As employees and plan sponsors become more techsavvy, they’re demanding faster, easier and more convenient benefits solutions. This year’s Group Insurance Report looks at how technology is changing the face— and pace—of the group insurance market.
 
After a long day of meetings, Mr. Smith’s lower back is feeling extra tight. In the elevator, he uses his cellphone to call his chiropractor to see if she can fit him in for a treatment. Luckily for Mr. Smith, she can squeeze him in the following morning. Before he starts his drive home, he uses his cellphone to check the balance on his health care spending account (HCSA). In the car, his wife calls to say that their son has an ear infection. She asks him to pick up his son’s prescription for antibiotics at the pharmacy on the way home.

At the pharmacy, Mr. Smith uses his cellphone again—this time like a debit card to pay for the prescription. The next morning, he pays his chiropractor the same way, using funds from his HCSA. Later that afternoon, he checks his bank balance (again via cellphone) and sees that the reimbursement for the claim for his son’s antibiotics has already been deposited into his chequing account.

This scenario may sound far-fetched, but it’s likely not that far off. After all, if you can get your boarding pass on your BlackBerry, benefits information can’t be that far behind. “At some point, technology will advance enough that you’ll be able to use your cellphone or BlackBerry like you use a debit card today and get real transactions almost immediately—even to the point of knowing what the balance is on your HCSA and making a transaction come right off your balance,” says Marilee Mark, vice-president, marketing, group benefits, with Manulife Financial (which ranks No. 3 on the list of Top 20 Insurance Providers, with $5.8 billion in insured premiums and non-insured deposits). “Technology is changing so rapidly.”

TECHNOLOGY DRIVERS

Today’s workforce is more tech-savvy than ever before. Twenty years ago, says Jean Guay, senior vice-president, group insurance, with Standard Life (which ranks No. 10 on the Top 20 list, at $561 million), “technology was used internally within the insurance companies to automate the benefits process. But over the past decade, it has been provided to the employee and employers.”

From the employee’s perspective, self-service is the new trend. Plan members don’t necessarily want to fill out paper claim forms or wait for a cheque to arrive in the mailbox. Many do their banking online and may expect the same service from their group insurers. “There is great opportunity for employee self-service, and it’s something employers promote,” says Brad Fedorchuk, vice-president, group marketing, with Great-West Life (which ranked No. 1 on the Top 20 list, at $6 billion). “If we look back at where we were five or six years ago to today, we now see website visits exceeding calls to our call centre.”

Plan sponsors also benefit from the efficiencies associated with technology and member self-service. Fedorchuk says plan sponsors want technology to provide three things: quick and efficient administration, ease-of-use for employees and cost control. “Plan sponsors may see benefits as one out of 20 things they have to do in a day, so when they do that one thing, it needs to be quick—because they’ve got 19 other things they want to get done,” he says.

Technology that enables plan sponsors to make enrollment changes in real time, for instance, means that a plan member can make a hassle-free claim the very next day. It also plays a role in decreasing the time and effort required by the sponsor’s maxed-out HR department. For example, if a plan member can go online to print out a customized claim form, it means one less call to HR. In addition, online tools such as organizational health risk assessments are now available, enabling plan sponsors to look at all of their drug claims data and identify health risks within their employee populations. They can then develop programs to address some of those risks, with the overall goal of controlling costs.

MEMBER SERVICES

Today, most carriers offer the ability to view claims online, view paid claims, view the explanation of benefits and direct deposit claims to the plan member’s bank account. In addition, plan members can often access personalized claim submission forms, benefits summaries and information on when they’re next eligible for certain benefits, such as dental checkups or eyeglasses.

Some insurance carriers even offer online claims submission. “It’s one thing to provide a personalized claim form online, but it’s another thing to provide instant online adjudication of claims,” says Brigitte Parent, senior vice-president, group benefits, with Sun Life Financial Canada (which ranks No. 2 on the Top 20 list, at $5.9 billion). “Our plan members can submit a variety of claims online in a very few simple steps. They receive instant confirmation of whether their claim is approved and the amount that will be deposited in their bank account. And they have access to their claim statement right away.”

Access to online benefits information has become mainstream, says Jean-François Potvin, practice leader, consulting administration, with Hewitt Associates. “Challenges that existed in prior years, such as employees not having online access at work or being constantly on the road—or, in some cases, not being Internet savvy—have been overcome, and we now see high usage of online tools by employees,” he adds.

