Novarica recently conducted a survey of insurance carriers to examine the strategic technology issues they face when offering voluntary benefits. As the Affordable Care Act (ACA) is introduced, employers are offering employees the opportunity to pick the benefits they prefer, so they can receive the benefits best suited to their lifestyle and stage of life. Carriers cite the ACA as one of their top motivations behind planned technological updates.
The majority of carriers surveyed currently provide Life and Disability products, with all carriers planning to expand into providing Life, Disability, and Critical Illness products. Other voluntary lines of business to which a number of carriers are planning to expand include: Accident, Critical Illness, Supplemental Medical, and to a lesser extent, Long-Term Care (LTC).
To take these changes into account, carriers are asking IT to create or leverage capabilities with only modest changes to the budget. With the fear of intensifying competition, and new players entering the market, the areas of focus for low-cost growth include, in order of importance:
- The launch and service of new products
- Customer Service
- Distributor service
- Ability to modify existing products
- Business intelligence and analytics
- Operating efficiency
Currently, carriers face a number of internal challenges, including a lack of portfolio breadth, product development capabilities, claim processing inefficiencies, high administration costs, and weak IT capabilities that are causing concern.
To deal with these issues, four out of ten carriers surveyed plan on replacing their core policy administration system to update technology, improve claim-processing efficiency, and reduce administration costs. As well as replacing core systems, half of the carriers indicated that mobile is an area in which they want to invest in. This is in line with industry trends, enabling portals to offer employees and supervisors instant mobile access to claim detail rather than using traditional methods, which will reduce administration costs.
Using a cloud-based claims administration system, carriers can implement a flexible claim processing system that allows them to react quickly to market changes by implementing new products and services and keeping pace with new technology.
With the ACA introducing a shake-up to employee benefits, carriers are focused on offering voluntary products but are aware that technology may hold them back. To remain competitive they must consider investing before it’s too late.