The traditional, aggregated approach to underwriting group schemes always was, and largely remains, a manual process. This is costly and as a consequence, it’s pushed group providers towards larger schemes. But there’s a latent opportunity for protection in the SME employee base that has grown exponentially in the last few years. Post-Covid, interest has grown as people have a much greater awareness of health or lack of it, and ultimately, their own mortality.
Demand for cover such as death in service, group critical illness, and group income protection has increased as more and more people consider it a valuable and necessary employee benefit. Yet it remains a sector that’s woefully underserved.
The challenge is SMEs typically lack the HR resources needed to manage and maintain a scheme or can’t afford the costs associated with a bespoke protection solution.
There’s a market that wants a solution, with suppliers who want to offer it. But, due to manual constraints, can’t do so economically. Until now.
Insurance, and specifically protection has been somewhat left behind in the digital revolution. Why is that? In part because intelligent automation didn’t exist to the extent it does today. But it’s also because the tech was, and to some extent still is, designed around the principle of a ‘policy’ rather than the ‘customer’.
There have been huge innovations in the last decade, and the technology to provide group benefits to a large but disparate workforce now exists. It’s the same event-based technology that Amazon, Netflix, and other disrupting tech firms deploy to service tens of millions of customers each day with personalised propositions.
The key to this technology is its ability to act intelligently upon customer data in an automated way, and it’s this automation that holds the key to economically servicing smaller schemes.
Rules can be applied in a reflexive way during underwriting to automate the process. Intelligent workflow processing can also be applied to those cases requiring human intervention. For example, cases above the free cover limit require medical underwriting, which is a significant cost overhead. In communications, there’s a myriad of other areas that can also be automated, such as follow-ups and work allocation.
The ability to interact with employer systems has also come on leaps and bounds. The ability to track ‘leavers and joiners’ in near-real-time massively reduces the need for remediation work. Our counterparts in the US have made great strides in this space, but the tech is here too and, critically, the will to implement it with great initiatives such as Grid and Criterion, in the UK.
It can be even better. Think about an automated prompt from the insurer that’s triggered by a change of address. The system then triangulates external data sources, such as Zoopla for house prices and Experian for credit info (all with appropriate GDPR permissions, of course), to identify a potential increased need for mortgage protection. Finally, the platform automatically calculates and presents three different sum-assured levels based on the data, and enables the employee to quickly and easily set up an individual policy.
This way, the employee maintains the cover from their employer, but can ‘augment’ it with individual cover as needs be, all from one place.
Does automation and digitisation threaten the broker model? Absolutely not. In fact, it tightens the value and distribution model further.
The technology is now here to speed up the onboarding process by enabling the employer and broker to digitally agree on who does what. This means saying “goodbye” to those cases that got parked in the “get to when less busy” pile.
Advances in medical underwriting automation help further, by speeding up the process of putting lives above the free cover limit on risk. This is a win for the client, the broker, and the insurer.
The upshot of this ‘digital first’ approach is that smaller schemes should be readily accessible to insurers, and those schemes should be more affordable to SME businesses.
The best bit, though, is rather than continuing the cannibalisation that’s hindered the individual/retail space, insurers can now support a new and hugely underserved sector, while growing their own market share at the same time.
Add greater connectivity with HR and payroll systems to ease the process of monthly leavers, joiners, and adjustments, and the emergence of event-driven platforms that can automatically act upon data triggers and the future is looking bright.