Parent estimates that about 30% of the plan members eligible to use online tools through Sun Life Financial do use them. And she also notes that some plan sponsors have significantly higher uptake rates— some as high as 90%. “The reason for that is there’s been such strong endorsement from the plan sponsor. They see the value, and it reduces the numbers of questions that come to HR,” she says. “What some of our clients have done is, they’ve directed employees toward the website by basically requiring them to go to the site for certain things such as their drug cards. That drives uptake on an ongoing basis as well. And once they explore the information on the Web, employees get a fuller appreciation of the value of their benefits program.”

HEALTH AND WELLNESS

For insurers, the Internet has been a good catalyst for educational opportunities that just didn’t exist in the past. “Where we’re seeing the biggest investments being made by carriers is around service providers and wellness information,” says Alex Diemer, vice-president, outsourcing, with Aon Consulting. “They really need to expand [to], How do I find a specialist in my neighbourhood? or Which pharmacy has the lowest dispensing fees? or Where do I get what type of service?” He says that provider searches aren’t yet available in Canada, but it’s a possible trend for the future—“especially as you see employers looking to cut costs. If an employer puts a $14 cap on dispensing fees, it’s in their best interest to tell you what pharmacies have the lowest dispensing fees.”

Insurers also offer tools focused on plan member education. For example, Great-West Life offers Healthy Buddy, an interactive guide that allows users to click on various parts of the body and find out about diagnostic services, diseases and other health information. This year, Manulife launched its Health Services Navigator tool, which offers health information and details on navigating the Canadian healthcare system along with a second-opinion service.

Some insurers, such as Sun Life Financial, also provide access to a comprehensive drug library. “Members can search the plan’s formulary by entering the drug name or DIN [drug identification number] to find out if it’s covered,” says Parent. “And from there, if you want to learn more about the drug, you can click on a link and go right to our drug library. You don’t have to re-navigate the site to find what you want.”

SPONSOR SERVICES

Ease of navigation and seamless delivery are two recurring themes in discussions around technology and group benefits. “A lot of our clients now want to connect to us in a seamless fashion through their own website or intranet. That’s a big trend for us,” says Wayne Lloyd, assistant vice-president, group benefits product and marketing services, with Manulife. “Most of our larger clients are asking for that. It’s one-stop shopping for their members.”

There’s also the option for plan sponsors to have the carrier’s website branded as their own. “An employee can come on through the employer portal [and] get on to our website, but it’s fully branded as the employer’s,” says Parent. “We’ve now put on a feature where you can do that in a seamless way. You can go from the employer portal to our site without having to re-authenticate or re-enter your access ID and password.” For plan sponsors, technology has also improved their day-to-day plan administration.

Plan sponsors can extract information from the payroll system—salary, date of birth, marital status and number of dependents, for example—and transmit it directly to the carrier electronically. “That’s effective for the employer,” says Guay. “About 30 of our [plan sponsor] clients are transferring data electronically for the moment.”

Insurance carriers are also offering online billing statements, electronic funds transfers for bill payments and the ability to make enrollment changes online. Fedorchuk estimates that about 85% of Great-West Life’s new customers are using these services. “They’ve embraced it because it’s convenient for them,” he says.

It’s a similar story at Manulife, where Lloyd estimates that about 80% of plan administrators use the carrier’s administration website for tasks such as performing eligibility updates, checking bills and adding new employees. “One of our major projects last year was focused on our plan administration site,” he says. “And it was a usability project. We didn’t add any new functionality, but we reconstructed the website for ease-of-use for our administrators to save them time and effort.”

TRENDS

The increased use of online tools has had a definite impact on call centres. Fedorchuk notes that Great-West Life now gets more website visits than calls to its call centre. “But the other interesting thing is, we get very few follow-up calls from plan members saying, ‘I couldn’t find what I was looking for online,’” he says. “We get less than two-and-a-half calls per 1,000 website visits from plan members looking for more information.” Parent notes that the types of calls that Sun Life’s call centre receives are different now that plan members can access so much online information. “We’re not getting as many calls saying, ‘Where’s my claim?’ or ‘How much was paid?’ They can get all that information online. They’re asking deeper questions,” she says.

As for technology trends in the industry, plan sponsors and plan members alike would probably be keen to see carriers make greater investments toward enabling a wider variety of providers to submit claims on behalf of plan members. “Most people can walk into their pharmacy or dentist’s office, have their claim submitted online and know what their adjudication is online,” says Diemer. “Where are those networks for other types of major benefits like chiropractic, physiotherapy [or] vision care? There’s been a lot of talk about having health standards on this, and [on] coming to the same type of protocol that the pharmacies and dentists have. But not enough progress has been made to get it to the market.”

