A recent trend for providers and technology support suppliers to up their game with platforms has led some to observe that group risk intermediaries will have to change their approach to stay relevant.
While this may be true for many smaller intermediaries, many of the largest intermediaries have arguably actually been leading the way on technology, with an early example being the emergence of Thomsons Online Benefits at the turn of the century.
Unlike the ‘quote, buy and management’ platforms now offered by many group risk providers, which are aimed largely at intermediaries, the intermediary platforms cater for employers and focus primarily on engagement — enabling employees to view group risk and other employee benefits via a portal.
Colin Fitzgerald, distribution director, group protection at Legal & General, says: “The original intermediary systems have been acquired and updated by the big employee benefit consultants, but we are still essentially talking about the same ones. Intermediaries wanting to add value have actually been leading the game over the last 20 years, but the group risk providers are now coming up with solutions to help with the SME market.”
A minority of intermediaries that focus primarily on small corporates and SMEs also have their own platforms but the many that don’t will soon have to make some hard decisions.
Are they going to invest in their own platforms or partner with a technology provider to come up with something similar? Or are they simply going to focus on transactional business and on keeping premiums as low as possible?
If they are taking the latter route, they can still benefit from the provider quote, buy and management platforms. Even though they will have to deal with different platforms for different insurers, it will be more efficient than relying on email and post.
But will they really be doing justice to the added-value benefits that have now become such an important part of the overall group risk proposition?
Steve Herbert, head of benefits strategy at Howden Employee Benefits & Wellbeing, says:
“The pandemic has encouraged the big players to come out with tools that help employees remotely, but we need to ensure every re-broking exercise provides a chance to reappraise added-value options from all providers, and not just price.
“I’m sure all the big intermediaries are doing this but smaller ones are probably less aware of the choices available and may only discuss added-value features at the outset.”
Additionally, not having an intermediary platform to provide data to be interpreted for the employer could result in missing out on significant consultancy work and new business opportunities.
Nick Homer, head of market management, corporate risk at Zurich, says: “Technology can absolutely change the relationships intermediaries have with customers as it can make it easier to create and share the data. In my view technology could also be a real game changer in helping intermediaries reach new clients.
“I feel there are opportunities to develop digital engagement models which could help them reach smaller employers and make them aware of the relevant benefits of group risk. It’s about getting the data and access and initiating engagement in a more cost-effective and focused way than the old-style worksite marketing and cold calling.”
One particularly interesting high-tech distribution possibility is suggested by Sean McSweeney, employee benefits team director at Mattioli Woods, who points to the potential for intermediaries to offer group risk schemes via pooled arrangements.
He says: “We have a lot of clients with 25 or less employees, which is not enough for a scheme even if they have the technology to run it. There is, for example, no way you could get a voluntary critical illness scheme for under 100 employees but, if you could pool together 100 different employers and the data for each, you might be able to come up with something that’s attractive to underwriters.
“It could give access to group risk to many more employers. We actually already have the necessary technology to do this and are about to start discussions to see if some providers will play game.”
Another attractive distribution possibility is already very much up and running in the form of Yulife, which launched to the broker market in December 2019. Intermediaries don’t need their own platforms to access this – although they will need to invest significant time.
Driven by a wellbeing app, Yulife proactively decreases risk on group life, critical illness and income protection by helping individuals live healthier lives. It already deals with 40 placing brokers and expects the number to increase to 60 by the end of next year.
Keith Bale, head of distribution at Yulife, says: “Employees tend not to realise they are covered for most group risk unless they know someone who claims. But we are offering something different that drives higher engagement and true value by employees taking small healthy steps and by giving data back to the broker, who can advise the employer on implications. I believe brokers who don’t deal with us will be left behind.”
The fact that Yulife has already quadrupled its 2020 business volumes is impressive and suggests that the Covid-19 pandemic may have proved a turning point in employers demanding greater value for money and smarter insights from data. Smaller intermediaries must consider whether they can afford to ignore this trend.
BOX: A reality check for group risk
Ian McKenna, founder of AdviserSoftware.com, describes group risk as “still back in the C20th compared with both individual protection and group pensions.”
The technology expert highlights a more time-consuming application process than with individual protection, where there is widespread use of automated underwriting engines, and a much more complex renewal process than with pensions auto-enrolment – for which employers have a duty to be up to date with data.
He says: “The systems used in individual protection and group pensions could transform group risk markets but there doesn’t seem to be the appetite for this. There is a massive issue around information delivery.”
McKenna even goes so far as to predict that the group risk market is “heading for a crash if it doesn’t do better” as it’s not sufficiently taking into account imminent legal obligations to meet the Government’s Smart Data initiative and the Financial Conduct Authority’s (FCA) initiative on open finance
BOX: Protect launch marks big step forward
Legal & General’s launch of Protect last December has helped narrow the technological gap with individual protection by enabling employees to access group risk cover and wellness add-ons 24/7 via their smart phones.
Aimed at businesses with 500+ employees, it offers group life, income protection and critical illness at no additional cost to employer or employee, and makes Legal & General the only player to offer either critical illness without pre-existing condition exclusions or voluntary group income protection.
David Williams, head of group risk at Towergate Health & Protection, says: “It’s a very smart and innovative idea, and involves fewer restrictions than the large platforms. Legal & General is using its knowledge of individual underwriting to enable employees to go on an app and change their benefits after answering brief medical questions.
“Flex schemes, on the other hand, restrict them to certain increments because they have no medical questions. The instant underwriting is what makes the difference.”