With plan sponsors becoming increasingly price-conscious, the group life, annuities and voluntary benefits sector is turning to technology to help them attract, retain and profitably serve clients. Across the industry, insurers continue to make investments spanning the Novarica Insurance Core Systems Map.
Novarica has identified seven key findings in its Business and Technology Trends: Group Life/Annuity/Voluntary Benefits report. If you’re not familiar with this report, it provides and overview of group benefit providers’ business and technology issues, data about the marketplace and 57 recent examples of technology investments by group benefit providers.
1) Top technology initiatives for group and voluntary insurers include agent and customer portals (including enrollment) and core policy administration, including benefits administration. The need for effective sales and marketing tools across multiple channels is key to drive enrollment, and robust flexible group administration is also vital. Carriers are opting for incremental upgrades over “big bang” core system transformations. Vendors must grow their understanding of individual markets, as well as the linkages between billing and enrollment.
2) True sales growth is a challenge in group business, with much activity consisting of carriers trading business or increases in group term life face amounts rather than cases or lives covered. Group annuities reportedly also saw declining sales. At least one carrier is experimenting with offering cheaper long-term care insurance coverage for lower benefits in an attempt to drive uptake.
3) Private exchanges are emerging as a new distribution channel for voluntary products, though enrollment is modest to date. The need for brokers to make up for caps on commissions and high deductibles for traditional health coverage may lead to more activity in this arena.
4) Group annuity contracts are seeing increased interest as some carriers are offering US employers the chance to offload some or all of their defined benefit plan liabilities in exchange for purchasing group annuity contracts.
5) Lower priority technology initiatives include billing, BI, claims, CRM, distribution management, document creation and management, rating, underwriting workstations, and specialized components. While lower priority, many of these components can contribute both cost savings as well as more efficient handling of transactions and payments. The lower priority of investment in BI should not be read as an indictment of its potential, as plan sponsor reporting and analytics capabilities, the ability to analyze participation, and understanding channel and producer productivity and profitability remain important.
6) Mobile devices continue to make inroads. Both members and plan sponsors see benefits, such as the ability to submit claims or view policy information.
7) Critical success factors for carriers continue to be sound product design; better tools for enrollment, marketing and sales to individuals; powerful and adaptable administration systems; marketing and sales across multiple channels, and continuing improvement of administrative systems to drive cost savings and efficiency.
With customer expectations changing across the industry, driven by changes in the technology ecosystem within the industry and across the economy, insurers need to plan to incorporate these paradigm shifts into their business and technology strategies for 2015. Or else plan to be taken by surprise! If you have any questions or comments, please feel free to send me a note at email.