Lloyd suggests that online claims submission by plan members is one solution, but they’re also looking to develop a more complete provider-submit claims capability. “Gathering credible provider information in some kind of database so that they can be authenticated is the challenge,” he says. “Building of the online claims for members is a step forward. We just need to add the provider piece on top of that.”

More integration between plan sponsor payroll systems and carriers is another important growth area. “At the moment, there are interfaces that are developed, but there’s no direct link [between the sponsor’s payroll system and the insurer],” says Guay. “In the future, we’ll see more direct links.”

As plan members become more familiar and comfortable with technology, chances are they’ll want to see even more online services. The ability to aggregate individual benefits with group benefits—for example, buying individual products such as optional life insurance or critical illness insurance from the group carrier—may become more commonplace. “That’s already there in some cases, and it’s slowly growing in Canada,” says Mark.

CHALLENGES

Keeping pace with plan sponsor and member expectations on the technology front is sure to keep group insurers on their toes in the coming years. And making plan member self-service easy and intuitive will become critical. Your website can have all of the bells and whistles, but if it takes one too many clicks for users to find the information they need, they’ll be frustrated and might not come back. “There’s quite a range in the depth of the solutions provided,” says Parent. “It’s worth the investment and time for [plan sponsors] to look beyond what the look and feel of the website is all about.”

And what about our friend Mr. Smith? He’s heading off to a sunny destination for a much-needed family vacation. Of course, he’s bringing his cellphone with him—just in case he needs to conduct any plan business while he’s away.

 

A Global Outlook on Group InsuranceIt isn’t a small world after all—at least, not in the group insurance market. Today’s employers are adopting a global perspective on group insurance as the market keeps pace with their evolving needs.

The Challenges
Going global isn’t as easy as one might think. Dealing with complex legislation in multiple countries and jurisdictions can be a hassle for plan sponsors. “The discussions we’ve had are around employers saying, ‘How can you make this simple for us?’” says Ron Hoskins, assistant vice-president, strategic planning and research, Manulife Financial, Canadian group benefits. “They’re looking for insurers to find ways to manage these issues, and take the pain and the headaches out of their world.”

U.S. parent companies with Canadian subsidiaries face unique challenges because of the vastly different healthcare environments. While they’re looking for efficiencies and opportunities for cost savings, they may find it difficult to harmonize benefits across the border. “The fact that the U.S. doesn’t have universal healthcare really makes them different,” says Michele Bossi, Toronto health and welfare practice leader, with Buck Consultants. “They’re often the biggest driver and they think that what works there, works everywhere else. When it comes to healthcare, it just doesn’t cut it.” Hoskins agrees. “There are things going on in the U.S., but they just don’t apply to Canada at all.”

Handling ex-patriot cases can also be complicated. “The first thing for an employer is, if you’re sending an employee of your own out to another country as an ex-patriot, generally, you want to look after them at least as well as they would be looked after in Canada,” says Hoskins. “And it may not be as easy to do that as you’d like.” For example, access to quality healthcare can vary significantly depending on the location. “Wherever you come from, you have your own vision of how healthcare works in your own country and how disability works in your own country—but when you go to another country, you find out the rules are all different,” he adds.

As companies expand beyond their home borders, they’re looking for better solutions to manage their plans on a global basis. Technology—such as the growing trend toward online self-service for plan members—can be a useful tool. However, Hoskins cautions that it’s not a panacea. “It helps, but it doesn’t solve the fact that jurisdictional rules are complex, never the same.”

The Trends
So does going global really just mean thinking local? Or do some issues transcend national boundaries? Here are a few global trends that industry experts forecast for the coming years.

Cost containment – Not surprisingly, healthcare costs remain a significant ongoing concern for employers. “One of the things that’s probably happening in almost every country is cost shifting from the employer more to the employees,” says Hoskins. “And that’s generally just because employers are being hit with ever-increasing healthcare costs and long-term disability costs.”

But while cutting benefits may be the obvious solution, it’s not always the best strategy—particularly in an increasingly competitive labour market. Employers are looking to the group insurance market for help and guidance. “Controlling costs is still an issue,” says Jean-Jacques Paradis, vice-president, product development and marketing, group and business insurance, with Desjardins Financial Security. “But what we are seeing now is that employers are not just reducing benefits as a way to control costs, but are working with insurers and their employees to help reduce long-term healthcare costs.”

