Bob Meier, EIS Product Solutions Manager, Benefits and Healthcare
While slowing considerably, the pandemic has spurred a boom in self-employment and career hopping, as people shift employers in search of greater opportunity and work/life balance. But, in taking these bold steps, employees typically give up their health, dental, life, disability and other employer-led insurance benefits, many of which are expensive and difficult, if not impossible, to replace outside of traditional employee benefits programs.
Whether they are changing jobs or leaving the workforce due to layoffs or retirement, most people would welcome the option to take their employer-provided insurance with them. For them, benefits insurance portability could significantly reduce their insurance costs and increase their sense of security. But, more importantly, they would benefit from not having to shop and qualify again for equivalent benefits, fear premium increases or being denied because of their lapsed coverage, age, or health status.
Should insurers be concerned? Well, it depends.
Chinese philosopher, general, and strategist Sun-Tzu wrote, “In the midst of chaos, there is also opportunity,” which is why shifting employment trends could threaten some employers and insurers.
But, benefits insurance portability offers a big opportunity for those ambitious insurers and employers willing to grapple with the challenge, ensuring a competitive edge for years to come.
Why benefits insurance portability is a winner for carriers and employers that respond
From the employer’s perspective, benefits insurance portability increases the value of the total compensation plan they can offer and could give employers a competitive advantage in tightening job markets.
For insurers, portability increases their attractiveness to their employer clients by helping them attract and retain talent. In addition, the insurer retains the customer, who could continue to purchase from them as they buy homes, and cars, marry, save for college, and plan for their economic future.
Benefits insurance portability also allows insurers to satisfy those evolving customer demands in new ways, through cross- and up-selling opportunities and by helping close the growing gap in insurance ownership.
Basically, benefits insurance portability is a win-win-win and will be a huge part of the future of insurance and how individuals purchase and shop for insurance. But only if insurers are equipped to take advantage of this shift.
Why many insurers will struggle with benefits insurance portability
For insurers, the question is how to maintain a relationship with an individual who once was part of an employer group.
This is not merely a hypothetical as it immediately reveals the inherent limitations of legacy and even “modern-legacy” policy administration, billing and claims systems, which almost invariably are built around policy records and not customer records.
Unfortunately, this is where many benefits insurance technology platforms will fall short. The most-contemporary insurance core systems, aka coretech, avoid such limitations via customer-centric data structures.
Another approach would be to create new group policies for “solo-preneurs” in the same way as they do for large employers. However, this also would reveal limitations with most legacy systems, which lack the low/no-code tools that enable business users to configure and iterate insurance products rapidly. Instead, many insurers still rely on developers to code and refine insurance products, which can take many months or even a year to develop.
Finally, insurers will also need a platform that can scale to house both group and individual benefits products and synchronize the inherently different data that accompanies these different types of insurance products. Adding to the challenge is that legacy and modern legacy systems simply may not be capable of managing multiple insurance segments – or even lines of business – on a single platform.
To handle a hypothetical 300,000-employee case, convert it from group to individual, and port that data over, carriers need a burly – and scalable – rules engine and configurable workflows to change the billing structure and automatically generate new policies. Otherwise, the additional work could be staggering from the carrier’s perspective.
But benefits insurance portability doesn’t need to be cumbersome or costly. As today’s employees embrace more flexible work options, employers and carriers need to be equipped for it. To provide excellent customer and employer experiences for those new products, benefits insurers also will need cloud-native insurance platforms with open APIs.
What’s to come: Partnerships to create personalized bundles of products and services
Data portability – the ability to move data to, through, and from systems, apps, partners, and data providers at scale – is an integral part of insurance portability.
Data portability is critical because it ensures you can interact with insureds as individuals rather than as a cluster around a specific product. It’s also vitally important that insurers are able to consolidate and order data around those individuals, which only be done with the free flow of data between systems and departments.
Again, this will prove challenging for insurers saddled with legacy systems and those structured around insurance products.
Those insurers that are able to break free of the constraints of legacy systems and their archaic product-centric data structures, however, will find themselves liberated to completely reimagine the enrollment and other customer experiences enabled by data portability, which provides the foundation for new methods of distribution and sales, like embedded insurance and ecosystems.
Consider the simple and unified presentation of embedded insurance and its impact on the customer experience. Embedded insurance positions insurance products as an add-on purchase at the point of sale and in a context where the protection makes sense. The $40 extended warranty Amazon offered with your student’s new laptop? With your payment details at the ready, it’s a no-brainer for most of us. Or $5 trip protection as you’re booking your flight, room, and rental car after two years of Covid confinement? Done.
Just as insurers and their partners are personalizing, suggesting, and bundling products and services in the above scenarios, ambitious insurers are looking to improve the enrollment experience with data-driven, personalized, and bundled insurance products.
Paper-based brochures, checklists, redundant and nonsensical application forms and underwriting questions are soon to be the kiss of death for insurers. The reason? Employers and employees increasingly expect the same elegant customer experiences they have with banks and retailers from all of the companies they do business with.
Insurers already are partnering and swapping data, sometimes referred to as “The Great Crossover.” Such an arrangement already exists between John Hancock’s Vitality Plus wellness-incentive program and Allstate’s Drivewise telematics program.
Essentially, data gathered through fitness watches, bio-monitoring bands, and a meditation app can make Vitality participants eligible for lower premiums. Since the partnership between John Hancock and Allstate, Vitality participants also may now qualify for further discounts based on safe-driving data gathered and shared by the Drivewise program.
Partnerships between insurers to offer a more complete portfolio of coverages make a great deal of sense considering how difficult and time consuming it has been for insurers to launch new products.
According to McKinsey & Co.’s “Ecosystem 2.0: Climbing to the next level,” insurers are eagerly pursuing partnerships and ecosystems to expand their product portfolios, make their products more attractive to people, and offer customer experiences that simplify buyer journeys, increase retention, and create product and service bundles that are data-driven, attractive, and drive revenue growth and customer loyalty.
The sticking point for many insurers, though, are legacy systems, with their hard-coded limitations and lack of openness. Ambitious insurers, however, are freeing themselves from these antiquated technologies through either greenfield innovation or digital transformation on API-rich, cloud-native policy administration and insurance core systems.
Employers, insurers and insureds all want the same things: simplified customer experiences, data-driven personalized options, and the security of stable coverage, pricing, providers, and market share.
For ambitious insurers, the great resignation could be the catalyst to fill the gaps between products and needs. For them, benefits insurance portability just makes sense and very well could spur a renaissance in workplace benefits.
