Just Choose Both: Adopting a New Group and Voluntary Mindset

If voluntary benefit/group insurers are open to a shift in mindset, they will open themselves up to growing new market opportunities.

(Image credit: Austin Distel/Unsplash.)

Traditionally, individual life and annuity insurers and voluntary benefit/group insurers were not much alike. Their products were different.  Their processes and systems were not alike. Their distribution was different. Their experiences were different. Even those carriers that played in both segments typically conducted their businesses as separate units of the company. It wasn’t hard to see why. Risks were calculated based on individuals or they were calculated based on the employee group.

However, one thing was the same…the ultimate end customer: the individual or employee.

Seth Rachlin, Seth Rachlin, Chief Innovation Officer for Insurance, Capgemini, co-authored this article.

While there are still many differences in play, there are increasing similarities that create opportunities with a new set of choices and a new set of rules. Sometimes the answer to these choices is no longer either/or, but it is both. If voluntary benefit/group insurers are open to this shift in mindset, they will open themselves up to growing new market opportunities—and a host of possibilities to create deeper, longer, profitable customer relationships. But it is going to take a lot of “both” thinking to achieve a successful perspective.

At a recently held roundtable organized by Capgemini and Majesco, distinguished leaders from the industry discussed how expectations at the workplace are changing for Gen Z and Millennial workers, especially regarding voluntary benefits at the workplace. Last week, Capgemini and Majesco released many of their comments and findings in a special report, Growth Opportunities in the Voluntary Benefits and Group Benefits Market. Today, we’ll take a brief look at some of those conversations for insights on how this might impact group and voluntary business strategies.

Defining the customer

At the core of group and voluntary benefits is one question that impacts all others.

Who is the customer—the employer or the employee?

In group and voluntary benefits, the employer has long been considered the customer. But we are undergoing a shift that has created an entirely new employment dynamic, where companies treat their own employees like customers—making sure that the experience looks inviting from the outside and doing their best to keep the employees happy once they’ve joined the organization. With employers needing to meet employee expectations, group/voluntary benefit insurers are now needing to look one layer deeper in the experience.

How can the industry improve the employee experience through the group and voluntary benefits? Of course, they can’t begin to improve the employee experience if they can’t prove to employers that their own experience will improve as well. Time-tapped HR teams don’t want to spend any extra time in the enrollment and administration of group and benefits products, but they do want to provide an expanding array of products and benefit plan options that meet a growing diverse employee continency. That means that the answer is both. If insurers can expand their definition of customer, they will begin to look at their products from both vantage points.

Enrollment as the first, but not only, area of opportunity.

In our round-table discussions, two words appeared as important and connected: relationship and relevance. It can be difficult for insurers to establish both a relationship and relevance while selling through an employer as part of their benefit plan options. The key is to find or create windows of opportunity.

The first window is typically the annual benefits enrollment period—the short window of time when an employee selects their benefits for the coming year. The industry is quite efficient at open enrollment. But it only happens once a year and so much else happens throughout the year that create new insurance needs. The birth of child, college, starting a business, marriage, purchase of a new home, traded in cars, a new pet or retirement points in time where the employee’s risk needs change that are often missed.

Instead, could we capture more employee related data internally and externally to guide them in selecting insurance benefits? Even more importantly, can we change the enrollment process assumptions from once a year to anytime throughout the year? And why not offer personal or individual coverages as an option within the benefit plan for needs like pet, auto, home, life insurance, long-term care and more that are increasingly desired?

A workforce in the midst of upheaval and shift

In 2021, the Millennial generation overtook Gen X and Boomers as the dominant 30-60-year-old insurance buyer segment in the United States. It will be joined by members of the Gen Z generation in 2025 [1].

Which employee population best represents the need for an expanded range of benefits and an increased portability in benefits—Gen X and Boomers or Gen Z and Millennials?

 Millennials and Gen Z are not bound to a single organization for their career, instead opting to move around and have different experiences, including starting their own business or Gig work. Their potential need for coverage now and after they leave their jobs is great. They will be especially interested in benefits that they can take with them.

Gen X and Boomers, on the other hand are also moving toward retirement and a different kind of financial independence that may include working part time or carrying their benefits with them in ways that are unlike COBRA coverage—because Medicare does not cover all their risk needs.

The pandemic has created a spike in the number of people who left their jobs from both demographic groups. Many have found they can work from anywhere, creating a new competitive workplace landscape. Termed as ‘The Great Resignation’[2], this economic trend, seen across all businesses from small to large and from retail and education to technology workplaces, has put employers on notice to retain existing and attract new talent.

 Insurers who can offer a wider array of group/voluntary benefits with different benefit plan options that meet the broad and different generational needs—often 5-6 different generations—to meet their unique risk needs and capture a significant market opportunity not seen in decades. Given the nature of the younger generation to change employment and the older generation wanting to retain some coverage, voluntary benefits insurers are staring at a fantastic opportunity.

Products that can be underwritten individually or can be ported to individual insurance so the employee can retain them, will offer insurers an opportunity to retain customers and deepen the relationship with other products over time—a far more cost-effective customer acquisition. They gain the short-term advantage of bulk business and the long-term benefits of a broadening relationship that doesn’t have to end with employment.

For insurers, though, it is a clear signal that both groups are candidates for selling through the employee channel, growing a deeper relationship, and providing the portability that employees may find appealing as they weigh their future options.

