Could a more effective digital delivery of employee benefits help advisers and consultants evolve their business model and expand into the SME market? And is the benefits sector ripe for revolution of the type experienced in other sectors by tech disruptors?
These were key issues debated at a recent Corporate Adviser round table analysing the ways employee benefits could be delivered more effectively in a post- Covid environment.
Delegates at the virtual event agreed there was considerable scope to improve the management and delivery of employee benefits. And there was optimism that this process was being accelerated, in part due to some of the consequences of the Covid pandemic.
Ian Rummels, the founder and chief executive of Cloud8 — which offers its own benefits platform-— laid out the challenge for the industry.
“People today can order a pizza on their phone and it is delivered in half an hour. They can use mobile apps to access their bank accounts, and see how far away the cab they’ve ordered is. But in many cases they can’t view the benefits they get from their employer — let alone amend details, or engage and interact with these services.”
Panellists explored why is it so difficult to buy, see or manage employee benefits, when in other sectors digital administration and commerce has become the norm. A number of historical barriers were perceived as being part of the problem.
Towergate Health & Protection head of specialist Debra Clark said there are a number of reasons why smaller and mid-sized corporates in particular have been reluctant to embrace digital delivery platforms.
“One of the main objections has always been the perceived cost, as well as the length of many licensing contracts. On top of that there is also concern about maintenance of a digital platform and IT systems, the ongoing challenge of keeping the technology up to date.”
For larger corporates this may be less of an issue, she said, but in smaller companies there are challenges for those who don’t employ technical specialists within their organisation.
Punter Southall Aspire principal Jon Webster pointed out that even in mid-sized and larger companies there can also be resistance to digital platforms because of the way employee benefits have historically been offered.
“Employers have a long track record of changing benefits, but not applying these changes to existing employees. This then becomes a barrier to change, and the benefit offering becomes increasingly complex – and there is a fear of giving employees access to the wrong benefits.”
Canada Life strategic propositions director Paul Avis agreed these issues can mean flexible benefit platforms can be more costly to run, if every client needs a more bespoke system to cover different legacy benefit options. He estimated that in some cases this can cost up to £100,000, clearly limiting the market for such services.
“For the SME market there is a need for more off-the-shelf options, that are simple for employers to set up and run, and easy for employees to use,” he said.
Rummels pointed out that there is now the option of “simpler plug in and play options”. This creates more of a volume business, which can help keep costs down.
But despite these long-standing obstacles, those at the round table noted there was now momentum towards embracing digital solutions and they agreed that the Covid crisis had proved a catalyst for change.
Lockdown has led to an upsurge in the number of people accessing employee benefits remotely. This includes support services, such as EAPs and virtual GP services, as well as online pension statements.
Group risk providers and health insurers say the number of people accessing value-added services, such as virtual GPs, has shot up during the lockdown period, with many providers adding these extras for free to their benefit propositions.
But Clark said: “We have seen this issue being fast-tracked by the introduction of these various products. But this is a broader issue, about how employees can reach
and access a range of services through a single platform.”
Aston Lark director Sam Mistry pointed out that migrating towards a digital delivery system needs to benefit employers as well as their employees. “It is our role to show how this can benefit their business in the long-term, and not simply be an additional cost, or technology requirement.”
Cowderoy Consulting is a technology firm that works to build platforms and systems across different sectors and industries. Chief executive Jenny Cowderoy said she has more recently seen demand for their services from those working in the employee benefits space.
She said: “It is clear what clients wanted and needed in a pre-Covid environment was very different. Increasingly it is the interest of HR teams who are talking to employees working across different environments – be it home and the office – to be able to manage everything through a single tech platform. These groups may also have various benefit requirements, so it can help HR to get information onto a
single platform, which they can manage more effectively.”
Cowderoy said the challenge for the industry is to sell a digital service on its business benefits, in other words helping companies operate more efficiently and effectively in the new normal.
“No-one wants to hear about how you onboard a benefit platform or set-up and integrate a new IT system. They want a plug-in-and-play system, where the platform company looks after the technology side of things.
“The challenge is to see this as a tool to transform their business, not just another piece of technology.”
She also referred to differences between larger corporates and smaller and mid-sized companies. “In some smaller corporate there can be a reluctance to engage with technology. Generally there may not be anyone in the organisation that has a background in digital transformation using technology as an enabler to the business, rather than just as a piece of tech.”
For business of all sizes these digital delivery systems offer a number of benefits. They can help simplify the administration of benefits systems, potentially leading to significant time and cost savings —particularly for SMEs, who may not have extensive HR departments.
Webster pointed out that another key advantage of these delivery systems is the way they allow advisers, and companies to utilise data on what benefits are being accessed and used by staff.
Aston Lark director Sam Mistry said this can help advisers ensure benefits packages are more effectively targeted, better utilised
and ultimately deliver a better return on investment for employers.
“In an ideal world we would see much better use of this MI in relation to employee benefits. At the start of the process we are making a lot of assumptions, but better use of data would help us understand what clients use and what they value most, enabling employer to target their benefit spend more effectively,” she said.
Webster argued that better use of MI data can help consultants design more relevant benefits packages that can play a key role in attracting and retaining staff.
While there are many positives, those attending the roundtable discussed potential drawbacks to this technology. Are advisers, for example, worried that digital delivery platforms could commoditise the employee benefits sector, potentially reducing their role and income stream? There was little concern about this scenario. Clark said better digital delivery platforms do not threaten their business, but offer an opportunity to redefine it, and emphasise the value proposition.
“It changes the conversation we have with clients. The focus is more on the employee as the end client, and the technology is an enabler that help employers run their businesses better,” she said.
She argued this effectively frees up the adviser to focus on more consultancy, driven work, using tech solutions to help improve engagement levels, and work with employers on issues such as staff retention.
“Technology is not the main element of the proposition but it will help us deliver a more efficient service to our clients.”
Cloud8 client strategy director Dipa Mistry Kandola agreed that this digital technology is not there to replace advisers.
“Many clients will still want the advice, support and the personal touch,” she said. “A digital delivery of employee benefits can help free up a consultant time so they are able to focus on these core services with clients.
TO DOWNLOAD A PDF OF THE ROUND TABLE SUPPLEMENT – CLICK HERE