Escaping the Group Insurance Blahs


Throughout today’s insurance industry, new entrants are emerging to challenge established leaders by creating new forms of value and capturing market share in unexpected ways. This is especially evident in Canada’s private group benefits industry, where disruption is unpredictable, and changes are swift. The result is more than just lower prices for customers. Very often, these changes are boosting customers’ value propositions, which means that group benefits insurers are facing increased competition amid a shifting landscape. However, by anticipating future disruptive trends, insurers can turn these challenges into opportunities for future growth.

The “Digital Front Door” Approach

Navigating the Canadian national healthcare system is often complicated, particularly in areas of rising demand such as mental health services. Accessing healthcare professionals can be difficult, and the experience can be highly fragmented. This creates opportunities for private insurers to play a bigger role in the healthcare ecosystem, connecting disparate systems and data sets to increase customer satisfaction and engagement, and reducing claims with preventative schemes to improve customer health and access to information and advice.

To achieve this, some organisations are adding value by creating platforms or “digital front doors” that aggregate access to healthcare resources and centralise the patient journey. This makes it easier for plan members to choose and connect with healthcare professionals and provides more engaging and personalised experiences. For example, a major Canadian group insurance provider has developed an app that makes it simpler for customers to research and connect with healthcare providers, book appointments, and access the latest resources to improve their health.

Similarly, a health-focused platform-as-a-service company offers a digital infrastructure that is designed to offer personalised and seamless health experiences for customers. By uniting fragmented data across different ecosystems, including medical devices and wearables, it becomes easier for customers to access, navigate, and pay for care. It also tailors wellness and health information as well as rewards and loyalty programs.

The Rise of the Direct-to-Consumer Distribution Model

Group benefits insurance is typically sold through intermediaries due to its complexity. Although small-to-medium enterprises (SMEs) value the guidance of advisors, they prefer to avoid the commissions involved in buying through a broker or actuarial firm. This means that the SME market is currently underserved in terms of group insurance, but ongoing technological developments and the pressure on insurance providers to increase profits may change this.

A recent survey by Deloitte showed that 25% of SMEs in Canada are showing increased interest in buying business insurance.1 This means that group benefits for SMEs are a significant opportunity for growth, in terms of direct sales and online broker distribution. However, this will require considerable product simplification, so that it’s easier for SMEs buying directly or through online brokers to understand available products and their purchase options. One health insurance solutions provider, for example, offers a digital platform that links SMEs, insurance carriers, advisors, and brokers. By helping insurance providers digitise their workflows, it’s easier for SMEs to get multiple quotes and advice and to rapidly enroll their employees in group benefits programs.

Diversification and New Market Entrants

In recent decades, we’ve seen an emerging trend among large companies – particularly those with strong technology foundations – to diversify into adjacent sectors. The private insurance market offers an opportunity for new entrants to consolidate their health ecosystems, by developing new value propositions for consumers and driving more revenue. A major Canadian telecommunications company, for example, recently acquired a digital health provider. This move adds significant scale to its existing digital health division, whose goal is to enable employer-based healthcare with greater access to high-quality health and mental wellness resources. This acquisition strengthens the company’s position as a leading global digital health and wellness provider, and forms part of the company’s diversification strategy. Many commentators believe this push into the high-growth healthcare sector is designed to offset a slowdown in its traditional industry. The acquired company provides actuarial services to companies buying group insurance, as well as insurance-related services such as employee assistance programs and disability management. Along with the telecom company’s complementary offers like virtual pharmacy services and telemedicine, this suggests that it is aiming to consolidate services within the greater healthcare ecosystem. By doing so, the telecoms provider can potentially challenge insurance carriers on their own turf.

Final Thoughts

Disruption in Canada’s private group benefits industry is enabling a variety of changes, ranging from new entrants to new technology approaches and distribution models. By anticipating and analysing future trends, group benefits providers can understand the risks to their business, and respond with strategies that turn these developments into opportunities to drive new revenue and strengthen their market position.

1 “The Future of Small Business Insurance,” Deloitte, March 14, 2022

About the Author

Craig Weber

Craig Weber is the Insurance Practice Leader at Cognizant, responsible for life, benefits, and retirement solutions within the firm's Insurance Solutions Group. With 30 years in the financial services industry, Craig is a recognized expert and thought leader on a variety of technology topics and is passionate about the industry being recognized for the good that it does for society.