Prevention Instead of Payouts: New Levers for Group and Voluntary Stability and Growth

Unstuck: Using Technology to Build Insurance Resilience

Published on

March 30, 2023

You are the U.S. VP of Human Resources at a global shipping company. For years, the most stressful part of your job was mergers and acquisitions. In the past decade, your company was on an “acquisition spree” and it was up to you to make sure that entire employee populations were brought on board promptly with effective communications to everyone. Fortunately, your company culture was to take good care of the new employees and make sure that their transitions went smoothly to lower attrition.

The most difficult part, not surprisingly, was transitioning benefits. Through special enrollment periods and on-site seminars, your HR teams would attempt to make your benefits package seem robust and easy to use. In reality, you just hoped that 95% of the employees would have an easy enrollment and that most employee data would move over to your systems cleanly. Your regional HR managers could handle the exceptions. Most of your group and voluntary benefits providers were adept at adding new company employees.

This year has been different. The voluntary benefits landscape has grown more complex. Your HR teams are dwindling. The onboarding process has way more “exceptions” than usual. Employee satisfaction is way down, not just among long-time associates, but among all ages and occupations. The executive suite is looking for answers to stem the tide of departures. You are looking for answers on how to reinvent your benefits program in ways that make an impact.

The growing relationship between talent and benefits

Today’s employers are finding that employees are their most crucial customers. They are stakeholders. They are human, so they are each unique, with unique circumstances, life needs, and career goals. Employees have become more than assets.

This means that employee satisfaction has become mission critical to corporate success, yet this new need to please is arriving at the very time that job satisfaction is diving, according to a recent MetLife report. Looking at Gen Z only, “job satisfaction fell from 72% in 2019 to 64% in 2021 to 60% in 2023.” Only 61% are satisfied with their benefits.[i] At the heart of change must be a change in the individualization and personalization of benefit offerings to meet the different demographics – often 4 generational groups with very different behaviors and expectations.

Many of the answers that employees seek to improve satisfaction are the ones that insurers can provide if they are prepared. Insurers need to envision a bridge between holistic employee protection and employee satisfaction. This will give both employers (groups) and employees (individuals) more reason than ever to see insurance as the one that meets their goals and needs. Talent needs to be protected in more ways than one.

A new method for building resilience in insurance

In my last blog on Prevention Instead of Payouts, we looked at P&C carriers for ideas on how levers of prevention could create an entirely new valued approach to insurance. Payouts have always been a fact of life for insurers. But what if they weren’t? What if prevention and customer experience became the greater focus? What would insurers and their customers stand to gain?

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Insurers in the Group and Voluntary Benefits space have a major contribution to make to whole health wellness and holistic protection. This includes everything from finances to identity and cyber theft to mental health, physical health, and safety. From a technology standpoint, the divisions, and silos are coming down. Many or most insurers in this space will need to be able to operate just as comfortably in the Group and Voluntary Benefits space as they do with any other  lines they may carry. This ability to do more, across common insurance silos will give insurers far greater resilience. It will happen through expanded channels, better service, increased opportunities, and a far greater ability to prevent and protect each insured.

4 levers of prevention that are designed to lower payouts and improve customer experiences.

To assess the potential risk reduction from prevention methods, we need to consider both the types of technologies available to insurers and the breadth of products currently in use, and those that may be up and coming in the future. In the following levers, we give examples, but you may be able to draw upon your own examples for each lever as we go through them.

Lever One: Protective data for financial products

When it comes to protective data, it pays to think in broad terms. Insurers might ask themselves, “Which of our current products would see fewer claims with better data usage, more real-time data, or a greater uptick in purchasing…where employees need greater protection?”

Let’s use Life, Critical Illness, Accident, and Disability insurance as examples.

Health insurers, employers, and employees have a vested interest in keeping individuals healthy. It’s natural to consider how the wide range of health data can contribute to an individual’s holistic health care. Yet, L&AH insurers have the same vested interest with arguably more at stake. When a person purchases a group term policy or even a voluntary benefit CI, Accident, or Disability product, what is done, if anything, to prevent a claim?

Historically, not much has been done to promote health and wellness to group policyholders. Yet every step that a group provider might take to reduce claims, is a step that health insurers and employers would appreciate. Incentivized sharing of real-time health data would accomplish multiple goals. Employees who opt into data sharing will begin watching their own health more closely. At the same time, they may receive a reduction in premiums or gain valued rewards. Insurers would be gathering valuable data on real activity from individuals and groups where they have never had good insights to promote well-being. Insights could be shared with employers on improving well-being and claim prevention. Vitality is an example that rewards customers for living healthier lives using fitness trackers and has partnered with John Hancock in the US.

Is this lever enough to justify the technology improvements that would be needed to ingest and analyze employee data? Actually, as valuable as this lever may be, it may occur naturally as the other levers in our list are applied to a holistic wellness and preventive experience too.

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Lever Two: High-touch, data-empowered communications

The previous, traditional Group and Voluntary benefits model used no-touch, low-touch customer engagement as a lever for profitability. (“Let the broker and employer sell it and we’ll service the policy and claims.”)

