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connectivity needed to interface effectively within the new world of benefits, insurers continuing to do business via outdated systems are already falling behind.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.
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Marias adds Microsoft Azure to its Hosting Services
- Insurity Collaborates with Allstate Business Insurance on New Quoting App
- Spinnaker Selects TigerEye to Support Underwriting Strategy
- Bold Penguin Expands Partnership with INGUARD
- Genpact Acquires OnSource; Brings Digital Inspection to Claims Management
- Insurers implement Patriot Technology Solutions Billing Tool
- TechCanary Announces Availability of Insurance Platform for Canadian Market
- American Capital Assurance Selects Multiple Majesco Solutions
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA is pleased to present the 2014 Webinar Series. We have many topics for you to choose from and attendance is open to all ITA members. The webinar topics are current and exciting — ranging from predictive analytics to telematics and will focus on the direction insurance carriers need to follow for the future. All webinars are presented by insurance IT professionals along with some of the leading analysts and consultants in the field. There is no cost to attend an ITA webinar. For more information and to register for the webinar, click the “title” of the webinar below.
BLOGS AND COLUMNS
The whole transportation sector is in for massive transformation. The way people and goods will be moved from point A to point B in the future will be... READ MORE
Insurtech activity certainly remains high and Novarica has been working with multiple insurance-focused accelerators in 2017 to keep abreast of... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE
The core systems replacement cycle is speeding up. Twenty years ago, even if you spent your entire career working at the same insurance company, you... READ MORE
- Partner News