The march of new technology is driving both innovation and disruption across many areas of the economy, but to date the workplace protection sector has remained largely insulated from these changes.
Yet employers and employees have much to gain from the flexible 24/7 functionality that digital technology can bring. And the potential for other players to disrupt the sector with a modern tech-based proposition remains a threat to incumbents.
So how should the group risk sector reimagine the way it operates to modernise its processes and take full advantage of the powerful technology that in other sectors is seen as business as usual?
Legal & General distribution director, group protection Colin Fitzgerald set out his vision of the urgent challenge facing the group risk sector and the providers and intermediaries operating in it. “Our hypothesis is that technology needs to drag the group risk market into the 21st century. We believe if we don’t step up to the plate as an industry and really work together, actually there are plenty of other players out there that will take our ball off us and create a consumer-like experience within the employee benefits space.”
Howden Employee Benefits senior risk consultant and new chair of Group Risk Development Paul White said: “There is a lot of validity in that view. The market that exists is served incredibly well by the group risk insurance market. These are incredibly simple products to sell to employers.
There’s the minimum requirement for them to provide data, to provide information for the employee experience.
“But when it comes to the question of how we can offer the products that we offer in a different way to a broader market, at the moment we’re all struggling with how to sell a very valuable series of products to a broader market where there is fear and concern about issues of selection, issues of underwriting, issues of price. And that’s potentially where I think the big, big win for technology is not growing the existing market but growing a new market.”
Aon director, proposition & development Colin Barnes said a more flexible, tech- enabled way of offering group risk would suit the increasingly flexible career patterns of modern workers. He said: “Workforces are completely fluid and people aren’t traditionally fixed to a single employer anymore. So the offering to the employee would need to be that they can go and choose what suits them at the time they need it. The employee needs a technology- enabled proposition that’s fluid and a marketplace to be able to underpin it.
“If you think that by 2025, around 75 per cent of the workforce will be millennials, can insurance companies support that vision or that potential opportunity where there is a fluid workforce?”
Delegates at the event agreed that portability of products could be a forward step in supporting this trend and making products more attractive.
Mercer insurer consulting group leader David Bourne argued that products needed to better reflect the needs of the user, citing his own example of being a homeowner two years ago but renting now, meaning life cover had become less relevant for him but income protection was massively important.
He said: “You have some millennials who still live with their parents and don’t have that much financial burden upon themselves. But you’ve got other millennials who already have children and already have a mortgage. And so for them, protection is much higher on the agenda.
So we need to look at how we evolve the protection market for the future, and we need to go on a needs basis.”
Referring to L&G’s new digital workplace protection proposition, Fitzgerald said: “Part of the product design for Protect was giving people ultimate flexibility. So people get a level of base cover, and should they want to, the employer can set a budget that the employee can spend and the ability to take that and apply it to a range of different needs with a number of educational tools through Protect. We think this gives the multigenerational workplace the ability to make that choice.”
Lockton partner, regional head of benefits, UK & Europe Jon Green countered: “Technology can help support and enable. But that functionality already exists in the more sophisticated employers that have already bought into more sophisticated technology, but it still doesn’t greatly change the insured population.
“I think it’s about making the benefits relevant for employees and that drives into the communications side of it. And the communications from the employer are probably the most important facet of that. So you could throw the very best technology at our market and it wouldn’t really move the dial in driving more participation.”
AJ Gallagher senior consultant Phil Thorpe added: “Employers are wrestling with a whole range of technologies and products that they want to promote. And it’s making sure that we’re doing what we need to do to promote our industry in that space.”
Fitzgerald argued that technology did offer efficiencies that meant the value could be delivered through the consulting rather than through the transaction.
Benefex head of corporate benefits Stephen Hackett said: “I see a split in the agenda. You have sales and marketing trying to drive future growth in the market, which I agree with. But I wonder if the guys behind it are as concerned or they’re quite comfortable with the position as is.”
Fitzgerald flagged up his company’s concern that the group risk market could get sidelined if it did not adapt quickly.
He said: “I’ve got to know (Legal & General Insurance CEO) Bernie Hickman’s thinking over the last five years. And there’s absolutely no doubt he’s concerned about the fact that, as an industry, if we don’t get hold of tech, tech will get hold of us. And that’s to do with efficiencies. But it’s also about engagement and comms to members. All of these retail and consumer-based vehicles are informed by access and information that is immediate. We couldn’t be further away from that if we tried.”
Barnes asked why, if L&G is so concerned at the idea of new tech players coming in and disrupting the market, why didn’t it partner with an Amazon or a Google or some other Big Tech player, as such a partnership could create a product that would stand head and shoulders above the competition.
Fitzgerald said: “Financial technology is an intrinsic part of L&G Group’s DNA across pensions, investments and retail protection. Group protection is now in focus to join the rest of our organisation, so we actually benefit from many years of investment in the tech space.”
Protect offers a potential new revenue stream for consultants and advisers.
White said he would rather charge a fee for introducing a service rather than a commission, which he said would be either ‘far too much or far too little’.
The discussion turned to the technicalities of running multiple platforms in parallel.
Thorpe said: “It’s about having that confidence that whatever we’re putting in place, whatever we’re recommending to our clients, is a strong proposition, does what they want it to do and stands up and works. And there is a nervousness in our market for that to occur because we have in the past had our fingers burnt.”
Green said: “Most companies will have some sort of social media related site. More advanced companies will have a flex technology solution. There’s multi layers of communications coming out, multiple ways of accessing services to ensure products for wellbeing and a lack of a simple message. So does having multiple platforms become a barrier? Probably, yes, unless you’ve got some sort of simplified skin over it.
“Trying to sell through employers you’re competing against lots of other messages, wellbeing, insurance products, the core business. Let’s not forget the employers’ priority is whatever they’re manufacturing or selling, and the benefits is a secondary element of that.”
Barnes described the trend experienced overseas in Asia-Pacific territories where the employer doesn’t necessarily provide any benefit.
He said: “This means the only way they get any revenue or the markets get any market share is through voluntary. So they use new technology with different types of aggregation and a sophisticated digital marketing campaign that they push out to pull people in. It is quite a sophisticated way of getting them to buy a protection product.
“In the UK market we are quite lucky with employers buying quite a lot of benefits. But there’s still an opportunity there that we’re going to look at. We want to get into the same sort of thing the insurers do, where they’ve got a whole chunk of people that aren’t buying benefits or employers aren’t providing cover for everybody.
“So something like that seems to me to be quite an interesting way of combining all the different approaches together to maybe grab a bit of market share, grab some new insured people and grow revenue streams.”
Fitzgerald said: “We here are all group people. And we’re all agreeing that what is there is not enough. The idea of more for less is absolutely where we’re coming from.
We get the fact that employers do not have budget. We get the fact, however, that there is also a broad discussion about inclusivity and access to benefits and choice. We’ve talked about the multigenerational nature of the workforce. There is a range of challenges for us to try to wrestle with. But all of us are using tech to a certain extent to address them.”
Delegates also discussed new consulting opportunities that tech will deliver by virtue of having better MI.
Hackett said: “We don’t use data science well enough. Many of us in this session have got a platform, and we have a wealth of data flying around and we don’t connect it well enough. Typically we issue a general communication for all. We don’t start to segment that messaging.”
Bourne added: “The healthcare market has done very well in using MI to drive how they developed that market. Where are we seeing the highest costs? Where are we seeing the highest prevalence of claims?
Let’s look at putting pathways in to improve that. That is the correct way to look at how you use data – have a message and an action on the back of it, not just delivering information.”