In today’s benefits environment, depending upon the product, that concept not only won’t sell, but it also won’t work toward lowering claims or preventing claim events. You can’t just sell the product benefits and expect that employees will understand them.

Two cases: Identity theft and Indemnity products

For example, with identity theft products, it is very common for employees to sign up, then neglect to finish the process by entering all of the personal data required to begin protecting their accounts and identities. They pay the premiums, but they don’t give insurers the full ability to protect. Real prevention and protection would happen when insurers establish direct contact with the insureds, then proactively establish ongoing communications.

Indemnity products, such as CI, Accident, and Hospital Indemnity, would also benefit from greater personalized communications — allowing insurers to warn about coming ice, fire, storms, or virus events that they should take extra caution to avoid injury or illness. These products are often seen as supplemental and disposable, but they gain value as they are used to prevent and protect.

Too often, an employee will sustain an injury and completely forget that they signed up for CI, Accident, or Hospital indemnity, forgoing the payments they were due to receive. Yet if insurers used data, such as location data from their phones, to ask if someone was in the ER, they would be providing the kind of high-touch service that employers are looking for. In this case, insurers would be “taking care” of employees without them needing to find contact information during a trying period. This would be the equivalent of parametric insurance in the P&C market.

Lever Three: Improved capabilities, better data, “single platform”

In individual life insurance, insurers underwrite individuals based on their personal risk. They use marketing to sell their risk product. They set up the contract for longevity. None of these are like offering life insurance in the group and benefits market.

Yet in today’s group and benefits market, products and risks do need to be individualized and understood in order to make them portable and assist with prevention. Today’s insurers should still be aimed at developing relationships of understanding and longevity that fit the employee’s desire for great customer service whether through an individual, group, or voluntary benefit product offered within a benefit plan that meets a changing employee base.

The only way this can occur is by bringing together modern individual and group and benefits capabilities onto a single platform that is scalable across all the various products.  This requires API-native, cloud-based architectures that break away from any constraints within the systems themselves. These new systems, such as Majesco’s L&AH Core Suite foster far better data, business, and technical architectures that are “un-siloed” and capable of rapid data transfer for enrollment, service, claims, and portability.

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Preparing to be used by enrollment systems

Enrollment makes a great case study of why insurers must improve systems and data access.

Today’s enrollment can now take on all of the attributes of both soft-embedded (opt-in) and fully-embedded insurance. Insurers hoping to serve both individual markets and group markets will find that both markets now require embedded capabilities. More often than not, the product will be sold on employer, broker, or third-party technology that will utilize APIs to interact with insurer systems.

The key to prevention instead of payout, however, is the knowledge and data that insurers can analyze across individual and collective employee populations. What bits of information will allow you to mitigate claims on some level? Just as P&C insurers can analyze trending claims across geographies, now Group and Voluntary insurers can dramatically improve claims ratios, pricing, and communications within groups and across related products.

Vision coverage: A case example

Let’s use Vision coverage as an example. Vision insurers can improve their payouts by incentivizing and steering insureds toward high-quality, less expensive optometrists and eyewear suppliers. They can only do this if they know and understand when an insured is likely to get an eye exam and then by utilizing that information to communicate appropriately. This is information that can be simply gathered during enrollment using a modern system.  

However, vision coverage could also work to the benefit of life insurers that choose to add it to their offerings. Eye exams are now routinely finding/predicting diabetes, cholesterol, and high blood pressure issues — especially among people who don’t commonly visit their doctor for preventive care checkups.

This is just one example. Once an insurer is equipped to make their own connections between data and prevention, they are likely to get even more creative with the ways that they can make new products to support those that are already in place.

Lever Four: Connected devices and real-time analytics

Yesterday’s analog devices, like scales, thermometers, and watches, became electronic. Then they got “smart.” Now that smart devices are here, their usefulness in insurance is changing the game. They are windows into risk, unlike anything we’ve ever known. To capture the data, they generate and use it to enhance wellness and help prevent claims, insurers need data and analytics solutions that fit the industry and its ability to make decisions. Majesco Analytics and our Ecosystem provide access to solutions that improve data access, visualization, and insights.

They also, however, need the ability to provide real-time feedback to individuals. This requires insurers to either develop apps that give feedback or enter into partnerships with ecosystems that include both apps and devices. Insurance integration is a natural next step for many health and wealth-related companies that wish to add value to their customer offerings.

Preventive levers as a case for a new core

Once again, each lever makes its own case. The right way to holistic benefits improvement for individuals and employees will be a comprehensive look at L&AH core systems like Majesco L&AH Core Suite and Majesco ClaimVantage that support Individual, Group, and Voluntary benefits.  In many instances, this will call for a new core — one that reduces costs, enhances service, and optimizes the business.

Are you ready to expand your company’s capabilities, products, and channels?

[i] MetLife, The Advantages of Employee Care: Creating human-centric employee experiences and work environments: MetLife’s 21st Annual U.S. Employee Benefit Trends Study 2023,