a record hurricane hit the Florida panhandle and wildfires in California destroy entire towns.

Disaster planning and response are an essential part of a risk manager’s job. However, the significant and devastating nature of the natural disasters requires evaluation of current risk management programs. Risk managers need to build in contingencies for contingent plans and need to factor in what would happen if there was a significant and lengthy disruption in your supply chain. We need to be thinking of the unthinkable and preparing for it before it happens.

To listen to the complete Out Front Ideas with Kimberly and Mark “Issues to Watch” webinar, which was broadcast on Jan. 8, please visit: http://www.outfrontideas.com/archives/

Bridging the Gap in Employee Benefits

Onboarding new groups remains an arduous, cumbersome part of the enrollment process for employee benefits insurers. While proposals are well-automated, and so is policy administration, between the two comes group onboarding. And that area has not been automated, leaving a gap that carriers fill with a hodgepodge of methods.

Complexity lies in the fact that each product—group medical, dental, life, vision and disability—requires different data to be collected. But the data gathered during the rating and proposal process isn’t sufficient. The employee’s gender, date of birth, zip code and perhaps salary aren’t enough to issue policies and pay claims.

Besides additional employee information, the insurer needs corporate information, such as affiliates, federal tax identification numbers and ERISA plan numbers. Many employers have multiple billing divisions that pay premiums separately. How to collect that information has plagued insurers for decades.

See also: 4 Key Elements for Onboarding Producers  

Two factors compound urgency. First, because about 80% of group plans renew on Jan. 1, insurers face a big crunch in the fall gathering data from paper forms, emails and the like. Additionally, employers—especially those sponsoring small and medium-sized groups—are changing insurers more often as they try to save every dollar on employee benefits. Groups of 50 to 200 lives often go out to bid annually.

Thus, the costs of onboarding a new client can no longer be amortized over five years. Carriers need more automated, cost-effective ways to onboard groups.

Some insurers have tried using CRM systems and other workarounds to improve efficiency. But those attempts have failed, and the process remains largely a manual one.

Enrollment solutions that address onboarding are, however, being developed. Successful vendors will have to provide the following:

Automated data capture. Manually entering information into the policy administration system results in missing data, errors and time-consuming back and forth. It can make onboarding a three-month process.

Effective importing tools will allow onboarding software to import and map data to system variables for seamless integration and efficiency. Additionally, the solution should include a support portal where human resources administrators can log on and enter data right into the system or use the import function to upload the entire groups.

Data integrity. Employee data must be correct and complete when entered. Built-in rules will enforce quality. For example, if a date of birth is missing or a year is entered incorrectly, the software will flag the error and require the user to fix it. This ensures data integrity and accurate rating.

Security. By eliminating manual data collection and handling, and using portals to enter and store employee information, the onboarding system can provide increased data security. It must comply with privacy regulations regarding personally identifiable information (PII), thereby ensuring a secure way to gather and store employee information.

Flexibility. Integrating onboarding closely with both proposal and policy systems is essential to efficient workflow. Tightly integrating it with your underwriting and proposal system will provide flexibility to easily navigate the sold-case process as changes in the group arise after the policy is sold but before the effective date.

See also: How Insurance and Blockchain Fit  

Onboarding software ultimately may help transform the entire policy lifecycle.

Digital Insurance 2.0: Benefits

The disruption and changes that are reshaping economies, industries and the businesses within them are providing unprecedented growth opportunities for employee and voluntary benefit insurers in terms of new markets, new customers and the demand for new products and services … creating Digital Insurance 2.0. The gig economy, evolving healthcare markets, shifting industry boundaries due to mergers and acquisitions (M&A), cost shifting from employer to employee, new behaviors driven by digital companies as well as new technologies and the growth of small and medium-sized businesses (SMBs) are at the forefront of these changes and opportunities.

Familiar Market, Brand New Look

While the outlook for employee and voluntary benefits is promising, the market no longer looks like it once did. In our new thought leadership report developed jointly between Majesco and Milliman, A New Age of Insurance:  Growth Opportunity for Employee and Voluntary Benefits Insurance in a Time of Market Disruptionseveral factors are converging to create change and opportunities in the employee and voluntary benefits landscape, as illustrated in Figure 1.

Figure 1: Forces creating opportunities in the employee and voluntary benefits market

The two largest generations, Baby Boomers and millennials, are in the midst of rapid transition. Their shifting positions within the general population, the workforce and business leadership are rapidly reshaping the market landscape. The behaviors and attitudes of both generations are substantially influenced by economic conditions, and digital technology is rapidly becoming an integral part in their lives. Gen Z is further intensifying this shift. These factors have helped fuel the rise of the gig and sharing economy, which is estimated to encompass 35% of the U.S. workforce today and is continuing to grow and expand.[i]

Together, these and other forces are creating employee and voluntary benefit needs and expectations that present unprecedented opportunities for growth. The growth in new affinity groups; increased demand for benefit portability; and the growing demand for new, non-traditional benefits and services that offer a simplified, satisfying customer experience are just a few of the dramatic shifts in needs and expectations.

See also: 4 Good Ways to Welcome Employees  

The market landscape will continue to rapidly transform as workers’ and employers’ needs and expectations shift, healthcare reform continues to change, industry boundaries shift with M&A, marketplaces evolve, new products are introduced and new competitors emerge from within and outside the industry. The surge in employee demand for innovative voluntary benefits are an increasingly critical element to attract and retain top talent for companies, particularly as we continue to see unemployment rates decline, as boomers retire and as the fight for technology talent intensifies.

