The Inevitability of Insurance Innovation

by Margaret Smiley | Nov 14, 2016 | Blog | 0 comments

Insurance represents nearly 10% of Fortune 500 companies and over a trillion dollars in premiums each year. The industry is large, not just in terms of its size, but also its worth. In business these are markers of success, yet when it comes to innovation, that isn’t always the case. Larger companies are notoriously slow to change, but this is only part of the reason why innovation has yet to take a strong hold on the health insurance industry. Insurance is a highly regulated industry that requires expertise to navigate the complexities and legalities as well as insider knowledge to understand the language. The industry abounds with this level of expertise, given that the average age of insurance companies is 95. But how do you convince a 95 year-old to change?

The answer has much less to do with willingness to change than with willingness to survive. The new insurance landscape points to 3 main factors driving the need for innovation:

1. A shift in the consumer: We are in the age of the digital consumer, meaning those who are purchasing insurance were born and raised not knowing anything other than the internet. With a shift in the population, technological innovation becomes an expectation.
2. New Regulation: For health insurance, the Affordable Care Act played a pivotal role in catalyzing needed change. It worked to increase public access to plan level information and pricing, developed a digital health insurance marketplace, and expanded coverage to more Americans than ever before. Now more than ever, legislation is of top of mind and concern in the industry, making flexibility and innovation in the time of disruption essential.
3. Increased revenue: This expansion of coverage means an influx of premiums, member administration fees, and commissions. This revenue opportunity requires the need to not only attract, but also to retain these potential new members

Embracing these drivers of innovation will allow carriers and brokers to differentiate themselves within the marketplace and not only survive, but thrive. This requires industry stakeholders to prioritize something so basic to business development, which has been lost over time: the consumer experience. Prioritizing the consumer experience implies that carriers and brokers start paying attention to their customer satisfaction and member retention metrics and increasing their online presence. In its current state, the insurance industry consistently ranks among the bottom in customer satisfaction. According to the BCG/Morgan Stanley Satisfaction Survey, only cable and real estate companies fair worse on the metric.

But with innovation comes opportunity. Establishing an online presence allows carriers and brokers to reach a larger, more technologically savvy client base while continuing to provide expert service. Focusing on the consumer experience and providing transparency are critical components of customer satisfaction. Let us show you how we can help.

Why Tech Continues to Reign this OE and Beyond

by Margaret Smiley | Nov 1, 2016 | Blog | 0 comments

With more individuals, families, and businesses gaining health coverage than ever before, new populations of Americans are flocking to health insurance brokers for help. According to the Robert Wood Johnson Foundation’s survey of SHOP users, 74% of small businesses relied on brokers to guide them in their benefit decisions. In such a complex industry, brokers are spending the majority of their time explaining health insurance complexities. 72% of a brokers time is solely dedicated to helping explain coverage. This attention to detail and expert level advice leads to overwhelming satisfaction. Health plan members not only employ brokers, they trust them, for one simple reason: they make the health insurance process better.

Yet the process brokers use themselves is far from perfect. Inefficiencies abound with unnecessary excel spreadsheets, reliance on outdated information, delayed methods of communicating with members including snail mail and even faxing. The amount of time and effort put into this needless back and forth make the health insurance broker industry ripe for technological innovation.

Embracing technology allows brokers to differentiate themselves within a hyper competitive market and even thrive during this time of growing pains. And, as technological adoption becomes a growing expectation across all industries, there are three reasons why brokers would be gravely mistaken to not overcome a fear of change:

1. Increased Opportunity: Technological adoption allows brokers to modernize their business as well as reduce the time it takes to close more deals by streamlining core work processes. It also streamlines the process for prospects as well through information transparency and increased engagement. The use of technology provides a sustainable solution for the broker industry to attract and retain clients through one seamless and engaging user experience.
2. Customer Demand: Over 53 million millennials make up today’s working population in the United States, representing more than 1 in every 3 American workers. The customers who brokers have represented for years are not only getting younger, they’re more entrepreneurial and tech savvy. Although this labor force still sees brokers as an invaluable piece of the puzzle, they are expecting their business advisors to provide seamless, convenient, instant answers – like they are used to in all other economic transactions.
3. Advancing Competition: New technology companies have emerged, grown, and even stumbled. Zenefits is one such company that has become known as the Broker Dis-intermediator. This name is a misnomer for Zenefits because they are not replacing the role of brokers, they are brokers. Their high growth revenue model is predicated on collecting lucrative broker commission. Tech start-ups like this offer technology to simplify processes for businesses in return for being designated as the “broker of record” and thus earning the commission when they assist the business in finding insurance. And Zenefits isn’t the first, or the last tech company that will come to disrupt the broker industry.

To attract the new digital consumer, brokers must too must be digital consumers. In such an evolving health insurance landscape, these are the brokers that will be welcomed with open arms. And we’re ready for them.