Insurance has always been a relationship business. The best insurers, brokers, and agents understand their customers’ needs, deliver the best solutions and customer experiences, and maintain that business through those relationships over time.
That’s true for insurance carriers regardless of whether they are in the employee benefits, property and casualty (P&C), or individual insurance business. But while their goals are very similar, their products and customer relationships are structured very differently.
To maximize their effectiveness and best serve their customers’ changing needs, employee benefits carriers should select the technology solution that best reflects the structure of those products and relationships and has been purpose-built to address them.
P&C: One-to-one relationships
A critical difference between employee benefits and P&C is that P&C insurance policies are “object-centric,” meaning they are bought to insure a building or a vehicle, for example.
While there may be several coverages in the plan, such as fire, flood, theft, or general liability, each policy has a one-to-one relationship with each insured object. In the employee benefits business, however, a single policy covers a group of people that can number in the hundreds or even hundreds of thousands.
To quickly serve the employee benefits market, some software vendors have adapted their P&C systems with substandard workarounds, such as by reconfiguring product templates. While these customizations may suffice in the near term for some products and books of business, they can negatively impact the user experience in the short and long term, and frequently set insurers up for painful system updates. Beyond product templates, there are large discrepancies in the data and system architectures of individual life and P&C systems versus employee benefits systems, which is why inserting a group number as a workaround is important to these converted systems.
When a vendor customizes a P&C insurance product template with a group number, along with the different sorts of coverage options, limits, and terms specific to group insurance, that template is inherently compromised compared to an employee benefits product template specifically designed and purpose-built to support them.
For example, tracking a policyholder’s employees across coverages becomes much more difficult for users. If the group number is not used on all policy documents, confusion and a raft of problems can ensue for the employer, employee, broker, and insurer, especially around benefits management and, more important: claims.
Individual insurance: Also one-to-one relationships
An individual life insurance policy is “person-centric” rather than “object-centric” but also has a one-to-one relationship with the insured. Very simply, each policy was purchased by and for an individual and was tailored to each person’s specific needs and circumstances.
Adapting a technology solution built for individual insurance to manage group insurance requires the same sorts of modifications and workarounds as a P&C solution does, and it suffers the same complications around the user experience and system updates.
Group insurance: Many-to-many relationships
An employee benefits policy covers more than one person and perhaps hundreds of thousands. Compared to P&C and individual life, there also are far more stakeholders and customers, including the employee and their family members, the employer, brokers, and carriers.
That makes employee benefits more complex on its face. Consider that employers are eager to add new benefits and options for recruitment and retention, and it’s easy to see how a P&C system will be strained to keep up. A purpose-built system is made to manage them.
Purpose-built solutions manage group insurance better
As group benefits insurers replace legacy systems, they can simplify their technological futures with cloud-based, purpose-built employee benefits solutions.
Purpose-built employee benefits systems accelerate deployment speed and time-to-value compared to systems that need to be modified. Modified systems, especially P&C systems, can add to development and maintenance costs, detract from the user experience, and complicate updates.
Next, a solution that is purpose-built for employee benefits has the advantage of workflows and content created by subject matter experts with decades of benefits-specific experience. This ensures that the knowledge base accrued in their legacy system is not lost, and only grows deeper. Innovative features and functions — such as growing menus of pick-and-mix coverages — are a priority for vendors dedicated to the employee benefits market.
By adapting an individual life or P&C system to group benefits, insurers risk buying another system that, like its legacy predecessor, is difficult to use, maintain, and may not support the digital engagement that is necessary in the market.
To maximize their effectiveness, serve their customers’ changing needs, and manage the inherent complexity of employee benefits, carriers need to select the core system solution that has been purpose-built for the structure of their products and relationships.
A purpose-built employee benefits system – hosted in the cloud, maintained as software-as-a-service (SaaS), and automatically updated — offers today’s employee benefits insurers the ultimate in speed to value and ease of use in a rapidly changing world.