Advances in technology have brought significant improvements to the group insurance industry over the last five years, making processes and procedures easier and more efficient. But is the quest for efficiency making insurers robotic?
“Through achieving efficiency gains, [service providers] are being forced to standardize a lot of their processes,” says Brian Lindenberg, a worldwide partner with Mercer. “We’ve seen a lot of standardization with contract amendments in particular.” He adds, however, that it’s the consultants and plan sponsors that are pushing the insurers to become more efficient and streamlined.
Vic Medland, president of group insurance services with the Ontario Teachers Insurance Plan (OTIP), a plan sponsor and a third-party administrator, says, “[Insurers] develop, and continue to develop, excellent front-end user tools. Direct deposit, enrollment tools and wellness sites are good examples of this. [But] given their size and need for efficiency, standardized plan design approaches decrease flexibility and plan options for sponsors.”
OTIP has approximately 300 employees in its plan, which opens the doors to more options than what may be available to sponsors of smaller plans. “I think consolidation has led to very large providers, and while there are some positives with that, I think it has also led to standardized service solutions, making it difficult to build meaningful partnerships. Smaller employers may not get the attention that they’ve had in the past,” Medland says.
But Lindenberg doesn’t entirely agree. “I think the marketplace is being served well overall,” he says. “It is still a surprisingly competitive marketplace despite the concentration of the big three [insurers] having 60% to 65% of market share. That hasn’t translated into a sellers’ market.”
He adds, “I think what we are seeing are insurers, especially second-tier insurers, specializing in certain areas—whether that is disability management, small markets or paying health and dental claims.” He notes that technology has made the industry less personable but thinks it’s “a natural evolution to where we are headed as a society.” Although a number of small plan sponsors have complained that insurers don’t understand their needs or can’t serve them properly, Theresa Wiwad, controller for Hood Group (a technical services company with 53 employees), says she is happy with service her company gets from its provider.
“Ours does a really good job. We are with a bigger firm, and I think they can totally meet the needs of the smaller companies,” she says. “They’ve been very flexible, and they’ve given us a couple of different options.”
Most plan sponsors and consultants are content with what is available to them and have benefited from the efficiency measures that have been taken. The drive to become more efficient may have lessened some of the customization opportunities that some plan sponsors once enjoyed, but that doesn’t necessarily mean the market is being served poorly; perhaps it’s just being served differently.
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April Scott-Clarke is Assistant Editor of Benefits Canada.
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