Group Life and Voluntary Benefits Insurers: Efficiency and Customer Experience


Group Life and Voluntary Benefits Insurers: Efficiency and Customer ExperienceThe voluntary benefits market has become more attractive as responsibility has shifted from employer to employee for many non-medical, health-related insurance products. As plan sponsors want to drive out costs, insurance carriers must execute the basics—benefit and policy administration, enrollment, case installation, marketing, and product design—while driving greater efficiency.

Scale Continues to Matter

Most real growth comes from the voluntary benefits and worksite segments. Critical illness, accident, and term life products are showing strong expansion. Dental and vision care offerings are gaining attention, and a considerable number of market participants are adding Health Savings Accounts (HSA) and similar products to their slate of offerings. Even voluntary lines are seeing a significant number of takeovers from other insurers.

Traditional group benefits are a slow-growth business in which scale matters to address the economic impacts of compressed margins. Plan sponsors are continuing to push insurers to 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 Impact of COVID-19

The COVID-19 pandemic has affected the market in several significant ways—and not just in the obvious areas of claims activity, pricing, and underwriting. The Great Resignation underlines the importance of benefits portability, and several articles point to the disparate impact the pandemic has had on different groups’ employment, Some employers are offering benefits to support remote employees, including behavioral health, pet insurance (many people have adopted pets during the pandemic), and telemedicine.

Munich Re reports that group life underwriters are taking several approaches to the 2020 claims experience, from removing it entirely or not making any adjustments to adjusting claims experience with an expectation for ongoing excess mortality.

Most voluntary carriers have not changed their underwriting practices to address COVID-19, but some have added health questions for specific products or added pricing considerations. Some have also started to access medical records for underwriting without requiring bloodwork or medical exams or started to take vaccination rates for groups or industries into account.

The Great Resignation

The Great Resignation is having a twofold impact. Employees are leaving and interested in taking voluntary benefits with them, and carrier IT organizations need to address mid-career and baby boomer employee retention to avoid a “brain drain.” The aging of carrier staff in various functional areas was already a fact, but carriers may need to shorten their timelines for retaining institutional knowledge and develop knowledge management programs.

Employees expect flexibility regarding when and where they work; they may be willing to walk if employers do not make accommodations. Employees are also leaving to improve their financial security (e.g., in favor of higher pay), diversify their skill sets, or because they have reassessed their priorities.

Physical location is less of a factor, which can work for carriers and against them. Carriers based in less appealing geographies can recruit from a larger pool with the potential for remote work if they offer other competitive benefits. They must also improve the onboarding process and work to offer a rewarding work environment. The latter is especially important for younger generations, who tend to value company missions and career development opportunities.

Product Development

Voluntary/worksite insurers are in constant pursuit of innovative solutions to differentiate themselves. Newer offerings include discount purchase programs for fitness wearables, identity theft, and student loan assistance.

Digital experiences, important before the onset of the COVID-19 pandemic, have increased as a priority for insurers looking to develop broader, deeper, and more resilient relationships with plan participants.

Many plan sponsors continue to investigate wellness programs to lower healthcare costs and increase employee productivity. Some insurers are offering wearables to gather data and monitor progress. Wearables also offer insurers the opportunity for more frequent yet relatively inobtrusive consumer engagement.

Acquisition and consolidation in the absence management space have opened doors for claims solution vendors to expand their offerings. Group life and voluntary benefits providers are wary of working with competitor-owned service providers. Some insurers view absence management capabilities as differentiators that complement other disability product offerings. Only the largest group life/DI insurers offer FMLA support through internal capabilities; others often turn to TPAs for a solution.

Top Technology Priorities

Top technology priorities remain sales, marketing, and tools for enrollment and for 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 Aite-Novarica Group’s Impact Report, Business and Technology Trends: Group Life and Voluntary Benefits.