Health and life insurance carriers continue to reinvent their market strategies in response to regulatory and industry changes, and benefit advisers should pay particular attention to carrier reaction to key issues in 2015.
The health insurance sector continues to undergo exceptional regulatory, financial and competitive changes, while life insurance carriers brace for changes from state, federal and international regulators. In particular for the health insurance market, players roles are changing rapidly and strategies that made health plans successful in the past will not suffice in the future, says Gregory Scott, vice chairman and national sector leader for Deloitte Consultings health plans practice.
In a 2015 health plan outlook for the United States, Scott says most health plan carriers are going to have to find new approaches to achieving growth, demonstrating value, developing products, embracing technology, engaging with consumers and collaborating with providers.
Key issues facing health plan carriers in 2015, according to the outlook, include:
- Refining value proposition: Increased health care costs have employers and health care providers looking for new ways to work together to reduce costs. Health plans, Scott says, are seeing increasing pressure to demonstrate value. In response, plans will need to develop strategies to align with providers under new payment arrangements. In the traditional power struggled between providers and payers, providers are gaining leverage, Scott says. Regaining balance will require greater collaboration and partnerships, he says, between providers and plans and between plans and non-traditional players like niche technology companies.
- Managing lower margins and the search for growth: Lower margins and increasing costs are driving health plans to seek new sources of revenue and market growth. While traditional employer group insurance business is atrophying, significant new opportunities for growth are emerging as the result of increasing consumerism and health care reform, according to the Deloitte outlook. Health plans that understand consumers wants and needs and are able to activate the right behaviors in the right consumers at the right time, will prevail and grow in the redefined consumer-centric health care marketplace.
- Meeting the innovation imperative: Although health plans traditionally have not been known as innovators, those that can and do innovate - in the form of new products, better technologies, collaborative business models, and enjoyable consumer experiences are likely to position themselves well for the future.
- Maintaining regulatory compliance: Health plans have always operated in a highly regulated environment, but the ACA and Medicare and Medicaid growth are adding to carrier compliance issues. Managing compliance, security and privacy is an operational imperative, says Scott. Health plans should establish a forum and governance process for risk-related decision-making and regulatory compliance.
- Responding to an evolving market and unanswered questions: The individual consumer insurance market is expected to grow, Deloitte says, and most health plans are making strategic plans around that growth, including investing heavily in retail IT infrastructures. There is also evidence of greater integration across the health care value chain, the outlook says, including health plans entering the world of care delivery, providers starting insurance businesses, and new health plan-provider collaboration models.
Meanwhile, life insurance carriers in 2015 will need to better leverage their data, according to Sam Friedman an insurance research leader with Deloitte and Gary Shaw, vice chairman and national sector leader for insurance at Deloitte.
The full value of data, they say, is rarely optimized by insurers because information often remains isolated in siloed, legacy tech systems and operating structures. To make data more fluent in their organization, the researchers say carriers should make information more easily accessible across the company, strategically transform the way they amass, store, define, govern, analyze and disseminate information, and turn proprietary information into a strategic asset and competitive advantage.
Life insurance carriers will also face some regulatory challenges in 2015, including the potential for new group capital requirements, the first Own Risk and Solvency Assessment filing, and the uncertain fate of life insurer-owned captives in the face of increasing regulatory scrutiny.
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