Another area that’s starting to receive more attention during these times—and one that providers feel is going to grow in the future—is individual insurance and healthcare products. “Retiree health products and individual health products are something that we will be paying attention to in 2009,” says Fedorchuk. “They may provide solutions to plan sponsors. If they are looking to shed costs, sometimes [individual products] are an opportunity. We’ve had those products on the shelf for years. It’s just that there is more focus on them right now.”
Dustin Coté, assistant vice-president, product and marketing services, group benefits, with Manulife Financial (No. 3), says his company has had a lot of requests for, and interest in, optional products. To meet that demand, Manulife launched personal critical illness (CI) insurance and personal life insurance this year. “From what we’ve seen, personal CI and personal life are quite unique right now,” he says. “In the future, [personal products] will be an increasing area of interest among sponsors and members.”
McLean agrees that the availability of and interest in personal products will increase. In fact, he sees this segment developing beyond just CI and life insurance. “As benefits [programs] become more complicated to manage, more expensive for plan sponsors to carry and more involved for them, we could very well see a point in time when plan sponsors seek to outsource plan sponsorship,” he speculates. “Instead of an organization offering its own employee benefits program, we may see a time when individuals secure their own coverage with funds provided by their employers. Those arrangements would be portable so the individual worker could take it with them to a new job. That isn’t a year down the road, and it may not even be five years down the road, but it’s not an impossible thought. It’s going to take a lot of courage for the first organization to do it. This could change the way benefits are delivered to Canadian workers.”
While the downturn seems to be stimulating product innovation and customer service, there are also unfortunate trends that have begun to emerge. Many insurers are seeing, or expect to see, an increase in disability claims and more requests for absence management services. “We haven’t seen [more claims than usual] yet, but with long-term disability, the waiting period is 17 to 26 weeks. So we may start to see some increase in incidence [soon],” explains Guay. “There is a risk that the duration [of leave] may be longer because if someone is on disability and the employer starts to lay off people, that may cause some stress, which can complicate and extend the duration.”
Time for Change
Insurers are well aware that employers are being cautious with their money, which means they will need to work harder over the next year to keep the clients they have and to increase their market share. “The market is very aggressive,” says André Simard, vice-president, sales and group and business insurance, with Desjardins Financial Security (No. 4). “Clients know that going to market could result in significant savings for them. So what we are seeing is the marketing of their plans, even if there is no service problem.” To avoid this, some insurers are compromising on prices and renewal conditions with clients as a way to keep them. “It makes it harder to sell to new groups,” says Simard.
To add to the situation, the ever-increasing cost of healthcare—drug costs specifically—is an issue that is on everyone’s radar as more biologic drugs and therapies enter the market. These are often the result of extensive research and require specific (and usually complex) administration protocols, which is part of the reason they often come with large price tags. In most cases, biologic drugs are treatments for conditions that previously didn’t respond to other forms of therapy.
Finding a way to make more biologics available to plan sponsors and members at an affordable cost isn’t going to be an easy task, but it is something that needs to be done. “I think new biologic drugs will present breakthroughs for our members, and we have to find a way to get these items covered, but it’s a challenge as we see costs continue to rise,” says Vic Medland, president of group insurance services with the Ontario Teachers Insurance Plan (a third-party administrator).
Monteith says the rising cost of healthcare is the No. 1 issue in the industry right now. Moving fast into the No. 2 spot is the need to support plan sponsors and the growing number of employees who are retiring or facing unemployment. “The current economic environment is going to throw us some curves, and we have to be braced for that. We need to contain expenses internally and make sure we are efficient.”
Although money is tight and cost is on everyone’s mind, providers feel the group insurance industry is on the brink of change. “I think our industry is headed toward more innovation,” Monteith says. “We have been doing things the same way for a long time. We’ve made some improvements, but I think we’re ready for change. We need to provide better solutions. I think our industry is poised to start delivering some creativity and innovation to our end-users.”
As the group insurance industry waits out the current economic crisis, there is no doubt that some financial damage will be done. But the innovation and service enhancements that will come because of the changing needs during this economic downturn may ultimately improve the industry.
The Numbers
• The group insurance industry grew by 6.1% in 2008, slightly less than the 7.2% growth it realized in 2007.
• The Great-West Life Assurance Company of Canada has once again secured the No. 1 spot in the Top 20 Group Insurance Providers ranking with insured premiums and non-insured deposits of $6.4 billion.
• Among the Top 10 Group Life Providers, Standard Life is No. 7 this year (bumping The Co-operators to the No. 8 spot) with $57.6 million in insured premiums.
• Green Shield Canada has entered the Top 10 Group Health Providers list at No. 8. Green Shield reported $298 million in insured premiums in 2008—a 29.8% increase from its 2007 figure.
• Desjardins Financial Security has bumped The Co-operators off the Top 10 Administrative Services Only Providers list, with $93.4 million in non-insured deposits as of the end of 2008—a 30.3% increase over the $71.7 million the company reported for 2007.
April Scott-Clarke is assistant editor of Benefits Canada.
april.scottclarke@rci.rogers.com
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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the April 2009 edition of BENEFITS CANADA magazine.