Last week, Novarica hosted its first virtual quarterly Group and Voluntary Benefits Special Interest Group meeting. Novarica senior team members discussed the impact of the pandemic on the group and voluntary benefits segment with more than 30 insurer participants. Topics ranged from managing digital engagement in a time of change to finding strategic direction for the new normal after COVID-19.
Prioritizing Digital Strategy
One clear takeaway is that digital strategy and capabilities have become more important than ever. Before the pandemic, digital strategy tended to be externally focused to meet customer needs. But with work from home now the norm, insurers are increasingly focusing on improving digital capabilities for better internal workflow and workstream integration.
Remote work has created a spike in demand for digital capabilities such as e-signatures and electric delivery; the adoption rate is far higher for carriers than before the pandemic impacted North American markets. Insurers are leveraging this increased utilization rate to accelerate related efforts that were previously considered low-priority.
While the increased adoption of digitization has, in many cases, been forced by the COVID-19 situation, utilization rates will likely remain high in the future, altering the potential investment priorities for carriers.
Innovation Movement and Market Changes
At least for now, insurers are continuing to move forward with major transformation efforts they had planned for 2020, especially with digital transformation. Part of the effort to move these capabilities forward has been a strong commitment to Agile development methodology. Greater reliance on collaborative relationships between business and IT organizations has led to a growing acceptance of delivering on MVP solutions. DevOps is also of interest to many of the carriers who participated in this Special Interest Group session.
Integration with vendors including TPAs/TPEs, payroll providers, and distribution partners can be critical to creating good experiences in the group/VB space, which increasingly means having an effective API strategy. However, different approaches and governance models may be required when looking at public versus private APIs. Participants discussed the importance of being mindful of these differences as they look to accelerate their implementation efforts. It can be challenging to maintain this work while managing lines of business with tight expense margins reflective of both the economic downturn and the low interest rate environment.
Many insurers have also connected with InsureTechs to create digital capabilities they could not have delivered effectively on their own. As insurers move into the back half of the year, and toward the next enrollment period for plan members, innovation can be an important part of positioning both product offerings and service capabilities. For this to be successful, however, carriers should be mindful of the critical role that corporate culture and governance models play. CIOs and technology organizations are enablers for innovation, but success is ultimately determined by culture, which is created by top executives.
The New Normal for Work Post-Pandemic
Many insurers reported that the transition to work from home has been smooth, and productivity has frequently gone up rather than down. Some insurers also reported a “democratizing” effect: all-remote meetings mean that everyone participates on equal footing, whereas previously some remote employees might have found it difficult to effectively engage in meetings they were not physically present for.
The success of work from home has some carriers beginning to question what the corporate environment will look like post-pandemic. Insurers are more comfortable with employees working from home than before, and permanent telework is a possibility for some. However, any return-to-the-office strategy depends on the company and its culture; some carriers prefer to have employees back in the office as soon as possible, while others are taking a second look.
Moving forward, the ability to work from home can impact talent acquisition and retention as well. On the one hand, remote work offers insurers a national reach as they search for skilled employees. On the other hand, insurers are concerned that they may have talent retention issues if their best employees don’t have to physically move to work for another organization.
Moving Forward
In the past few weeks I’ve frequently spoken with insurers about “not letting a good crisis go to waste”—that is, moving forward from COVID-19 while maintaining the development energy and organizational commitment that has characterized the response to the pandemic. That will be an especially fascinating conversation in the group benefits space, which sometimes lags other sectors of the industry and grapples with compressed margins that tend to be highly correlated with business cycles.
Our next Group and Voluntary Benefits SIG meeting will be held on August 20th. Register here for the next event.
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