Enrollment and administrative technologies have yet to establish a firm hold in the worksite insurance market. But employers are expressing significant interest in them.
That is one of the key findings to emerge from preliminary results of recent LIMRA International interviews with 1,000 employers. The interviews polled employer experiences with worksite insurance products. The responses can be used to help formulate action plans for leveraging technology in this market.
When enrolling employees, fewer than 10% of the employers indicated they use electronic enrollment methods such as Interactive Voice Response, Internet, or Intranet (see Table 1).
And although large employers are using these methods more often than small employers, the methods have by no means become the accepted standard. Even at the large end, paper forms continue to be the dominant enrollment method.
The idea of giving employees the ability to enroll in worksite benefits over IVR, Internet, or Intranet just doesnt spark interest. Among smaller employers (fewer than 100 employees), about two-thirds say the availability of Internet or Intranet enrollment is not important. And though over half of those with over 1,000 employees say they would like to have these enrollment methods available to employees, they indicate this is not essential and its presence would not make or break the sale.
However, when it comes to administering worksite benefits, it appears the Internet is definitely making its mark. More than one-third of employers are downloading forms, accessing claims status, and receiving claim reports via the Internet.
And employer interest in Internet services for administration is much more evident than is interest in electronic enrollment. Well over half of employers that currently do not yet have these services available, want them. This is true among small and large employers alike.
The high level of interest in these administrative services can in part be attributed to the standards set by institutional retirement providers.
Employers tend to compare the administration of their insurance benefits with other “vendors” with whom they work, most notably with their retirement plan provider. Employees in many retirement plans can now check on 401(k) account balances, transfer funds, take loans on their accounts, and change investment elections. Therefore, employers want similar real-time capabilities from their insurance carriers.
Hence, electronic administration and service capabilities are quickly becoming “must haves,” whereas Internet enrollment tends to be a “nice to have.”
What about single-source billing–e.g., a single system that manages all human resources and benefit administration instead of dealing with each carrier individually? Can worksite marketers incorporate these systems in their efforts to help build relationships with employers?
On the surface, it would seem so. But awareness and value are two obstacles that companies marketing these systems need to overcome.
Awareness is a major issue when it comes to single-source billing. Only about half of employers who deal with multiple carriers are even aware these systems exist. And few employers (14%) currently have single-source billing systems in place.
When hearing about these systems, employers are at best moderately interested; just under 10% show a high level of interest. Furthermore, 43% are not at all interested.
This low level of interest seems to contradict the high level of interest in Internet administrative services. Perhaps this is due to the familiarity of employers with basic Internet services; single-source billing is a foreign concept to them.
This suggests that worksite marketers need to spend time showing employers the value and benefit of these systems.
In addition, since employers are not willing to pay extra for this service, marketers should consider packaging this feature as a value-added service. (Note: Interest in these systems tails off quickly if a per-head charge–such as $2 per employee–is imposed.)
When trying to leverage technology in the worksite insurance market, the secret is to be able to introduce services and capabilities that are most likely to result in new worksite sales. Regardless of the approach taken, technology will continue to be a force in the distribution of worksite products and services.
Patrick T. Leary is manager-distribution research at LIMRA International, Windsor, Conn. He can be e-mailed at firstname.lastname@example.org.
Reproduced from National Underwriter Life & Health/Financial Services Edition, June 17, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.