Connectivity Drives New Business in Evolving Benefits Market
Anthony Grosso | July 06, 2015
In spite of all the arm-flapping and hand-waving stirred by the Affordable Care Act (ACA), the way health insurance is purchased, and employee benefits are offered, is changing and this will undoubtedly change consumer behavior.
In step with this big shift, more and more consumers are accessing group and voluntary benefits via employer-sponsored enrollment platforms and private insurance exchanges. This means insurers must now work harder to adapt to new levels of competition and new ways of doing business.
There is new insurance business to be had in the form of individuals and employers who are demanding more choice and flexibility from insurance products and providers, but without the ability to reach potential consumers directly and to connect to enrollment platforms and private exchanges across the country, insurers don’t have the opportunity to even compete for it.
Legacy core administration systems, which have managed business in the group employee benefits space for decades, cannot support an evolving voluntary market with individual recordkeeping, and multiple enrollment channels. Further, these systems offer no ability to connect to a modern, digital technology environment.
As employers increase the variety of employee-paid voluntary benefits, employer-paid group benefits almost naturally decrease. And, as healthcare continues to morph and create coverage gaps, employers find it necessary to offer more voluntary benefit options to employees via the employer’s enrollment platform or private exchange to help employees obtain the full coverage needed. Compounding the challenge for insurers is the fact that today there are more places where individuals and employers can shop for benefits, and insurers must support all of these new channels (including exchanges), and traditional channels as well.
Without the connectivity needed to interface effectively within the new world of benefits, insurers continuing to do business via outdated systems are already falling behind. The evolving group and voluntary benefits market demands greater connectivity all along the value chain. In fact, this demand for greater connectivity and increased level of competition is heightening and accelerating the introduction of new, omni-channel business models which leverage and incorporate individual data and personalized communication, as well deliver better service to an employer’s already overworked human resources (HR) staff.
Modern technology is more open and flexible, and can enable insurers to push past outdated legacy systems and integrate with a variety of digital channels. For many, this starts by connecting to multiple online enrollment platforms. Insurers attempting this with closed, legacy systems end up with inefficient, manual processes and workarounds which ultimately do not meet the needs of the market. A more enlightened approach is for insurers to start by addressing the fundamental problem—core administration systems—which have outlived both usefulness and capability, by replacing said systems with an open platform featuring the now required connectivity capabilities.
In a world of private exchanges, brokers and enrollment firms will own the relationship and control access to the consumer who is voluntarily purchasing insurance benefits. From an insurer perspective, this means a significant loss of access to potential policyholders. In order to regain access to the policyholder, insurers offering voluntary benefits need to import and maintain individual data.
The rigidity of outdated, legacy systems make it difficult, if not impossible, to provide connectivity to exchanges and enrollment platforms, or to bring back and store individual records, putting tremendous onus on employers, and HR departments in particular. The ability of insurers caught in this bind to compete for new business will diminish rapidly as employers realize other, more connected, insurers eliminate this additional administrative and HR burden through the use of more modern technology.
No Quick Fix
The reality is right now too many insurers are addressing connectivity shortcomings by treating the symptoms instead of the root cause of core system challenges. And, processes created to enable existing legacy systems to partially connect with a limited number of enrollment providers are merely a temporary fix. Moreover, these compensating efforts often turn into lengthy one-time projects which take months to complete, require a dedicated staff, incur large costs, and result in a bespoke, one-off solution. This approach seriously hobbles insurers’ ability to distribute insurance products to multiple markets.
Insurers must look past legacy to find out how the technology available today can effectively eliminate barriers to connectivity. Easier integration into new enrollment platforms and private exchanges is needed, as is the ability to retrieve customer data, which will inform and help deliver a higher level of service to employers, as well as create a direct relationship with the consumers who have purchased benefits.
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