Health and wellness – Health and wellness may be the new frontier for the group insurance market. “With the competition for talent, which is also faced globally, all employers are starting to look at healthy work environments, and environments that are more attractive, to keep their people and to increase productivity,” says Bossi. “The new workforce is asking for this,” adds Jean-Guay, senior vice-president, group insurance, with Standard Life. “They’re looking for an employer that will care about their well-being. And of course, the employer will benefit from that, because they’ll get more from the employee.”

This trend toward wellness initiatives may include an increased focus on mental health. “The leading cause of long-term disability these days is mental health issues, and a lot of the costs for healthcare themselves are driven by chronic diseases,” says Hoskins. “So if you’re thinking about managing those kinds of costs, prevention/wellness goes a long way.” Bossi suggests that stress management will also become a priority for employers. “For employees to manage the responsibilities that they have today, which are significantly more than 15 years ago, the best employers—[those] who want to keep their employees—are going to help them do that.”

Quest for talent – As the labour crunch continues and talent becomes scarcer, employers will want to ensure that their benefits packages can match or exceed those of their competitors. “Controlling rising costs is still a viewed as a major concern for employers,” says Paradis. “However, in an opposing view, they realize that to retain and attract employees, they must offer competitive benefits.”

In the search for new attraction and retention strategies, the definition of “benefits” is expanding. Employers need to start looking at the work environment as a whole, says Bossi, finding new ways to help employees balance their work and home lives. This more inclusive approach to benefits could include offering financial counselling, on-site fitness centres or day cares and even concierge services for employees. “What’s going to be really big over the next decade is investment in people,” she adds.

This is just one sign of a larger trend toward an employee-driven approach to benefits. Bossi predicts that, in the future, the group insurance market will shift its focus to the needs and wants of the employee, rather than those of the employer. “The new employee demographic, and the one of the future, is made up of very diverse groups of people who really have different needs and wants,” she says. Employees may well be the driving force behind developments in the group insurance market. And if employers are reluctant to adopt an employee-based approach, they may lose out to those with more “people-friendly” workplaces. “The reality is that, in the future, employees who don’t like the environment will simply leave,” says Bossi. “Because they can.” —Alyssa Hodder

A shorter version of this sidebar appeared in the magazine.

 

 

The Numbers

The group insurance industry experienced moderate growth of 7.2% in 2007, with total insured premiums and non-insured deposits of $28 billion as of Dec. 31, 2007. The top 20 providers account for almost $26.4 billion of the total and experienced growth of 7.2% since last year.

The Great-West Life Assurance Company places first in the ranking of group insurers, with $6 billion in insured premiums and non-insured deposits—a 5.5% increase from last year. Moving up to the No. 2 spot is Sun Life Financial, with $5.9 billion in insured premiums and non-insured deposits, representing a 7.3% increase. Manulife Financial comes in third, at $5.8 billion, representing an increase of 5.2%. Desjardins Financial Security maintains its fourth-place spot with close to $1.6 billion in insured premiums and non-insured deposits, representing a healthy 16.3% increase. Rounding out the top five is Green Shield Canada, at $1.1 billion, representing an increase of 8.3%.

For group life benefits, the top three providers are The Great-West Life Assurance Company, Sun Life Financial and Manulife Financial. The group life sector total is $2.4 billion, representing a modest 4.1% increase from 2006.

For group health benefits, the top three providers are The Great-West Life Assurance Company, Manulife Financial and Sun Life Financial. The group health sector total is $13.8 billion—a 7.5% increase from 2006.

Administrative Services Only (ASO) providers had a sector total of $11.8 billion—a 7.5% increase from 2006. The top three ASO providers are Sun Life Financial, The Great-West Life Assurance Company and Manulife Financial.

Note: To ensure consistency in how the group benefits industry is reported and measured, Benefits Canada has adopted the methodology of the Group Universe Report, the industry standard. Under this methodology, used with permission of the Fraser Group, group insurers were asked to exclude revenues for governmentsponsored social benefits programs and for creditor and affinity group business when reporting their 2007 revenue figures.

For the full methodology, click here.

 

Andrea Davis is a freelance writer in Guelph, Ont. andrea.davis@rogers.com

Click here for the 2008 Group Insurance Directory.

For a PDF version of this article, which includes all the rankings, click here.

© Copyright 2008 Rogers Publishing Ltd. This article first appeared in the April 2008 edition of BENEFITS CANADA magazine.

 

Copyright © 2018 Transcontinental Media G.P. This article first appeared in Benefits Canada.

Join us on Twitter