At Sentro, we have always believed that it should be possible to serve individuals like individuals in group insurance plans.
But there are some real tensions in achieving that in practice. Some of these tensions are structural, and others are just a consequence of historical operating practices that should really be re-thought.
In this article, we explore what some of these tensions are, and how we at Sentro have approached them.
The "annual wash-up"
Historically, group insurance business has been a very "once a year" type of product. In the US - "open enrollment" practices mean that individuals get one opportunity a year to alter their coverage choices. Insurers generally also only update the membership of a group plan once a year.
These practices have created byzantine invoicing and coverage practices that the industry somehow considers "normal".
Imagine a 500 person group scheme. The insurer quotes and charges coverage for those 500 people for the full year.
Over the course of the year, 60 people leave the company, and 70 new people join. That's totally normal, most businesses have an employee turnover rate of 10 to 15 percent.
But here's the strange part. Generally, the insurance company doesn't find out until the next year that those 60 people left, and 70 new ones joined.
In a billing sense - group insurers treat this as an "annual wash-up". They use various formulas to account for and credit the 60 people who left, and to account for and charge the 70 new people who joined. They then carry these forward into the next year's invoice as "adjustments".
While this (inelegantly) sorts out the billing part of the service model, it totally destroys the ability to serve people as individuals. We'll look at that tension next.
At Sentro - our recommended approach is to apply employee changes as close to the actual leaving or joining event as possible. This allows automatic pro-rated charging and crediting, and eliminates any need for a once-a year crude and inaccurate "bulk adjustment".
Delayed application of employee changes = poor service
The generally accepted practice of applying plan membership changes only once a year creates some substantive risk exposures for insurers. It also creates major missed opportunities to serve an employee well at a time when they would be most open to hearing about it.
The exposure risk
In our scenario where 60 people left the plan, and 70 new people joined - in insurance terms, that represents 130 people where their coverage status and ability to claim is technically unclear.
For the leavers - when did they actually leave? What happens if they leave the company, but file a claim after that? For the joiners - when did they start? Are they on cover? Do we know anything about them if they call us up and ask for assistance or service?
These 130 people have kind of a 'phantom status' through the plan year.
Missed continuation opportunities
Most group insurers who offer continuation options in their group products require the leaver to exercise that option within 60 days of leaving the company.
That's great - but usually the last thing on the leaving employee's mind is 'can I somehow keep my group insurance coverage'?
So the better approach is to have an awareness that someone has left a plan, and proactively offer them the information and opportunity to continue their coverage.
But - if you are only updating employee changes once a year, the insurer will have no idea that the employee has actually left until well after the continuation period has expired!
It is a huge lost opportunity to the insurer and the broker servicing the employer - all because of an annualized updating practice.
The better approach is to update employee changes more frequently, and build workflows to engage departing employees with useful information and offers.
Missed welcome opportunities
When someone is starting a new job, you've got their maximum attention. Everything is new for them, including engaging with their employer's employee benefits.
This is the absolute best opportunity to offer them great and individualized service. That includes offering ancillary products that they may wish to add to their base coverage.
If that person doesn't get that kind of 'high-touch' care in their first few weeks of employment, the 'new employee' interest and openness will naturally drop and they will become more of a day to day employee. If they get their first 'high touch' welcome at annual renewal or enrollment time, that might be 5 months after they started work.
At that point, their openness to signing up for something will be much lower - it will feel more like a task that they need to do rather than a choice that could benefit them and their family.
It's a sales cliche but there is absolutely no doubt about its impact - you only get one chance to make a first impression. If that first impression isn't happening when the new joiner is most open to being positively influenced by it, you've missed a big opportunity to secure a customer for life.
Responsive service versus lots of choice
Many providers feel that offering lots of coverage and module options to employees on group plans means they are providing individualized service to people.
While that is partly true, we'd argue that being truly responsive to an individual in a timely way is actually what drives individual service satisfaction.
For example - let's imagine Employee A has bought a house and wants to voluntarily increase their life insurance cover. If his plan permits that, but doesn't allow him to action that change until 7 months from now, is that really individualized service? Choice is great, but only if you can exercise that choice when you want to do it.
At claims time, responsive service is everything. Most insurers execute well around the claims experience, but if the service journey makes the claimant have to provide basic information that they've already provided to the insurer, then that adds more pain to what is already a very stressful time for the individual or the people supporting the individual.
Timely, up to date and internally shared information is very important to the service experience. Providing responsive service through online channels and devices that people are already using is also important.
Reducing the service tensions
At Sentro, our philosophy is to empower group insurers wanting to offer responsive, individualized service. We achieve this through building the service delivery experience around continuous updating of membership information. We also facilitate self-service and real-time onboarding service with member service portals and real-time product assignment and onboarding flows.