By Jessica Word:
The first half of 2020 has been anything but business as usual. While many companies have embraced remote working policies, one thing has become clear: Insurtech (use of technology to increase efficiency in the insurance industry) is poised to continue to influence how the health insurance industry operates.
For years, health insurance was a paper-dominated industry, where carriers and brokers alike were mailed benefit plan designs—and enrollment forms had to be completed by hand. Quoting could take days to complete. Today, the insurance marketplace is much more efficient and it relies more than ever before on technology.
In fact, according to PwC, our industry is currently in the middle of the Fourth Industrial Revolution, ushering in an increasingly connected business world. It has experienced more rapid technological evolution in the last decade than it did in the 50 years since the industry first began to use mainframe computers.
One key element of Insurtech is the ability to leverage data from multiple sources, such as smartphones and computers, streamlining routine processes. This innovation has allowed brokers to increase steadily the use of technology to create efficiencies and lower costs through automation.
Using Insurtech, insurance professionals can start a quote and put together a complete proposal more quickly than in the past. It is now easier to make adjustments based on a business’ specific budget and employees’ individual health care needs, while also enabling employers to respond better to changing regulations, employee status updates, and more. The result: greater efficiency and better customer service. With limits on in-person meetings due to COVID-19, some brokers have met with prospects and clients online via Skype or Zoom to review and discuss their quotes and coverage proposals.
Here are the top three Insurtech solutions that offer a myriad of benefits to brokers and their clients:
- Speedy access to information: Consumers expect a certain level of speed when it comes to accessing data. Business owners have the same expectation, specifically when it comes to comparing benefit plan options while also managing employee benefits and employer monthly contributions for each employee’s coverage. Quoting technology continues to evolve – for brokers, general agents, and carriers. Due to these expectations and demands, brokers, now more than ever, must be able to obtain quotes at an increasingly rapid pace. It is not speed alone that determines success, but quality and accuracy as well. Some quote engines allow producers to present product combinations that cannot pass Underwriting. In the rush to quote delivery, this often results in significant errors that are not caught prior to employees making plan selections. Errors are costly in time and re-education, and can result in the loss of a sale altogether. Some quoting platforms include highlighted plan differences to make plan comparisons easier. And others include integrated provider search technology to ensure clients are quoted plans that only include the providers they are seeking in the health plans they are considering. That gives brokers the ability to quickly put together the best package and proactively make prospects and customers aware of any deficits they could experience.
Online enrollment (OLE), human resource information systems (HRIS), and benefits management tools are also attracting increased attention from groups of all sizes. Brokers and their customers can choose tools from carriers, administrators, general agents, and third parties (like Ease, Rippling, Employee Navigator, GoCo, Insynctive, and others). Employers and members appreciate the many benefits of OLE such as streamlined information distribution and integration of HRIS to help employee onboarding run more efficiently. Benefits management tools also help employers stay on top of changing rules and regulations, track variable hour employees, calculate full-time equivalent employees, and determine Applicable Large Employer (ALE) status.
It is in a broker’s best interest to keep an eye on new and emerging technologies that simplify health plan shopping and make benefits management easier for business owners and managers. This reinforces a broker’s value as a business partner and insurance adviser to employers.
- Another layer of checks and balances: New legislation and regulations at the state and federal level can affect the underwriting process, along with how brokers quote and sell health insurance to their book of clients. For even the most well- informed broker, these evolving adjustments can be tricky to monitor. Automated online management tools can quickly alert a broker if a required authorization is missing, or issue a prompt if a specific regulation might have been accidentally overlooked. Carriers, administrators, and general agents are always looking at ways to improve their systems and implement changes to enhance the process for brokers and their customers. Insurance professionals who embrace these updated, automation tools set themselves up for success by providing clients with the assurance that their plans are fully compliant with federal and state rules.
- Organization of employee statuses: By law, employers offering health insurance must extend coverage to former employees and dependents following the loss of that coverage for up to 18 months. However, federal COBRA and Cal-COBRA requirements can sometimes be difficult to follow, and compliance errors can cost clients big money in statutory fines, excise tax penalties, civil lawsuits, regulatory audits, and more. For example, the Department of Labor (DOL) published its inflation-adjusted fines in January. The fines for failure or refusal to file an annual report (Form 5500) are up to $2,233 per day. And the maximum penalty for failing to provide a Summary of Benefits and Coverage (SBC) has increased $1,176 per failure. Lawsuits and audits can drive costs even higher.
Failing to help clients avoid DOL and other penalties can also cost a broker – in loss of reputation, lost business, and higher professional liability expenses. Insurtech innovations can help brokers work with their clients to maintain accurate employee counts, generate reminders to alert parties of qualifying events such as employee terminations, and help a broker and his or her clients’ businesses stay organized. Benefits professionals who are able to leverage this technology become long-term and valuable partners to their business clients.
Insurtech will continue to influence the further evolution of the health insurance industry. It is ushering in an era of improved service—providing greater value to insurers and their customers. It is important that brokers stay apprised of new and innovative technologies to help them more quickly and efficiently serve their clients. Nevertheless, one thing is certain: brokers will not be replaced by technology anytime soon. Business owners and their employees will continue to find value in high-touch customer service.
Jessica Word is president of Word & Brown General Agency. Established in 1985 and headquartered in Orange, Calif., Word & Brown is one the state’s largest general agents. For additional information, visit www.wordandbrown.com.