It used to be commonplace to find employees of Las Vegas-based Insurcorp at the casinos at 2 a.m. Not to blow off steam after a long workday, but to continue it, conducting benefit meetings for graveyard shift staffers.

"If you've ever been to Las Vegas you know it's a 24/7 town and in order to run a 24/7 town you have to have employees that are working 24/7," says Brian Cruden, president and CEO of Insurcorp. "So it's a continuous search on our part to try and find innovative, creative ways to be able to reach these employees on a 24/7 basis."

Enter Steve Pappadakes, president of Visyt, Inc., which creates avatars, or simulated artificially intelligent people, for use in virtual benefit communications.

Cruden started working with Pappadakes shortly after Visyt was founded in 2005. The partnership brought a much-welcomed end to the middle of the night meetings for Insurcorp. "It was really kind of difficult," Cruden says of those late nights. "Now, we are able to use the virtual benefit communication, developing and designing custom avatars to accomplish that job. We have several resort hotels and casinos that are utilizing it and it works really well."

On his relationship with Pappadakes, Cruden calls the Cleveland-based former broker "an innovator" and outside-the-box thinker. "If you're one that enjoys dealing with innovative thinkers and can embrace an idea he's certainly your guy," says Cruden.

After a brief post-college foray into financial planning, Pappadakes quickly gravitated to employee benefits, working for himself as a broker twice, as well as a few stints in senior management for insurance carriers, before founding an online enrollment company shortly after Sept. 11 - when enrollment through the Internet was still a new concept.

"I was always really looking for a way to communicate through the Web," says Pappadakes. "Because to me, from an employee benefit perspective, I always felt like if you could find a way to give a 24/7 outreach to employers that was kind of the industry changing thing."


Constant communication

Like Cruden, Pappadakes had many hotel clients who used the services of his online enrollment company to reach their disparate employee populations.

One such client had an idea to develop an avatar-based virtual concierge for hotels lacking a human one, and asked Pappadakes to partner with him. Although not necessarily interested in that specific application, Pappadakes saw the potential to put that concept to work in the employee benefit and financial services world. He put a deal together with the client and formed Visyt. After nearly two years working with the client's locally-based software that was designed to be run off a computer rather than the Internet, Pappadakes pooled his resources and began to focus on building Visyt's own technology to develop a truly Internet-based virtual benefit communicator. "When we completed that, that's when things really started to take off," Pappadakes recalls.

At online enrollment and HR data management company Benefitfocus, Shan Fowler has heard a lot of talk around avatars lately, says the director of product management, marketplaces. "We see the convergence of a couple of different influencers in the market that are driving this," he says. "One is that - and this isn't necessarily a new thing - there's a lot of complexity in health care and in benefits, enrolling in benefits, shopping for benefits, on down the line. And that complexity has really been compounded in the last couple of years by health care reform and the drive toward more consumer-centric approaches in health care."

The increasingly consumer-driven approach to benefits creates a need for benefits education that is not only "on a consumer level," but also done "in a way that is encouraging," says Fowler.

Consequently, "when you're talking at the individual consumer level, brokers ... can't be everywhere all the time," he adds. "So an avatar is a way to be personable."

MetLife uses Benefitfocus for its group benefits and incorporates an avatar named "Amy Helper" into the communication process that serves as a navigator during enrollment, says Fowler. "It's one approach to delivering a personable shopping and educational experience," he says.

Another factor driving the developing popularity of avatars is how recognizable and user-friendly they have become within popular culture, Fowler adds. He points to Apple's "Siri" as an example of a successful audio avatar in use on the company's latest iPhones.

The benefits game is changing as more and more employees - not just those on the graveyard shift - increasingly demand access to information around the clock.

"They want questions answered on a 24/7 basis ... so someone has to fulfill that employee requirement for the employer," says Pappadakes. "And, more importantly, why I think we're seeing the success we're seeing ... is that spouses are getting so engaged in the process."

In such circumstances the avatar technology helps to avoid the "telephone effect" of lost or misinterpreted information as benefits communications go from employer to employee to spouse. "We're engaging everybody in the process in interacting with our communicators," says Pappadakes, "and they're going to get their own information right from the horse's mouth."

That's huge from a compliance perspective, says Insurcorp's Cruden. "You've got the new privacy laws, the HIPAA laws; Lord knows whatever else is going to be coming down the pipe with health care reform," he says. "So it's imperative that you're able to communicate information to employees on a consistent basis with no ambiguity whatsoever. And you can't guarantee that on an old-school form of delivery."

"Whereas the virtual benefit system," Cruden adds, "allows us to be able to have every single employee hear the same exact message the way we want it delivered and the way the employer wants it delivered."


How it works

In the early days of Visyt Pappadakes' initial approach to building the business was to partner with leading voluntary benefit enrollment firms "and offer them a model that was scalable, very compliant and I thought what employers wanted," he says.

The result? "We really couldn't find anybody that wanted to do it," says Pappadakes. "I was sworn at, told all kinds of things about how I was going to ruin the industry. My view on it always was the opposite, which was that this is rapid expansion of the industry."

Pappadakes likens the voluntary market in particular to an iceberg, where agents are fighting over the top 10% while "all the real business is below it."

A lot of that potential business is from employers that are reluctant to an invasive approach or have employees all over the place and it doesn't make economic sense to send a human enroller there, he adds.

Still, since he wasn't getting any traction with that approach, Pappadakes made a decision to start working with group brokers that either were not currently in the voluntary market, or that partner with a voluntary enrollment firm, and then lead with a discussion about how Visyt can help with core benefits.

