Structural changes in the workplace, technological innovation, providers’ direct strategies and increased consolidation all mean group risk products must develop to thrive in the market of the future, said delegates at a Corporate Adviser round table in London last month.
The fast-evolving market presented both opportunities and challenges for both advisers and insurers in the sector, said speakers at the event.
Aon head of technology and engagement Jon Bryant argued that the very nature of work is changing, and employee benefits need to reflect this. He predicted that in future there will be a need for insurance products that port from one job to another — or from an employed to a self-employed environment.
He said: “This brings to the forefront the fact that it is an individual you are insuring, not just an employee within a larger workforce.”
“In future, the idea of the company workforce is dead. It no longer makes sense to provide an all singing all-dancing suite of product that is relevant only to the HR director, or procurement officer.
“Employee benefits – whether we are talking about death in service benefits, income protection or critical illness – have to become more tailored and more relevant to the individual, and help plug the gaps in the cover they need.”
Broadstone director of employee benefits Steven Hackett said: “The benefits marketplace is changing and the new generation are demanding different things and more of a benefits framework, where there will be far less emphasis on core benefits, but more of a focus on a range of products.”
He drew parallels with the market in Australia where the employer is still key, but acts more as a gateway to employees.
Bryant predicted that “hyper- personalisation” of insurance data should also create significant opportunities within the industry, not least in creating a suite of insurance products that are more valued by employees.
This he says could tap into other employee benefits, be it extended maternity or paternity needs, or ‘absence leave’ – helping cover costs for the sandwich generation juggling care for younger children and elderly parents.
Capita Employee Benefits principal consultant Lee Gruskin agreed that there is a need to modernise group risk products like income protection. “Income protection policies are outdated. They are designed for the world of work that existed prior to the economic downturn. We need to update them to reflect what people want from a benefits package today.
“The question is how you personalise this data and make it relevant to individual.” He suggested this might be done by wrapping up group risk within a company’s wellness platform or portal.
He said more personalised data may help reinforce the value of some of these products, whether it’s the cost of rehabilitation services, EAP services of Best Doctors that are offered through some of these policies.
LEBC group risk consulting manager Karen Gittings (pictured above) pointed out that one of the keys to driving sales in the corporate market is better employee engagement.
“If there was greater awareness of the value of group risk products, if employees asked what package was available at an interview stage then this would help drive corporate sales.”
But this more personalised approach represents a fundamental shift in the dynamics of the group risk market, from a business-to-business model, to something more akin to the direct to consumer market.
Canada Life Group Insurance marketing director Paul Avis agreed that these trends will shape the group risk market in future.
But he pointed out that today it is the employer that is the customer, not the employee. He added that there is still significant scope to grow this market, particularly as many smaller businesses in the UK do not currently offer these group risk benefits.
Avis argued that the way to target these employees is through the advisory channel. But it is clear that other providers are shifting their business models from a fully intermediated approach.
L&G for example has launched the ‘Protect my People’ quotation engine; AIG, while having acquired Ellipse, has launched YouLife, Unum has partnered with the Pure Benefits platform for direct enquiries while Zurich has a deal targeting group life at Scottish Widows and Lloyds Bank corporate customers.
More personalised products may provide additional benefits to those working in the gig economy, but will they be valued any more? Many on the panel argued this still doesn’t solve the basic problem of engagement, and getting both employers and employees to the benefits on offer.
For Bryant, smart use of technology is key here. This means enabling people to use platforms that which utilise mobile phone technology.
He says: “Communication and access via mobile phone technology is paramount. “This isn’t just an issue that affects millennials. The latest Ofcom data shows that in the last 12 months around a third of those in the 65 to 74 age bracket were making purchases or doing banking transaction on their mobile phone.”
But as he points out, can you access group risk products via such mobile apps? The answer is generally no.
Bryant says that rather than offer a flexible menu of benefits via an HR-run payroll service he envisages group risk products being offered via employees phones, perhaps via a wellness app.
“Most of our larger clients are redesigning employee benefits to a more affinity-based model. Why would they offer something via payroll? It is simply an expense for the employer.”
Some panellists pointed to third party services such as EarthMiles@Work as being a model that could work for the benefits industry. These offer ‘gamification’ tools and push notifications encouraging greater engagement from users.
But while these tech platforms may look attractive, insurers and distributors need to ask pertinent questions. Bryant says: “One question you need to ask with third party developers is who is funding the service, and what happens if this funding runs out?”
Premier Choice head of group risk Steve Ellis said this more personalised technology-drive approach may open up new sale and retention opportunities.
He said: “The industry has helped create a secondary protection gap. People might have four times salary covered through a death in service benefit while they are working for a particular employer.
“But when they switch jobs and leave the group risk scheme there is no option to offer continuation policies.”
Avis said a continuation option may be developed in the future, particularly for individuals who have already been medically underwritten.
But he pointed out there are challenges, not least the fact that insurers don’t hold personal details for the majority of individuals that are covered under group risk schemes – they only see data when claims are made or other interventions take place.
“We only have details of those whose salary is high enough to require medical underwriting, or claimants,” he said.
Bryant said: “Cover for leavers is going to be more significant in future. It has to be. It is a data challenge, but this can be overcome, particularly if providers and distributors start to segment the market.”
Perhaps surprisingly, advisers at the event did not see the push by providers to a more direct model as a threat to their business.
Hackett said: “I don’t see this as a threat to corporate advisers. Many providers have always had a multi-challenge distribution. So long as there is transparency and openness and an understanding of the strategy at play there is nothing wrong with this approach.”
Ellis argued it could in fact create significant opportunities for advisers in the group risk market. “If a company like Aviva wants to splash around a lot of money raising the profile of this market, communicating the value of the benefits to the broader population, then this can only benefit us.”
He argued that some companies might work with providers directly at first. “But in a year or two, as renewal premiums start to edge upwards they are likely to be more receptive to talking to an adviser about whether this is the best solution for their company,” he said.
Gittings agreed that if insurers did more to promote group risk, and also individual protection products, this should create better awareness and boost demand from employees.
While those on the panel agreed that technology offers exciting opportunities to boost engagement levels in the group risk market, most were realistic that it isn’t going to be a silver bullet that would bring in new customers overnight.
Bryant said: “But tech is part of the answer to growing the corporate risk market.”
He said more platform-based approach may help drive down costs, enabling distributors to target parts of the market they don’t currently serve such as the SME market.
But he added: “Tech is only part of the solution. Culturally we need to change as an industry.
“Both providers and distributors need to look at whether they could structure their businesses if they want to survive and thrive in the future.”