Group and Voluntary Benefits represent an area of increased interest for many carriers, including some who have traditionally operated in adjected spaces such as Individual Life Insurance and Group Health Insurance. The promise of growth is in this segment, even in light of the compressed margins on traditional Group Life / Disability products. Novarica’s recently published Business and Technology Trends report for the Group and Voluntary Benefits lines of business provides a detailed review of the business and market actions driving carrier technology investments today.
Market Dynamics are Changing Forcing Changes in Product Strategies; Scale Matters
In the current market, most of the real growth premium comes from the voluntary benefits and worksite segments. Critical illness, accident, and term life products are showing strong growth. Dental and vision care offerings are gaining attention and a notable number of market participants are adding Health Savings Account (HSA) and similar products to their slate of offerings.
Traditional Group Benefits increasingly is a slow growth business where scale matters in order to address the economic impacts of compressed margins. Plan sponsors continue to push insurers for lower costs, driving them to improve efficiency while still delivering the basic functions of benefit and policy administration, enrollment, marketing, and product design. The demand for efficiency is also spurring merger and acquisition activity.
The Demographics of Group and Their Investments
The companies in this space are a mix of group and multi-line life/annuity/health players. Few companies write group life or benefits as their main business. Often, insurers will also write individual annuity, life, or accident and health business. Larger health insurers often package voluntary life offerings with traditional health products. L/H/A insurers frequently offer voluntary benefits products as part of their portfolios, though specialist companies exist as well. Group health insurers are increasing their voluntary benefits offerings to complement traditional ASO, PPO, HMO, and DMO products.
Insurer technology investments are the most substantial in distribution, underwriting, claims, billing and marketing data and analytics, and customer experience digital processes and data and analytics. To a lesser extent, insurers are investing in digital product development, marketing, and billing processes, as well as core customer experience and billing systems.
Analytics and an Interest in Data Standards
Insurers are using analytics primarily in the voluntary benefits space, with applications in enrollment, identifying claims fraud, member conservation, sales reporting, and underwriting, among others. Analytics and reporting are important to plan sponsors and insurers for increasing participation rates.
ACORD has proposed an enrollment standard—but traction is uncertain. LIMRA also recently introduced post-enrollment data standards with participation from several insurers and vendors, but the potential for these standards to take hold on a broad basis remain, at best, uncertain. Alternatives to standards may be found in creative approaches carriers can take to managing the data associated with enrollment and change function. In this context, InsureTechs may also provide creative solutions for insurers seeking to create differentiating competitive advantages.
Top technology priorities include sales, marketing, and enrollment tools for enrollment and explaining product offerings; robust, flexible group administration capabilities, including reporting and analytics for plan sponsors and insurers, payroll deduction date flexibility, porting to other groups, and converting group contracts to individual contracts; multi-channel marketing and sales, including calculators and planning tools as well as self-service functionality; and administrative capabilities in billing, claims, enrollment, and financial and non-financial transaction processing.
For a more in-depth look at the trends in this space, read Novarica’s latest report, Business and Technology Trends: Group Life and Voluntary Benefits.
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