"That started driving some large clients directly to us," says Pappadakes. "The irony is it's pulled voluntary benefits into the discussion and we're selling voluntary benefits in a big way. So we're just kind of changing the discussion paradigm, if you will."

Of course a big function of the Visyt technology is the avatars' ability to communicate benefits during open enrollment, but it is also used at any time with new hires. Additionally, most clients are using its question-and-answer functionality for employees' benefits questions that arise throughout the year, such as what is the deductible on the plan or which doctors are in-network. When it doesn't have an answer there's a protocol in place to get the question answered as soon as possible, Pappadakes explains.

Visyt makes its money in a few ways. A per employee, per month fee, some brokers pay the fee themselves, or the more common approach when working with brokers is to share on the revenue of the voluntary products and others on an at-risk basis, says Pappadakes.

"The smartest brokers I know are selling the employer on the idea of what we do and how valuable it is and how it will save HR money ... and they get the employer to pay us the fee," he says. "Then what that does is that sets up the whole communication effort to sell voluntary benefits on their behalf.

"It's kind of like getting the employer to pay for their enrollment firm. And the employer loves doing it. That's really the smartest firm out there. They're getting the employer to tee up the scenario for them to make more money. Kind of a good business model, you know?"


The right approach

Even so, avatars aren't for everyone, says Nancy Sansom, SVP, marketing and communications at Benefitfocus. Those who are regular users of technology, who the software designers at Benefitfocus refer to as "expert users," are likely to want a quicker flow to their online activity, says Sansom.

"We talk a lot internally about avatars being something that is a component of the customer service experience as opposed to being the entire customer service experience," adds Benefitfocus's Fowler. "You need the data to be very, very strong and if it's not you may get into a situation with an avatar where it can be seen as just another road block between the customer and a human being. And you don't want that to happen. You want the avatar to actually facilitate the process and provide that personable approach that you're looking for."

Insurcorp's Cruden agrees that it doesn't work to approach the technology with a 'set it and forget it' mindset. "From a brokerage perspective, it's making sure that you just don't have cutting-edge technology, but you understand it and you're able to utilize it and implement it and advise your client correctly with it," he says. "I see a ton of automated-type stuff that's out there but if your firm isn't wired right to be able to do it with a client it ultimately can blow up and you can lose a client."

As far as other brokers' perception of avatar technology, in Sansom's experience, "brokers want to feel like if they're there in person they're the one guiding it," she says. "So it's almost competing a little bit for their knowledge."

The perspective from which brokers and carriers approach the technology plays an important role in how effective it will be, says Fowler. "If you're looking at it from either a broker or a carrier perspective as, 'this avatar will automate an experience that we may not necessarily want to deal with ourselves,' then I think you're playing a losing game because people can tend to see through that kind of thing."

What about employers? "All of them were hesitant," Insurcorp's Cruden says with a laugh. "Because it's new, you know? We have a few employers that are somewhat cutting-edge and they're reaching for something like this. But there's a cost involved. It's not an inexpensive product to implement."

For it to be cost-effective, Cruden recommends using the technology with employers that have more than 1,000 employees. Meanwhile, Pappadakes reports that Visyt will be unveiling a new platform aimed at medium to small groups that is expected to launch later this year.

Regardless of client size, expect to put a lot of time, energy and effort into the buy-in process, Cruden says. "It was more difficult at the beginning because we were selling something that was kind of at the 'test rat' stage as opposed to now it's tried and true and we've got lots of references of employers that have been using it year after year," he says.

The good news is once clients are on board, "it's very difficult to gravitate away from it ultimately," says Cruden, "because your employees get used to seeing the avatar, listening to the avatar, getting the information through the avatar. As a result, you stop and it looks like a step backwards."



Pappadakes is finding that employers, particularly large clients, are continually coming back to Visyt with requests for more ways to use the technology. "Somebody actually said to us, 'You guys are like the germ warfare of HR. You guys get into what we're doing and you infect us,'" he laughs, clarifying, "'in a positive way.'"

Visyt is currently building an onboarding system for its largest client that will walk employees through all kinds of HR-related activities, necessary forms, etc.

But are brokers afraid they will be replaced by the avatar technology?

"We're having quite the opposite response," says Pappadakes, "which is that innovative and forward- thinking brokers are growing their practice exponentially by using us. Because they're coming in and offering such a unique, compelling solution, No.1, and they're changing the whole discussion paradigm to focus on the things they're really good at."

For example, it allows them to talk up their 24/7 service commitment and dedication to the strategy behind benefit planning, he says. "It's no different than what we tell HR people. It's that our communicators don't replace HR people; they just allow them to do the critical parts of their job and focus their efforts on that because we get rid of some of the minutia," Pappadakes adds.

As Pappadakes sees it, "they win out three ways," he says. "We're helping brokers get clients, we're helping brokers get additional revenues and we're helping them focus on what their core competencies are in their practice."

Cruden has seen his firm's voluntary benefit enrollment numbers rise with the technology, but he stresses that it's been an evolving process. While using the avatars started out in an orientation-type format, it now requires a certain level of interactivity - particularly with voluntary benefit enrollment.

"Now it becomes a lot more than just scripting something that somebody needs to hear from an informational perspective," he says. "Now you're actually having to sell using virtual benefit communication technology."

In the case of Insurcorp, the process started with using large voluntary enrollment firms for large clients, then working the avatar into the process to combine the two.

"You allow the employee to start getting used to making choices as a result of what the avatar's doing and eventually you get to a point where there's minimal need for large volumes of counselors," says Cruden. "And as a result, yes, your numbers do go up. We've set some really high penetration percentages with our clients as a result of this model."

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