Competitive, Specialised, and Growing: Thoughts on Canada’s Group Insurance Market

The Canadian group insurance market is growing steadily and continues to be dominated by a handful of players – the top three alone hold 65% of the market share. This means smaller insurers must focus on developing more innovative and diversified offerings — since competing on price in this environment is difficult — and on streamlining their businesses. So what trends are we seeing in this challenging market?

Personalised Benefits

As the makeup and behaviour of the workforce changes, the ‘one size fits all’ approach to group insurance is becoming less effective. The combination of more employee mobility, greater diversity, a growing number of workers with special needs, and a mix of several generations within the workforce requires a new approach.

As a result, most insurers are moving toward personalised benefits such as Health Spending Accounts (HSA) and Personal Spending Accounts (PSA) that allow employees to make individual choices about their plans. Canada Life’s Health SolutionsPlus, for example, provides plan members with a prepaid Visa card that lets them choose how and where they spend across eligible healthcare services and products. This allows insurers to better meet the unique needs of each individual across Canada’s diverse workforce, while also helping employers attract candidates.

Improving Health and Developing Closer Relationships

Many insurers suffer from the perception that they are only relevant in employees’ lives when they make a claim. New and emerging digital technologies, however, provide an opportunity for insurers to improve relationships with plan members and reduce the number of claims. This can be achieved by offering value-added services and increasing the number of customer contact points through information and services that encourage better mental and physical health.

Many insurers have already moved to providing telemedicine services, which is a clear benefit to plan members with healthcare access issues. Newer technology offers further opportunities. Manulife’s Vitality program, for example, uses wearable technology to encourage healthy behaviour by offering rewards for activities such as exercise and attending regular health screenings.

Controlling Costs

Higher disability rates and the cost of specialty drugs is directly affecting insurers’ profits, putting the focus on managing costs. As a result, most insurers are introducing return-to-work programs to help reduce the number of disability claims. LifeWork’s InfluenceCare, for example, helps plan members return to work by identifying barriers and providing support throughout recovery.

Substituting generic and biosimilar drugs for higher-cost brand name drugs also helps reduce cost per claim.

Operational Efficiency

As the market becomes more competitive, low interest rates threaten margins, and costs increase, the need to improve operational efficiency becomes more pressing. Modernising legacy systems and implementing new technologies such as AI, digitised customer contact points, and predictive data analytics are all clear ways for insurers to improve efficiency.

Even those insurers who are not yet ready to modernise their systems are looking at smaller ways to boost business effectiveness. Robotic Process Automation (RPA), for example, automates mundane business processes and frees up workers to focus on higher-value tasks. This helps to streamline operations and save costs.

Final Thoughts

In summary, group insurers are finding new ways to thrive in a market dominated by a small number of large players. Greater personalisation, boosting customer relationships, cost efficiencies, and improving member health and helping employees return to work are all helping insurers to cope with a changing workforce and to compete in a challenging marketplace.

About the Author

Mathieu Beauchesne

Mathieu Beauchesne is a Strategic Advisor and Expert Leader in personal insurance (individual and group benefits) at GFT Canada. In addition to an MSc in Information Systems and an MBA in Information Technology Management, Mathieu has 10 years of experience in business architecture and IT consulting. He played several key roles to support the modernisation and transformation of ecosystems for many insurance clients. He also participated in the decision-making committee that determined the target ecosystem for the group insurance of one of the largest mutuals in Canada, as part of a merger. His specialties include Business Architecture, Strategic Advisory, Strategy Development (Business & IT) and Business Analysis.