This series explores policy administration systems, their importance for business success, and what considerations should be made in implementing them.
A conversation with Dan Watt, FINEOS Senior Vice President of Product Management
Let’s start with an overview of the voluntary benefits market. It is a term that can mean different things to different people.
In general, voluntary benefits are those in which the consumer is selecting and purchasing insurance relevant to their needs beyond standard employer-provided coverage.
From a group insurance perspective, voluntary benefits can describe products such as group term life, disability, critical illness, hospital indemnity and accident insurance to name just a few. With all of these, the employee can choose coverage beyond what their employer pays for, paying on their own via an employer-sponsored plan. For example, basic employee term life insurance may only provide a lump-sum payment, or an amount based on one year’s salary or other variant that is paid for by the employer; the voluntary term life plan can allow the employee to select and pay for additional coverage beyond what the employer provided. In many cases, this is where voluntary is such a critical component: providing that extra peace of mind for the employee and their family.
Over the past 10-15 years, the phrase “voluntary insurance” has morphed into a broad term that means insurance selected and paid for by the employee across a wide range of offerings – everything from additional life insurance coverage to pet insurance.
Can you provide an example of how voluntary benefits affect the policy administration process?
Let’s consider someone who has a basic term life plan from their employer but would like more life insurance coverage. To enroll in additional coverage, the individual will need to provide more information about themselves and typically go through the medical underwriting process before they are approved for the additional coverage. This is a multi-tiered process involving numerous factors and business decisions. To do this well for the employer, employee and broker, the carrier must leverage a modern policy administration platform that validates the enrollment data against plan design and enrollment rules to determine exactly what medical underwriting process to provide the employee. This is a tricky part of the insurance purchasing process, however, it’s crucial to both the employee and carrier that it’s done efficiently and accurately.
How efficiently and effectively those benefits are managed depends on having a policy administration system that can manage all those variables. How has the importance of a modern policy administration system moved up the value chain?
In general, a policy administration solution spans insurance functions including rating, quoting, case installation, renewal, and servicing, and is integrated into billing and claims platforms. It’s a source of truth for all upstream and downstream solutions as well. The policy administration platform is the solution carriers leverage to provide superior customer service, drive business innovation, and connect to the broader insurance ecosystem.
A modern policy administration system can synthesize a plethora of rules with flexibility, regardless of how an employer is administering their benefits. For example, if you’re a large national employer with thousands of employees across multiple states, you need a platform that manages benefits and plan and enrollment rules across states with different laws, especially when it comes to the complexity of absence management. Leave laws vary from state to state, and even between municipalities, so a platform that reconciles these issues is critical. Also, consider all the other plan design features that vary from state to state. Or with a claim or coverage inquiry, every employee needs accurate information about their plan, what will be covered, and how. This can be enabled via APIs from the policy administration platform to either the carrier or partner portals or engagement methods.
Effectively managing this down to the individual employee level is critical. A policy administration system that does all this well is a great benefit to the carrier, broker, employer, and their employees who are navigating the intricacies of insurance. This is where modern technology is evolving to improve the process and experience.
In Part Two of this series, we will discuss how modern policy administration systems help achieve business goals.