Reimagining insurance benefits for a changing workforce

Can traditional L&A carriers—the old faithful faces of the insurance industry—really take on new market entrants and nimble InsurTechs to re-shape the face of group and worksite benefits? With the right tools and mindset, the answer is yes.

The workplace attrition crisis during the COVID-19 pandemic saw millions of workers across the globe re-imagine their working lives and leave their employers in search of something new. It would be natural to think of this trend as a negative, triggering a universal business-critical challenge. But dig deeper, and a significant opportunity emerges for employers to reassess the way they attract, retain and value their workforce—and for providers to reimagine the products, such as life and group insurance, that enable this.

This opportunity is particularly relevant to Life and Group insurance carriers. Here is a segment that has seen top line pressures (flat growth, declining interest rates) intensified during COVID-19, compounded by increasing operating expenses. Add to this the rapidly changing face of customer wants, needs and expectations, and the outlook may appear challenging. But within the Life and Group insurance stable of products, group and worksite benefits is emerging as not only a fast-growing market in the war against attrition, but also one that is ripe for reimagining. Savvy Life and Group insurance carriers can use this to their advantage.

Great expectations: The changing face of group benefits

In September 2021, McKinsey surveyed more than 5,500 workers worldwide, and 250 managers, with the aim of understanding the reasons behind the attrition epidemic. What emerged was that employee expectations and aspirations are shifting in a clear direction towards meaning, connection and flexibility-- employers have overlooked these factors and are increasingly misunderstanding what their workforces’ truly value. Instead, McKinsey observed, employers tend to “over-index on external factors and structural aspects,” such as compensation and benefits. The report goes on to suggest that, while pay and benefits are important, the employer focus must shift to the overall employee experience.

So, what do workforces want and need, in this post-pandemic landscape? Having switched the open-plan office for the work-from-home set up, or adapted to hybrid working, what matters now? And, with the rise of the gig economy, longer lifespans, and digital-first behaviours, how do employees want a new breed of contextual, meaningful benefits to be offered, delivered and serviced? Carriers would do well to start getting curious about these questions and considering how they shift from offering worksite benefits to delivering workforce benefits that are fitting for our distributed, digital-first world.

For Life and Group insurance carriers, it’s worth dreaming big. Group and worksite insurance products that use data and wearables intelligently could not only offer employees a stake in improving their own wealth, health and wellbeing, but also enable tailor-made coverage—and even additional services and products—to be offered to employees at the exact right moment. It’s a win-win-win: happy, healthy, loyal and engaged end users; improved retention for employers; innovation and growth for carriers. So, how do we get there?

Digital DNA: Ecosystem, capabilities, engagement

Traditional insurance carriers are often (and justifiably) viewed as digital laggards, slow to adapt and naturally risk-averse. The Life and Group insurance market is no exception. Speed to market is a major concern, with detrimentally long product development processes baked into the overall culture and technology landscape. A 2021 Novarica study of 38 L&A carriers found that, to launch ‘true new’ products took an average of 8.5 months, with 36% of products taking nine or more months to reach the market. Large insurers were found to be 25-30% slower, thanks to complex, internal processes across multiple functional areas and the need to grapple with legacy technology infrastructures. Indeed, slower time to market and product modifications for group benefits were found to correlate with reliance on legacy COBOL or client server technology.

Yet, faced with a clear and present opportunity to reinvent group and worksite benefits products, speed is key. The rapid rise of nimble and audacious InsurTech players, uninhibited in their capacity to innovate, underscores the urgency. Traditional carriers need to act—and do so boldly.

This call to action is an indisputably digital one. For carriers to offer something different, they must do something different. And that means—like those leaders in alternate verticals—establishing a digital DNA that captures the right ecosystem, capabilities, and engagement initiatives:

  • Ecosystem: Unleash innovation at scale through partnerships, including with InsurTechs, and power these partnerships with APIs to create a state-of-the-art ecosystem capable of offering diversified products in differentiated ways.
  • Capabilities: Collect and apply data and in novel and intelligent ways and leverage analytics and AI to intensify and personalize the employee’s experience as a benefits end-user; invest in the talent and technology needed for flexible, next-generation platforms; outsource smartly for efficiency and effectiveness.
  • Engagement: Offer employee end-users greater engagement with their benefits through frictionless digital experiences; engage internal teams with a culture of innovation, partnership, and digital centricity.

Underpinning this trifecta is cloud, the critical tool for powering experimentation, innovation, and accelerating speed to market, as well as powering wider technology and business solutions.