A new set of rules for a new type of life

As insurers grapple with the possibility of selling to employee groups, they should also consider that generational needs aren’t the same. In fact, their possible interests and products are all over the map. The wider the net, the broader the portfolio of offerings and the greater the importance of the experience.

To retain and grow their customer base and revenue, insurers must rethink their scope to a broader lifestyle experience across health, wealth, and wellness that includes insurance products, lifestyle needs and value-added services. Providing a broader portfolio of offerings as part of an overall plan benefit package begins to address the broad range of needs across multiple generational groups that will drive employee enrollment, satisfaction and value. To make the process easier, insurers must leverage employee data – both collected as part of the employment process and voluntarily supplied by employees – to personalize and prioritize the products and services that fit with employees’ life stages and personal needs and interests.

For example, there are solutions that provide online portal and app to help employees with enrollment and benefits questions throughout the year.   Using AI, you can capture engagement data to further guide employees and identify future needs.    This different level of engagement creates new opportunities for consideration. Can group/voluntary benefits insurers find ways to “listen” to structured and unstructured data for signs of new risk needs or product and services trends? 

One of our roundtable participants discussed how we use our listening to create new models of business:

“If you [look] at employee life events, does that offer an opportunity to engage that employee differently? They had a child. Maybe they need additional insurance. Maybe they took a loan out of their 401K to be able to put a down payment on a house. Now there’s a lot of opportunity to engage to sell new products at that point in time, off-cycle to the annual benefits process. These could be individual products that can create a better overall value proposition and loyalty to the employer and insurer because they’re helping them at that time, when their life is changing.”

Embracing innovation as the tool of rapid advancement and growth       

Group and voluntary benefits insurers need to look at broad-stroke changes in engagement, but they may need to also consider a wide array of factors concerning innovation and improvement. Data, for example, will be the key to successfully negotiating both group, voluntary benefit and individual underwriting, claims, product development and communication. To rapidly add these capabilities, insurers should be prepared to adopt a next-gen platform approach. Next-gen platforms are providing insurers with out of the box third-party data integrations and social media sentiment analysis using machine learning and artificial intelligence.

Should we innovate to expand our group channels or innovate to improve individual experiences or innovate by embedding our insurance into someone else’s experience?

 It is in the area of innovation that we find so many questions that can be answered, “all of the above.” One level of innovation gives rise to another because innovations have become more dependent upon each other than ever before. Channel growth makes a great case for this. It’s the innovation of ecosystems that enable insurers to think outside of their markets.

One roundtable participant commented that,

“I think smart insurance companies are beginning to think about everything as a channel. If I’m an insurer and I want to embed insurance into somebody else’s value chain or experience, I should have the ability to do that.”

 By building a partner ecosystem of collaboration, insurers can play to their strengths while the customer gets to enjoy a well-rounded product. For example, a life insurer can partner with a fitness tracker company to offer insurance to their customers, thereby allowing the insurer to target that market without having to set up a separate fitness watch business. But to do so requires next-generation technology using APIs to bring together solutions transcending industry or company boundaries.

Next-gen platforms are the foundations for future group and voluntary product innovation. They must support the customer across their lifecycle – whether for group, voluntary benefits, or individual insurance, recognizing the need to transition between these as they change employers, gig on or off, and have new product needs based on where they are generational. Optimally, these systems will support group and voluntary benefits with individual policy servicing on a single platform, recognizing that customer retention, regardless of where they originate, is critical to insurers’ growth strategies.

Finding the win-win in the quest for a transformational mindset

Last, there is the question of motivation. Is there any evidence we can point to that will solidify the need for group and benefits insurers to act now, while the employee and technology shift is creating opportunity? The answer might be found in the answer to one more question.

Who wants a wider choice of benefits options that can be provided through insurance innovation — employees or employers?

According to the MetLife U.S. Employee Benefit Trends study, 60 percent of employees are interested in their employer providing a wider mix of non-medical benefits that they can choose to purchase on their own.[3]  According to the same report, 66 percent of employers are expanding the range of employee-paid benefits or have plans to. This is great news for Group and Voluntary benefits insurers. The answer is both. Employees want us to expand our mix of benefits. Employers want us to expand our mix of benefits. We want to improve our market reach and deepen our relationships with increasingly mobile insureds.

The time to win in the group and voluntary market is right now. For an in-depth look at the Majesco and Capgemini roundtable comments and findings, be sure to download Growth Opportunities in the Voluntary Benefits and Group Benefits Market today.

Co-authors of this article:

Seth Rachlin, Global Insurance Industry Leader, Capgemini | Financial Services

Denise Garth, Chief Strategy Officer, Majesco

To continue this conversation, connect with Seth on LinkedIn and Denise on LinkedIn or Twitter

NOTES:

[1]  Projected Population by Single Year of Age, Sex, Race and Hispanic Origin for the United States 2016-2060, 2017

[2] Anthony Klotz, Texas A&M University coined the phrase while predicting the mass exodus in May 2021

[3] Redesigning the Employee Experience: Preparing the Workforce for a Transformed World, Metlife 2021

 

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Denise Garth // Denise Garth is Chief Strategy Officer responsible for leading marketing, industry relations and innovation in support of Majesco’s client centric strategy, working closely with Majesco customers, partners and the industry. She is a recognized Top 50 InsurTech Influencer and industry leader with both P&C and L&A insurance experience as a CIO and business executive with deep international ties in Asia and Europe through her ACORD leadership role. Denise is an acknowledged strategic thinker, innovation leader, international speaker, and author of thought leadership and articles regarding the key issues and opportunities facing the industry today to prepare for the future.

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