Aite-Novarica Group’s Insurance practice recently facilitated a Special Interest Group meeting focused on group and voluntary benefits. Our Special Interest Groups are confidential knowledge-sharing meetings tailored to specific lines of business where our team shares recent research and participants discuss industry trends.
This latest session focused on issues carriers in this highly competitive space are addressing as we rapidly move toward enrollment season. Product portfolio changes, distribution channel integration approaches, and recognition that the traditional swim lanes governing how companies approach these markets are breaking down were foundational parts of the discussion.
Here are a few of the lessons learned during this gathering.
- Provide benefits—and technology—people actually want.
As the plan participant enrollment process has evolved, a number of traditionally life- and disability-oriented carriers have either doubled down on their existing dental investments or, in a number of high-profile transactions, acquired carriers to expand their product offerings. This continues to be an important aspect of carrier “go to market” strategies given the priority plan participants (e.g., employees) place on these products. Dental puts these firms “above the fold” for high-priority products during the enrollment process and creates new technology investment priorities for carriers operating in this space.
Interest in this area is also driven by the importance of health-related data for supporting an array of key business processes, including underwriting, enrollment, and experience rating. Regardless of the line(s) of business a carrier focuses on, being aware of both the challenges and opportunities associated with emerging data capabilities remains a high priority.
As part of keeping up with new data capabilities, broader technology modernization is also a key concern for carriers. A drive toward higher levels of automation, self-service, and digitization across the value chain for plan providers, plan sponsors, and plan participants is highlighting some of the critical limitations in existing technology environments. We discussed an array of approaches to this challenge, including the potential value for operating greenfield environments to allow a new line of business to be brought up quickly while creating opportunities for “testing and learning” about both the products and the underlying technology concurrently.
- Technology for the sake of technology doesn’t lead to good outcomes.
Modernization is hard work, and it requires well-orchestrated efforts between IT organizations and their business functional area partners to succeed. Things falter when modernization efforts become technology projects, rather than business projects enabled by IT.
Session participants offered a number of examples, reiterating that nuance and awareness of the details of a specific line of business are vital for success. Leaving these aspects out can lead to unfortunate or incorrect assumptions, even when very talented IT teams are engaged. Failure to communicate effectively between business and IT stakeholders can also lead to timelines, project complexity, and budgets ballooning in unpredictable ways.
Transformative projects must be joint efforts, combining IT and business leadership and resources. Developing the appropriate relationship can be far more difficult than the actual technology work, but the payoff for making these investments is a far higher chance for a successful outcome.
- Testing shouldn’t be an afterthought.
As the capabilities of as-a-Service products grow, there are notable benefits when things work as architected. However, if things go wrong, organizations need to know what they’re going to do and react immediately. When a cloud service or third-party capability goes down, issues can make themselves felt in very public ways. This is certainly not a reason to avoid their use. Rather, it highlights the importance of testing not only the “happy path” when everything works as planned, but also each of the connection points where failure can suddenly turn customers into the QA team.
IT organizations also need to recognize that even easy-to-deploy solutions require both governance and documentation. The concept of RPA offers great promise as a way to quickly fix a variety of workflow-related issues. It can also create some unintended consequences, which can become testing nightmares. One carrier noted that their business partners had widely deployed end-user-driven RPA solutions that worked as designed but created a brittle exoskeleton around old systems.
Any time changes were introduced, they broke the RPA capabilities, which were not only undocumented but had been deployed with little regard for the evolutionary nature of the underlying systems. What had started as a way to create business benefit by improving productivity suddenly became an unexpected deterrent to deploying new foundational capabilities quickly. This highlights the importance of thinking about systems holistically rather than as a series of technical deployments that operate independently.
Group and voluntary benefits remains a line of business that is very attractive to many carriers and that has unique requirements which differentiate from individual product manufacturers and other benefits providers. Appreciating these distinctions can be the key to future-state success. If you’d like to discuss this market in more detail, please reach out to me at [email protected]. You can also read our latest report on this space, Business and Technology Trends, 2022: Group Life and Voluntary Benefits.