Seizing the opportunity: From “worksite” to “workforce”

To move the focus of the product portfolio from worksite to workforce and to design it for the new world, carriers will need to establish their digital DNA and put it to work in a bold and urgent fashion. But they must do so with a new end goal in sight: not to deliver worksite benefits products any longer, but rather evolved workforce benefits products and services. This means putting the employee end-usernot the employer sponsor—at the center. This may feel counter-intuitive; after all, group benefits sponsors are price-sensitive customers at the best of times. In the war against attrition, however, the rules are being rewritten. Powerfully relevant, contextually delivered products and content that enhance individual employee experience and garner loyalty as a result should be the goal of both the carrier and the sponsor.

We at EXL have identified two critical and complementary strategic imperatives to support the journey towards this goal:

Focus on the employee: Customer-first

To create and offer benefits products and to identify potential complementary benefits, understanding the end user more deeply than ever before should be a priority. Once again, strong Data underpinnings are key here.  By leveraging both internal and external data, carriers today are able to more effectively segment employees, develop personas, and use proactive campaigns to drive product and service adoption.  Interestingly, organizations at highly varied levels of data maturity are able to tackle these challenges through the use of an ecosystem of enhanced digital tools and experienced market Partners.

By creating compelling value propositions for multiple end consumers, carriers are laying the foundations for not only offering the right products and delivery and service mechanisms, but also adding value to the group sponsor customer by way of enhanced employee experience. Greatly enhanced analysis of employee data—whether from the employer, from third party data sources, or from anywhere else—along with AI/ML will be critical to understanding this group of end consumers and predicting preferences and behaviors.  Truly leading carriers have developed toolsets, for example, that automatically look across an employee’s coverage to automatically alert if additional beneficial coverages are available to an employee in need - even going so far as to pre-schedule appointments, reminders, and office visits where appropriate.  Why are Employers delighted by this?  A truly integrated Customer-First experience supported by modern data, analytics, and digital tools results in more satisfied, productive employees that are easier to retain, return to work faster, and have shorter full-recoveries.  Supporting employees holistically in today’s market has palpable bottom-line impacts.

Evaluate and augment the technology foundation: Digital-first

Assess the as-is organizational technology environment and establish where legacy technology is holding product development back. Rapid innovation at scale is most feasible within an ecosystem of partnerships, cloud and SaaS enablement, so identifying opportunities to enhance capabilities quickly and powerfully pays off. The ecosystem is especially important for traditional players: product innovation and diversification will only be possible at the required velocity if carriers are willing to explore collaborations with start-ups and service partners, and to embrace rapid co-creation through API-led platforms.

While COVID-19 has already forced all businesses to digitalize, opportunities remain across the board to further streamline and rationalize processes, harnessing enablers like AI, intelligent automation, and advanced data analytics to take the strain out of traditionally time-consuming manual processes and freeing up teams to focus on higher value work.

Establishing priorities: Lead with digital-first or customer-first?

With the need for speed and sheer agility at play, most carriers will, in reality, be forced to make tough choices. For many, there is simply not enough talent, time, or financial resources to prioritize both initiatives equally and concurrently. Some might therefore start with a focus on optimizing the front-end of the business by creating a seamless customer experience, building customer-centric products providing customer centric content, and helping their channel serve the customer. Others might resolve to first rebuild the core, strengthen APIs, implement AI and ML in underwriting and replace manual processes with robotic process automation (RPA).

When making bold choices to determine their next immediate focus, carriers should first consider the potential constraints and limitations of their current digital capabilities; for some, this side of things may simply not be robust or evolved enough to support a customer-first effort. Where this is the case, the digital-first route should take precedence.

Bringing it all together

Waiting for the perfect roadmap to emerge before committing to the journey ahead is not an option. Seizing the initiative and making a start sooner rather than later is the only way to mine the true potential of this major opportunity. And no matter which route carriers ultimately choose, now is the time for bold thinking and digital mastery to become the norm, not the exception.

The profound shifts in where, how, and why people work over the past few years offer a catalyst for a whole new breed of insurance products and services. The opportunity is to deliver a truly differentiated insurance proposition by engaging employees on a personally meaningful level, all the while extending lifetime value and building relationships that translate further down the line into priceless brand loyalty.

Carriers that ignore the call of this opportunity and continue as before risk losing relevance and market share; those that embrace the opportunity to reimagine their business to meet the demands of the new, dispersed, and digital-first workforce will almost certainly forge ahead.

The time to act is here. And the question for carriers is, what will be your next bold choice in the journey to re-imagining benefits for a new era of work?


Written By

Lawrence Krasner
Vice President & Client Executive