You don’t need expensive consulting firms and years of analysis to identify the key theme that runs through industries like finance, retail and travel: follow the consumer. “Following the consumer” means meeting your end users where they are today and accurately anticipating where they will be tomorrow. To accomplish this in the age of connected insurance, carriers will need to think differently and check their legacy baggage at the door.

Taking stock of the insurance distribution “stack”

I hear from carriers all the time about how difficult it is to balance the competing priorities of increasing membership, maintaining a high level of customer service, and reducing operating expenses. The current configuration of insurance product delivery complicates this equation even more.  

To reach their customers, carriers rely on a complex network of third parties to sell, distribute, and service their products. This has created many layers between a carrier and the end consumer: 

1. Benefits brokerages who sell and service insurance products

2. General agencies who assist brokerages with selling and service

3. Software solutions that provide the front-end consumer experience and back-end administration for command and control

4. Businesses and employers that are responsible for vetting and selecting insurance plans to offer to their employees

Ultimately, the employees are the people paying for and using the insurance carrier’s product, but all these layers have resulted in a massive disconnect between the two parties. Recently, as carriers have become more aware of how this structure may be impacting their ability to appeal to their customers, they have been asking important questions like: 

• Do my products look the same from one consumer to the next?‍

• Are my products and prices easy to access and understand?  

• How do I know that consumers are experiencing my products the way I intended?

• Do I have all of the consumer behavior and usage data that I need to be successful

These are tough questions that unfortunately aren’t easy to answer, but we hear about them daily in our work at Noyo. This can mean only one thing: Houston, we have a problem. 

Why are we talking about this now? 

In the last decade, scores of software solutions have emerged to provide a seamless consumer experience for HR, benefits administration, IT, and payroll management. Some of the market’s best examples include Rippling, Sana, Ease, Zenefits, Namely, and Gusto– their software is beautiful, intuitive, and friendly. These solutions have really flipped the script, and now the consumer’s relationship to their benefits and insurance lies with the front-end software selected by their employer. 

Traditionally, by the time a carrier’s product has traveled through all the layers in the stack and reached the consumer, it has been chopped up, shuffled around, patched back together, and given a whole new identity. All of this laundering puts carriers at a real disadvantage when it comes to offering a streamlined, standardized, and pleasant shopping and enrollment experience. It can also drive the costs to acquire clients too far up to be sustainable. 

The inconsistent connection between consumer and carrier can also affect the post-sale relationship and make key product insights more difficult to get. A carrier’s ability to calculate lifetime value and implement a retention plan is also at risk; it’s hard to figure out how to improve the customer experience and offer new products when interactions are so disconnected and process-laden. 

Figuring out how to talk to the consumer across many different platforms isn’t the only challenge for carriers in the modern world. There are a couple of recent trends that have only increased the complexity of reaching consumers in a consistent way: 

• Decision-makers in HR departments are changing roles and companies a lot more frequently (generally every 2-3 years*). These decision-makers not only have the power to change plans, but also brokers and software solutions.

• Employees are switching jobs at a record pace, so they’re experiencing many different plans and software solutions over time.

• New competitors and distribution channels are constantly emerging–traditional models of insurance are being re-thought.

• Benefit brokerage mergers and acquisitions are accelerating (there were 600+ brokerage M&As in 2019**).

These days, the only constant is change, so how can carriers become agile enough to reach the end consumer and provide a great experience, no matter the context? The answer goes to the core of many of the industry’s problems: interoperability. 

The hidden piece of the puzzle

Many of the complexities outlined here are difficult for carriers to navigate because of old, outdated methods of data exchange between layers of the stack. Examples include EDI 834 files (invented in 1991), paper forms, and clunky portals with heavy human administration. There’s a popular narrative in the insurance industry –“we’re integrated”– but this phrase can be misleading. Behind the scenes of the “integration,” manual work is being shifted around between different players in what is essentially a game of high-stakes, operationally burdensome hot potato. This topic comes up in almost every conversation I’m in; there are certainly optical wins to being “integrated,” but more often than not, real business gains are diluted before getting to market because of high operation and maintenance costs.

To be clear, EDI works. But so does riding a tricycle across the country without a GPS. You’ll get to your destination eventually, but at what cost? Tricycles are not the future of transportation.

Moving off of legacy technology would unlock innovation all across the industry. For example, what if customers could set up custom payment plans, turn coverage off and on as needed, or get predictions for the right coverage based on life events? What if carriers had granular control over how their products were presented, and the quoting and enrollment process could be reduced to a few clicks? Imagine the possibilities for connecting with customers, resolving issues, and designing new products if data exchange were fast, clean, and on-demand.   

So where do we go from here?

Reforming old systems is much more than a ‘build vs. buy’ conversation, but unfortunately I hear this framing pretty often. The challenge of modernizing outdated systems does not have an overnight solution. Instead, it requires carriers to thoughtfully deploy technology that’s specifically designed to adapt to future trends and can scale quickly to serve the modern consumer journey. 

APIs, or application programming interfaces, present an obvious way forward when it comes to interoperability. But it’s not as simple as building a few APIs in-house. Instead, carriers must appreciate the holistic problem they’re trying to solve–modernizing their distribution strategy–and recognize that building or buying a handful APIs will not be enough. That’s what makes Noyo’s API-powered platform for data exchange so special: we provide a comprehensive interoperability solution that will grow and evolve along with carriers’ needs and prepare them for anything the market demands. 

API-powered data exchange through Noyo is a carrier’s best bet to win the consumer experience. Data is piped directly to benefits administration platforms, enabling timely coverage with fewer errors and more transparency for platforms, brokers, and customers. Front-end software solutions that receive data through APIs have the fuel they need to develop new and exciting experiences that bring more clarity and consistency to the benefits process. APIs also allow for built-in business logic and validations, giving carriers more control over how products are quoted and installed.

We all know that consumers will continue to seek out the best experiences–and that software solutions will continue to deliver them–so carriers need to set themselves up as ‘plug and play’ members of the ecosystem. Whenever a platform needs to surface information to a customer, the carrier should be able to provide the relevant data quickly and easily. Noyo’s solution enables this while allowing carriers to gain incredible insights across partnerships and channels. 

Not to mention, if a carrier and a platform are exchanging data through Noyo, they are truly (actually, really) “integrated.” 

Carriers need to ask themselves: do I want a short-term win that looks good on paper, or do I want an infrastructure strategy that changes my business for the better? It’s clear now more than ever–carriers who move quickly and adapt to the needs of the consumer will win.

As it stands today, there are some forward-thinking carriers who have made a real commitment to the consumer experience:  Beam Dental, Humana, Ameritas, Principal, Sun Life and Guardian are a few of them. They have come to the table and are demonstrating that they want to embrace technology in order to serve their customers. This takes a particular mindset that can be hard to come by in our industry, but that I believe can be adopted by anyone. If you’re ready to start building a new strategy for interoperability, please reach out to me; let’s chat.

I’ll leave you with the immortal words of hockey legend Wayne Gretzky: “Skate to where the puck is going, not where it has been.”

By: Tim Cerimele

* 2019 HR Careers Report from Namely.

** “Insurance Agency and Brokerage M&A Trends to Watch Amid the COVID-19 Pandemic,” by Thomas Trullinger for Insurance Journal.