There comes a time in many industries where things begin to change. Some people welcome change and others fight it. Regardless, change is often inevitable and the market forces of change are too powerful to prevent it. I think the employee benefits industry is going through some big changes right now.
This article is not really about what those changes, are though I can throw out some words like private exchanges, Zenefits, ACA, consumer-driven health care, HSAs, ACOs, that are all terms that are more common today than just a few years ago. What this article is about is the ability to recognize change and then take action to meet the challenges that those changes may present. Or should I say to capitalize on the market opportunities that the changes present.
In any industry it is important to recognize change. When you look at companies like Kodak and Blockbuster Video you see two firms that missed the market change. Try to think of the biggest selling cell phones before the iPhone or Samsung. Remember the Motorola Razr?
How about the health insurance business? When I entered the benefits business in 1986, Unum was in the health insurance business. So were Travelers, Prudential, Metropolitan and Guardian. I do recall delivering my first renewal with an employee rate of more than $100.
What will the benefits business look like 10 years from today? For the most part, the brokerage side of the benefits business has not changed that much over the past three decades. However, over the past five years, the fastest organically growing benefits brokerage firms have been a payroll company and now a technology company. Times are changing.
Recently, I have been conducting many webinars for benefits brokers about some of these market changes. While I am not going to proclaim that I am the soothsayer with a clear vision of the future, I do like to try and point out some of the factual changes and provide some interpretation of what these changes may mean for the industry.
Zenefits raising $500 million does have industry implications. And how about the number of hospitals entering the insurance business? What are the future implications there? What I find most interesting is the broker audience reaction to some of these webinars. Some brokers dont want to acknowledge that changes are coming, while others simply misinterpret what the actual changes are. Those that dont see the change most likely dont want to see it, while others are simply viewing the world from a narrow perspective. I like to say they that their benefits goggles may be blurring their vision.
There are many examples of different perspectives. Is Zenefits a technology company or a benefits broker? They call themselves a technology company. Others call them a broker. I refer to them as an outsourcing firm. At lunch recently I had the president of a major HR technology company tell me he believes stand-alone benefits enrollment systems will not exist in the future. Meanwhile, the other day, a broker was telling me he just invested in a benefits enrollment platform.
I had one broker tell me the future will all be individual health insurance. Other brokers are entirely dependent on an existing employer-based insurance model. An employer recently told me he would never allow his broker to offer voluntary products to his employees because he thought they were too expensive. At the same time, voluntary product vendors are saying the way to make up for decreasing medical commission is by selling more voluntary products.
The changes you may need to make to compete effectively in a future benefits world may be dependent on some prediction as to where you think the market is going. I know brokers today are struggling to decide whether they want to make a play to compete with Zenefits. The moves you make may be very dependent on what you think their value proposition is. If they are a technology company then you may need to do one thing. If they are really an outsourcing firm you may need to do something else.
Whatever it is you choose to do, my advice is to take your benefits goggles off. They may be blurring your vision. If your vision is off you could choose the wrong path for your business, which could have negative implications in the future. And, if you want to buy a benefits enrollment technology company just give me a call. I know several that are for sale.
Markland is a principle of HR Technology Advisors and past president of Benefits Technology Group (BTG). HRT is an insurance and technology consulting firm focused primarily on helping insurance brokers, companies, third-party vendors, and their customers, with evaluating and implementing technology solutions and e-commerce strategies.
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