You have just arrived at the office when you get a phone call from the day care. Your daughter has fallen off of some playground equipment and the teachers are contemplating sending her to the hospital. They are getting your opinion on what they should do. You’re most concerned, of course, over your daughter’s condition and her pain. But for a fleeting moment, you feel grateful and comforted because you know that both your medical benefits and your accident insurance will have you financially covered for any scenario. You have one less worry.
You aren’t alone. Employees have long appreciated an umbrella of protection from unexpected circumstances. Whether it is their employer who is covering them or their union or even some measure of government protections, in general…employees are more comfortable working when they feel secure. They want a bubble of benefits to protect them from the playgrounds of life and they want voluntary options that will enhance their ability to enjoy their lives.
What has changed in the last 18 months?
Workplace safety issues are a concern. Talent is in high demand. Business models are in upheaval. Employee desire for financial security is higher. COVID has impacted everything.
COVID stands out, not as the only driver of employee benefits change, but because the net effect of COVID is that it has jump-started a new era for Group & Voluntary. The new workplace has greater opportunity. Group insurers and Voluntary providers will need to re-evaluate all that they provide. The key will be grasping which new diversified plays will best fit the new employee culture and which insurer investments will make those plays quickly.
The changing nature of the employer/employee relationship
Employees may appreciate security, but the dynamic of the employer/employee relationship is in the midst of change, making it far easier for an employee to switch from umbrella to umbrella. COVID has hastened a number of employment issues that have been lingering on the fringes for some time. For example, workplace stress has been growing, even before COVID-19. According to a 2019 Korn Ferry survey, employee stress levels rose nearly 20% in three decades — all of this before COVID even hit.[i]
Then, between April 2020 and April 2021, 37% of employees felt that they were stressed at their jobs nearly half of the time — a 7% rise in one year.[ii]
If we think of just this one issue, workplace stress, we see a host of areas that might be impacted within benefits. Physical wellness and mental wellness will certainly be impacted. How can employers foster mental wellness? Would travel and vacation perks help? Would improved flex-time benefits help? Can employees expect some kind of bundling and time-saving assistance within non-traditional employee benefits such as Auto/Home/Rental insurance or maybe an expansion of services to those who live in their household?
According to the MetLife U.S. Employee Benefit trends study, 60% of employees are interested in their employer providing a wider mix of non-medical benefits that they can choose to purchase on their own.[iii] According to the same report, 66% of employers are expanding the range of employee-paid benefits or have plans to. This is great news for Group & Voluntary providers.
The changing nature of Group & Voluntary offerings
With the changing market, the Group & Voluntary benefits industry is in search of direction. To help make sense of it, we called upon two prominent industry experts to explore the changing nature of Group & Voluntary benefits, including the shifts from traditional offerings to more diversified plays. Joining me in the conversation were Seth Rachlin, Executive VP, Global Insurance Industry Leader, Capgemini and Jamie Macgregor, CEO of Celent. As a bonus to the conversation, Jamie provided us with a full industry overview based on Celent’s recent Majesco-commissioned report, Next-Gen Platforms in Group and Voluntary: Exploiting New Opportunities Across the Worksite Ecosystem. To hear the full presentation and conversation, watch Untapped Market Opportunities for Group and Voluntary Benefits with Diversified Plays, Open Ecosystems and Next-Gen Platforms. Below, we have excerpted portions of the conversation that you may find very interesting.
Analyzing what employers will need to foster positive, holistic employee lives and lifestyles
“COVID has provided a space and a break for many of us to rethink our lives. Much has changed. Some of us might be saving anywhere between 1-4 hours commute time during the day. The battle for talent is becoming important from an employer/employee relationship. Increasingly, employees are looking for more from their employer.
“We’ve had 18 months of thinking during the pandemic. I think a lot of people are now looking for greater purpose in what they’re trying to achieve. From an employer/employee relationship perspective, this relates to purpose, “I believe in my firm’s vision”, flexibility, recognition and the total reward package. It’s not just pay, salary, and vacation time. How do insurers and voluntary benefits providers capitalize on this need?”
“Employers need to work closely together with providers to understand and identify what’s important to employees, and then rethink the proposition. There’s a vast area of untapped opportunities in diversified plays beyond the traditional coverages offered. We know that the anchor propositions for employer plans are healthcare and retirement services, and then moving into traditional group covers for protection and disability. Expanding beyond this usual set, the opportunity could be huge.”
Fuzzy products + Blurry silos + Non-Traditional insurance = The Diversified Play
Diversified plays are just one way of describing the non-traditional product/service/process that insurers are going to need to look at. They would include things like:
- Financial management across wealth, health, life and protection
- Gig on / gig off benefits
- Embedded insurance
- Expanding into non-traditional P&C products and other non-traditional products like school loan reduction, legal services, financial planning services, etc.
