How brokers can leverage data analytics

Technological advances have provided consumers more choices and more competitive pricing for everything from refrigerators to financial advisers. To help negotiate the profusion of options, consumers have become increasingly accustomed to straightforward choices designed to their tastes. That’s the work of data analytics, which can synthesize information about a consumer’s demographic profile to present customized buying options.

This demand for simplicity, customization and efficiency is now hitting the benefits space. The need for more clarity in selecting plan designs is growing, as employers struggle to control rising health insurance costs and negotiate the vagaries of the Affordable Care Act.

Employers are shifting a greater share of health insurance costs to workers, while regulations are limiting the scope of health plan coverage. As more employers respond to these changes by adopting high-deductible health plans, gaps in health insurance coverage are rising.

More employers are consequently integrating voluntary benefits into their plan designs. Voluntary benefits shift costs from employer to employee, yet also fill in health insurance coverage gaps by giving workers choices to purchase coverage at a group rate with a level of guaranteed issue.

That said, the array of voluntary options and the diverse needs of each employee base mean employers must determine which plan design will serve their workers, their recruitment goals, and their budget.

Customization through data

Benefit brokers can play an indispensable consultative role to help employers negotiate the many variables. New data analytics tools now allow brokers to present to benefits administrators a customized plan design strategy based on an employer’s workplace demographics, benchmark incidence rates and the plan designs of typical competitors.

Sun Life Financial’s Benefit Profile tool that I helped develop, for example, is a decision-support tool that helps brokers guide employers with an analysis conveyed by informative graphics and customized to the composition of a particular workforce. Benefits brokers can provide employers sophisticated advisory services. Employers can offer their workers a customized, appealing benefits package while still controlling costs.

The Benefit Profile correlates a group’s census data to employers in its industry and geographic region. For example, if an employee base contains a high proportion of women aged 20 to 40, and benchmark data reveals that average competitors have a robust short-term disability offering, then a broker may recommend integrating a short-term disability benefit, since pregnancies for this age group comprise their most commonly experienced disability.