Adding fuel to the market shift is the rapid emergence of new technologies like wearables and advanced medical devices and exploding data (among others) that are redefining the insurance market into one focused on well-being, lifestyle and longevity, rather than illness and death. Innovative benefits are increasingly focused on digital health and well-being, elderly care, pet insurance, college loan repayment and the demand for digitally enabled customer engagement.

Making the Marketplace and Workforce Changes Work for You

Greenfields and startups saw these opportunities early, but existing insurers are now quickly developing strategies and plans to capture this once-in-a-generation opportunity.  Insurtech has fueled significant investment by venture capitalists, spawning companies like Zenefits, Maxwell Health, ZhongAn, Discovery, Allan, Bright Health and Clover Health.  We now see existing insurers begin to focus on the opportunities, such as MetLife focusing on the SMB market. At the same time, the increased demand for portability of voluntary benefits due to the generational acceptance of frequent job change offers insurers a unique opportunity to cost-effectively capture employees as individual customers and to keep and grow individual relationships (and premiums), rather than losing relationships through attrition.

The robust, once-in-a-generation opportunity is seeing insurers of all types developing strategies and plans to capture business, including:

–Traditional worksite carriers specializing in supplemental products such as accident, cancer, critical illness, hospital indemnity, voluntary STD, term life, universal life and heart/stroke insurance are expanding their portfolios to include voluntary LTD, gap, dental, whole life or vision products.

–True group carriers that historically specialized in group products, including term life, basic AD&D, group STD and LTD, dental and vision are expanding their product portfolios to include accident, critical illness, hospital indemnity and gap insurance.

–Medical carriers specializing in major medical coverage have been acquiring supplemental benefit carriers or administrators to expand their portfolio with supplemental products. They may have a competitive advantage because of their ability to harness and analyze extensive medical data.

–Finally, we are seeing a range of other carriers including multi-nationals, P&C carriers, retiree market specialists, and others that are entering the market with unique voluntary benefits like pet insurance and legal insurance as well as expanded affinity market programs to capture the opportunity.

Underlying each of these is the need to respond with innovative products, plan designs, underwriting and pricing as well as new services, distribution channels and customer engagement approaches enabled by modern digital platforms. Thinking about the best strategic approaches to pursue to maximize the potential of these new products, services and processes will be critical for success.  Several approaches that are gaining traction include:

–Product differentiation: Insurers can differentiate themselves in a crowded market by offering a complementary portfolio of unique products, services and benefits. Differentiation may be achieved through value-added services (if exclusivity is achieved), creating an integration model across products, aligning products and benefits with a carrier’s identity, etc.

–Adjacent markets: Traditional group carriers are developing individual products to compete in digital, direct-to-consumer markets, and traditional individual carriers are developing group products to compete in the gig economy or growing affinity markets. Carriers operating in the consumer market are expanding into retiree markets, and carriers in the retiree market are moving into consumer markets.

–Product bundling: The demand for product bundling, or “combo” products, has recently increased. Sample combo products may include a group hospital indemnity product with accident, critical illness and term life riders or a universal life product with a long-term care rider. While these are just two examples, a large number of product combinations may be considered. In all market segments, and in particular the SMB market, combo products can broaden coverage, increase affordability and reduce or eliminate the need for underwriting by limiting anti-selection.

–Rapid product development: We are seeing an increasingly quick pace of product development, which is in stark contrast to the long shelf life of products before the ACA. In addition, carriers in the large market are frequently required to customize benefits and rates for distribution partners as well as employers. Keeping up with this pace requires a nimble technology solution for administration, billing, claims and operations. Carriers that are using newer technologies will have a distinct competitive advantage, especially in the large account and broker markets, as these technologies provide increased flexibility and speed to market. This competitive advantage also applies to the bottom line, as more efficient technologies can eliminate manual processes and reduce expense margins.

See also: Value in Informal Employee Networks  

–Partnering with emerging technology/insurtech: Insurance markets are being flooded with new insurtech startups. Some of these startups provide products or services that complement employee and voluntary benefit carriers’ value propositions. Existing carriers would be wise to identify the key startup companies in their markets and establish strategic, beneficial partnerships.

Reap the Benefits of This Unique Market Opportunity

There are a multitude of exciting opportunities for employee and voluntary benefits insurers in this rapidly evolving market. The unprecedented pace of change will drive out old business models and allow new ones to flourish with the introduction of products and the offering of new services, plus interesting mergers and acquisitions such as Aetna and CVS, and the emergence of new business models via insurtech and established insurers.

There is no longer a doubt or debate regarding the need to digitalize insurance, but this still continues to be an unpaved path for insurers. Not many understand the best way to achieve it. Insurers are still in the midst of legacy modernization of their core systems for strengthening their back-end processing capabilities, but most realize that these initiatives will fall short without digital transformations that will bring meaningful benefits to customers and ultimately to win them. In this new market, insurers will need a single platform to support individual, group, voluntary benefits and worksite across all lines of business and with a design flexible to adapt to new products, workflows, distribution channels and even devices. The platform will need to enable portability of voluntary benefits to individual policies as well as innovation of products where the same product can be offered as an employer-paid, voluntary or worksite product. Platforms must increasingly make it easy to customize plan options for groups.

There are a multitude of potential futures for group, employee and voluntary benefits insurers in an increasingly volatile world. The rapid and unprecedented pace of change will drive out old business models and allow new ones to flourish with the introduction of products and the offering of new services, and much more, from both new insurtech startups and established insurers.

At the heart of the disruption is a shift from Insurance 1.0 of the past to Digital Insurance 2.0 of the future. The gap is where innovative insurers are taking advantage of a new generation of buyers, capturing the opportunity to be the next market leaders in the digital age.

It is a once-in-a-lifetime opportunity for insurers to redefine the market and competitive landscape in employee and voluntary benefits. Be one of them!