Four Big Challenges for Group Life/Voluntary Carriers
The U.S. group life and annuities marketplace is rapidly evolving, due to changing regulations and rising healthcare costs. This market has shifted from basic group products, to a complex mix of group/voluntary products across lines of business.
Worksite benefit offerings are expanding, as employers try to retain and attract workforce members with appealing benefits, at low or no cost. It is a difficult, ultra-competitive market for carriers who are trying to meet the needs of a variety of group demands.
While the pain-points carriers are experiencing with group/voluntary insurance are similar to many of the problems experienced by other lines of insurance (rapid product development, interfacing with new systems, etc.), group/voluntary insurance has its own set of challenges. These challenges are becoming critical for carriers, considering the competitiveness of the voluntary market.
Difficulties Combining Group and Voluntary
As voluntary products become a larger focus of groups, carriers struggle to support their very different requirements, which are based on individual life and health products with the challenging requirements of transferability and portability. Many carriers have resorted to utilizing separate systems for basic group and voluntary, or worksite products.
This makes a 360-degree view of the client difficult to achieve and creates numerous billing challenges. As consumers enjoy increasing levels of convenience in all their daily transactions, they expect the same from their employee benefits. Millennials, a large portion of the workforce going forward, are particularly impatient with carriers that haven’t gone fully digital, and often vote with their feet. Plan sponsors monitor the percent of their group that is enrolled in a product, and will discontinue plans that are not well-utilized.
Enrollment procedures vary by the size of the group and type of product (group/voluntary). Benefit brokers typically enroll worksite products. As a result, carriers must be able to use and deploy a wide variety of enrollment approaches and need to provide enrollments from mobile devices, as well as interface with external enrollment providers seamlessly to the carrier PAS.
Group/voluntary carriers offer customer interaction-heavy products. Dental coverage, for instance, can involve multiple customer-insurer interactions in a short period. Online, instant and easy interaction is key for providing consumers with the service they expect.
Billing continues to pose challenges, as group carriers must now provide various billing types for a group. Multiple types of both group and individual products must be correctly deducted from payrolls and direct bills correctly generated/reconciled for direct billing. Adjustments and additions/deletions of billing amounts are complex. Following the Amazon model, members expect to receive one bill across their products for their household, if receiving a direct bill. Carriers require a record-keeping system that can track and reconcile bills at the group, sub-group, and even across sub-groups, and at the same time, accurately direct-bill a member.
What should group life and annuities providers do to overcome these challenges? Stay tuned, my next blog post will describe important differentiators for an effective group/voluntary policy administration system…
Please take a look at my white paper, Group and Voluntary Life Insurance: Challenges and Trends, to discover how insurers can consolidate ineffective and costly legacy systems, while group/voluntary customers can benefit from the same dynamic experience that individual customers already enjoy.