Group risk for Generation Tech

Tomorrow’s workers are already starting to ask today’s group risk professionals to up their game. Edmund Tirbutt reports

Only a fool or the most hardened Luddite would underestimate the extent to which technology could transform the group risk landscape within the next five years. Adapting to millennials’ expectations of technological engagement will be essential for employers looking to get the most from their benefits package, according to delegates at ‘2020 Vision: A Blueprint for a New Group Risk Market’, a Corporate Adviser/Canada Life Group Insurance event held in Birmingham last month. 

Delegates at the event, which sought to probe how group risk professionals envisaged the
sector at the end of the decade, argued that swift action was required to serve a completely new generation of people who virtually run their lives from their smartphones and who expect all the information and accessibility they require to be available via a few taps on a screen. These digital natives are not seeking chapter and verse on the subjects they are exploring; just speedy and pertinent guidance on what they can and cannot do and what is likely to be the best option.

Pace of change

Premier Choice head of employee benefits Steve Ellis highlighted the pace of change by describing how he had just signed off the purchase of 250 iPads and 250 Androids in his role as chairman of the board of governors at a primary school.

He said: “Kids and young people are now highly tech savvy and, for them, it’s the absolute norm. There’s now even an app that teachers can use to monitor how much pupils have been reading on their Kindles. “Technology will change the products we market because it will become more voluntary 

product based. 

“If someone has a lifestyle change, they will go on their app and say ‘I’ve just got married, bish bash bosh, and this is what I want to do.’ The app will say ‘You need this. Buy it.’ Done. Immediate gratification of what they need.”

Providers and advisers seem well aware of this challenge and can hardly be accused of standing still. For example, Canada Life Group Insurance marketing director Paul Avis reported a hit rate of over 10 per cent on the Simply Class Group Life Assurance product he launched in June for auto-enrolling businesses with up to 50 employees.

Available on Canada Life’s Class platform, this uses basic pension data to automatically provide straightforward life assurance quotes and accompanies them with clear information explaining issues such as cost, taxation implications and the ability to avoid medical underwriting.  

Avis said: “We are starting down a journey of product simplicity and ease of purchase. Technology will drive the success of our business, in our view, so you’ve got to make group risk easy to buy and part of our plan for that is to have automated datasets.

“E-linking between platforms is definitely one way of growing the market. The other way is via a web product and that has to be worth having as an adviser because all you have to do is promote it to grow your SME client bank.

“Our focus groups suggested that micro employers wouldn’t use advisers as they felt doing so would cost them, but what they did say is that they would use something like a website product. So this is why we are thinking of putting website products on adviser websites.”

Avis also pointed to recent Canada Life research that showed that demonstrating the cost of
products could help solve the issue of lack of market penetration. It found 91 per cent of employers thought group life cost more than 1 per cent of salary and 9 per cent thought it cost more than 5 per cent.

Cost illustrations

Angela Jones, senior consultant, group protection, health & wellbeing at Johnson Fleming – which has launched its own platform – reiterated the importance of providing cost illustrations.

She said: “It’s about getting the cost up there because, when they actually see the true cost of life assurance, and even of income protection, they are always surprised at how competitively priced it is. Then, if it’s easy and quick for small companies to obtain, they can just get the terms and then agree.”

Mercer principal David Manning thinks that,
by 2020, the emphasis will be on offering platforms providing services linked to health, wealth and careers – a model that Mercer has recently launched itself.

He said: “The employer will facilitate it and employees will make the selection as they go, and there will perhaps be a core level of benefits in play that might be totally or partially funded by the employer and the rest will be on a voluntary basis. All this will be linked into employee health and there will be different ways of analysing the data that becomes available. It will link into wealth management and financial education.

“There will be a marketing tool to market whatever you see and in whatever way you deem fit across the generations based on the data you get back. The younger generation is fully understanding of health and wellbeing issues and challenges. They just want information and want data from it. It’s going to be a very fast-moving society.”

Avis argued there was still some way to go before platforms were delivering all the answers.
He said: “Before the advent of the internet, we were in an era when we used fax machines and
had to buy reports to get information. But while I see these new platforms, I don’t believe the technology is quite there yet.”

Portus Consulting director of consulting David Dolding said: “I think the technology is there but it can still get better, although there is a limit to what you can do because of medical confidentiality.”  

Controversially, i2 Healthcare director Simon Derby questioned the much-touted link between wellness programmes and employers’ bottom line.

He said: “All this wellness stuff is good and fine but, let’s be honest, we’re not here to provide a social service but to sell insurance products.

“Most wellness programmes are flawed because the empirical evidence doesn’t support what they actually do, and most people with Fitbits are the worried well.”

Device promotion

These observations attracted no support and Dolding was quick to challenge the worried well observation, saying: “It all depends on how these devices are promoted. If people simply go out and choose one then, yes, it tends to be the worried well. But if the employer offers to provide one to anyone who wants one, then you get a very good take-up.

“At Portus, we are seeing people who would never have gone out and walked anywhere regularly walking at lunchtime because it nudges them into changes in behaviour.”

Derby did, however, highlight the importance of engaging employees, emphasising that: “Most people don’t have a clue what products they have.”

Dolding said: “The communications piece is key. The old style of having a flex window once a year turns people off; you need open enrolment of benefits throughout the year. It’s happening with many products but not with the traditional insured products.”

He suggested employees would get more out of flex schemes by being able to make choices through the year – for example, using a bike-to-work scheme in the summer, when the Tour de France is on, rather than in April when it is probably raining.

Ellis pointed out that the newer platforms were themselves helping to engage more employees.

He said: “Technology is facilitating the decisions, not making them. It’s allowing people to
make decisions themselves around health, wealth and careers, and we’re also going to see people comparing what their employer offers with what their friends’ employers offer.

“This is an absolute positive as it’s raising awareness and creates demand.”

But Jones stressed that communications programmes should consist of a combination of online activity and old-style posters and, equally importantly, they must be ongoing throughout the year rather than confined to a one-off event.

Beyond the technology issue, Avis envisaged a positive outlook for income protection because, by 2020, “there will be no state benefits of any note”.

He also questioned whether, by then, more advisers might have been attracted to health and wellbeing as a result of declining pension revenues. 

Dolding disagreed that the withdrawal of commission on pensions meant that workplace retirement was no longer a lucrative source for corporate advisers.

He said: “Pensions revenue is still there if you provide the right services. In fact, it gives you
the opportunity to say: ‘Because we are charging you a flat fee rather than commission, we can provide you with more services.’”

Linked products

Avis also questioned whether there was a risk of large composite insurers starting to offer
platforms through the workplace that linked products such as home and motor insurance
with pensions, investment and health-related products, ultimately disintermediating much of
the process.

Manning agreed. “Without a doubt. Direct sales has always been a challenge,” he said.

 “But there will still be an appetite for individuals and corporates to look for best of breed. I see insurers having to diversify a bit more and provide a range of services relevant to health and wellness in the workplace.”

Intermediaries will have to proactively harness technology and make it work for them if they are to remain the valued lynchpin in the creation of benefits strategies that meet the needs of tomorrow’s workforce.