The industry is changing. To be successful in the coming decade, insurers will need to deliver distinctive consumer experiences and value-adding tools for brokers.
The group benefits business in the U.S. has been pivoting in the past five years toward voluntary benefits and away from end-of-life benefits, as employers seek to reduce costs and manage the impact of the Patient Protection and Affordable Care Act (PPACA) and employees make more of their own decisions about benefits. In response to the PPACA, new distribution platforms, such as private exchanges, are emerging, and brokers are consolidating, putting pressure on carrier distribution and economics.
Carriers can respond to these trends in two primary ways. First, to drive voluntary take-up, carriers should develop direct-to-consumer marketing and distribution capabilities, supported by advanced analytics. Second, to build scale and loyalty with key brokers and expand the number of plans sold, carriers should develop digital tools to help brokers with self-service quoting, real-time compensation data, and visibility into the overall book of business.
Momentum in the voluntary benefits market :
For generations, tens of millions of Americans turned to their employers for life insurance coverage, but the PPACA has spurred employers to reconsider the benefits they offer. This reappraisal is likely to accelerate the longer-term structural trend of employers shifting financial and decision-making responsibility for benefits to employees. Close to half of the employers Mc Kinsey interviewed in late 2014 said that the PPACA was leading them to reconsider their choice of insurance carrier and benefits broker.
The group voluntary benefits market—that is, benefits purchased at the worksite—has grown rapidly. New annualized voluntary benefits premiums grew 9 percent in 2013 and 5 percent in 2014 to $4.5 billion, while sales of term and whole life insurance lagged. Benefits that improve quality of life have grown fastest, with sale of vision insurance up 24 percent and critical illness insurance up 19 percent in 2014.
Becky Brown 