“Group and Voluntary Benefits providers are now moving into non-traditional life insurance types of products with pet insurance, cyber/ID theft, auto, homeowners, and more. And it’s getting really fuzzy. No one insurer can really provide all of that. How should Group and Voluntary Benefits providers approach diversified plays? Is this where ecosystems come into play?”
“We are moving toward a world in which there’ll be the people who are bundling and packaging and providing benefits, and then there will be the people who are actually manufacturing them. There are very few insurers, if any insurers, who can offer everything. So, you’re right. I think that there’s tremendous opportunity for partnering and for ecosystem orchestration to put together holistic packages.
“But, there’s another topic that’s implicit in your question. The traditional dividing lines between property and casualty, life and annuity, and even health, have been almost sacrosanct since I got into the industry some 30 years ago. Maybe they should blur. Perhaps they don’t need to make a whole lot of sense from a customer perspective. I understand why from an industry perspective it makes sense, but maybe there will be a blurring of the traditional sectors to be more customer-focused and more holistic.”
How the Need Relates to the Solution: Investing to Make the Diversified Play Work
Of course, the insurance dividing lines and silos that Seth mentioned aren’t just a hurdle for customer understanding; they were both a necessity and a nuisance for insurance IT departments. Breaking down the barriers in products will require a completely new model.
“Are insurers investing in capabilities to position themselves with a new operating model that really requires a new set of technologies, such as Next-gen core platforms, API, open ecosystems and digital capability? This industry is behind, compared to the P&C segment from a modernization and optimization perspective. But there’s an opportunity to actually jump… leapfrog that and go directly into the cloud with these different next-generation platforms that allow a lot of these capabilities.”
“All clients suffer from the same things and are challenged by the same things. They’re challenged by the efficiency and the effectiveness of onboarding processes. They’re challenged by managing these various lines of business. And, (within the same product lines) you could even have all life products and have four or five products, and they’re still all managed in silos.
“And then insurers are challenged more broadly by data — by having the right data and by being able to use that data to effectively to target offers, to accomplish portability. You can’t get that without modernization or without transformation. And to think that you should do it anywhere but the cloud in 2021, I think makes no sense.”
“In a perfect world, we would start with a system designed for the cloud from the outset where integration assumptions are built-in to the design and services form part of its DNA.”
Jamie discussed this in terms of designing and building a middle layer into an insurer’s architecture that would more readily facilitate the plug and play relationships that are required.
“The concept of a middle layer is not new. We’ve seen it before. The difference today is that technology has advanced, and there are now platforms coming into the marketplace focused on this layer. Providers who recognize the advantages of this approach ahead of time and invest in it will be more likely to take advantage of the broadening ecosystem of partner solutions as opposed to those still operating on a largely monolithic system.”
“These new platforms are also getting pretty good at understanding how to move towards flexible coverages, where the ability to switch on or switch off cover comes easily.”
“This is just another example of where the API economy will ultimately prevail. If you are an insurer and you manufacture products, you want those products to be available in anybody’s value chain where it’s appropriate — via an API — so that your storefront is as big and broad as possible.”
“The idea of the marketplace is becoming predominant in the European market. There are new API-enabled marketplaces of things like benefits or various types of insurances. I think that’s coming to the US as well. When you see all of the different players and the complexity of the benefits ecosystem, the notion that a seller of benefits should be able to plug and play your products into that environment, I think it makes all the sense in the world. API interoperability will become more and more important in the 12 to 24 months ahead.”
Industry excitement and “the big picture.”
“This is an area which is exciting and where there’s incredible potential. We’re talking about people’s lives. We’re talking about people’s livelihoods. And, we’re talking about the opportunities for an industry to do a better job and to more completely serve the needs of customers in those critical areas.
“Employers benefit and insurance companies benefit and employees benefit. It’s a virtuous circle. And it’s a challenge that I’m excited to be a part of.”
“Also, instead of fighting for the same market share that we’ve all been fighting over for decades with many of the larger employers, we now have an unmet market opportunity with the small and medium employers. The growth opportunities are pretty astounding. I think we take a step back to rethink how that market needs to be served, and how we can provide benefits to a vastly changed employee marketplace.”
Are you ready to capitalize on a new era of opportunity within the Group & Voluntary market? Majesco provides Group insurers and Voluntary benefit providers with approachable, cloud-native technologies that were built to help you capture today’s and tomorrow’s diversified opportunities. Find out more about the full industry opportunity by reading Next-Gen Platforms in Group and Voluntary: Exploiting New Opportunities Across the Worksite Ecosystem. Also, don’t miss my conversation with Jamie and Seth and by viewing, Untapped Market Opportunities for Group and Voluntary Benefits with Diversified Plays, Open Ecosystems and Next-Gen Platforms.
[ii] MetLife, Redesigning the Employee Experience: Preparing the Workforce for a Transformed World, MetLife’s 19th Annual U.S. Employee Benefit Trends Study 2021, March 31, 2021
[iii] Ibid. p.8