Discovering new paths to growth is the biggest challenge for insurers today – and the biggest opportunity. In mature group markets where traditional insurance has become commoditized, innovative growth is not just advantageous, it is imperative.
Voluntary benefit products, along with associated modernization, offer a vehicle to meet this growth imperative.
A collection of cultural drivers have fueled the proliferation of group voluntary products. In the U.S., for example, supplemental health insurance sales increased an estimated 4% in 2015, marking five straight years of growth in voluntary benefits.1
- Cost shifting – Aging populations and rising healthcare costs have led to cutbacks in employer- and state-provided benefits, creating protection gaps. In Asia, the mortality protection gap has reached an estimated $60 trillion – an alarming figure that does not even include the growing morbidity gap.2 How do markets try to fill the gaps? Higher out-of-pocket expenses for consumers.
- Underinsured middle market – With limited employer-provided benefits and increasing personal debt, many middle-income families are foregoing adequate insurance. In a survey of Canadian households, roughly 30% report they carry no life insurance and 45% believe they do not have enough.3
- Unique needs – One-size-fits-all programs no longer meet the needs of a diverse workforce, including employees working past the age range of employer-provided benefits. Overlooking the needs of older employees could cost British businesses £44 billion ($54 billion) through staff turnover and reduced productivity.4
Voluntary benefits offer opportunities for group insurers to take advantage of these drivers via product diversification, technological innovation, and geographic expansion.
By shifting focus away from a few highly competitive market segments, voluntary benefits offer untapped growth potential. The key is to address unmet needs, such as paying medical bills, meeting mortgage commitments, or insuring pets, cars, cell phones, etc. Products should recognize inter-generational and cultural differences as well and adapt benefits, marketing, and distribution accordingly.
Technology is speeding the adoption of voluntary offerings. Online platforms help increase financial literacy and the awareness of protection gaps. Decision support tools accelerate enrollment and enhance the customer journey. Wellness programs featuring wearable tech reward healthier life choices. And this is to name only a few examples.
Cost shifting and the rise of the underinsured are global phenomena, making demand for novel solutions nearly universal. Carriers once wary of global expansion are now using innovation in voluntary covers and distribution platforms as a gateway to untapped markets. Voluntary benefits’ intrinsic customizability allows for easy implementation across geographies.
The rise of voluntary benefit platforms shows no signs of slowing down. A growing number of our client partners at RGA are working with us to develop innovative and sustainable voluntary solutions. Winners will be those providers who take a proactive approach to using voluntary benefits to help address rapidly evolving individual insurance needs.
1. U.S. Worksite Sales 2015, LIMRA.
2. Mortality Protection Gap: Asia-Pacific 2015, Swiss Re.
3. Canadian Life Insurance Ownership: Household Trends, LIMRA, 2013.
4. The Future of Employee Benefits, UNUM, 2015.