A Group Insurance Midyear Update
Introduction
As we reach the halfway point of 2022, the group insurance industry continues to evolve in response to the challenges of the ongoing pandemic, inflation concerns, and slowing growth. Group insurers are reevaluating their current strategies to boost momentum and profitability, as well as their present offerings to satisfy members and attract new business. With hope for greater stability, our midyear update provides current perspectives on the industry’s performance and insights on market dynamics that may persist until the end of 2022 and beyond.
The Good News
Covid’s Halo Effect
One silver lining of the pandemic is how it has increased the value perception of group insurance. Overall, insurance products have experienced heightened demand as consumers have become more attuned to their health. Specific lines that were popular during the pandemic’s surge, such as disability and life insurance, are forecast to experience strong and sustained demand through the second half of 2022 and beyond. Capitalizing on this increased demand will require insurers to adapt to the new face of the workplace. Large face-to-face education and enrollment events have become more infrequent and will remain so as working from home continues. A digital and connected client experience is now more important than ever.
Macroeconomic Observations
In today’s labor market, hiring managers have recognized the importance of an excellent benefits package to attract and retain talent, inclusive of performing salary adjustment exercises to remain competitive. While employers are occupied with organizing hybrid work schedules and salary adjustments, they have become hesitant to switch their current insurance carriers. This situation has helped carriers improve persistency ratios, while also gaining premium through wage growth. In addition, interest rates have increased in the first half of 2022, increasing new money yields on carriers’ investment portfolios that back their product lines. Looking ahead, there is a huge opportunity for carriers to strengthen their plan sponsor relationships and implement margin expansion strategies as premium and investment results remain favorable.
Greater Expectations
More Product Education
As demand for insurance spikes, greater insurance education has become a long-term necessity. Millennials and Gen Z members in particular have taken the initiative to become more well-versed in insurance coverage choices and products. After witnessing so many families take on serious medical debt due to the loss of a principal breadwinner who lacked sufficient coverage, Millennials and Gen Z members are looking for ways to protect themselves and their families. With so many important decisions for individuals and families of all generations at annual enrollment, it is critical that members have all the facts to make informed and appropriate decisions.
Heightened Plan Sponsor Demands
Plan sponsors are asking for enhanced service delivery, including more healthcare self-management tools and enhanced digital self-service. Although the push for digital self-service preceded the pandemic, shelter-in-place orders and social distancing mandates further augmented the need. Sponsors are also asking for increased automation for faster outcomes and wage efficiencies, in addition to immediate lead response and rapid claims processing and resolution.
Improved Mental Health Support
As conversations about mental health become more open, carriers are even more eager to provide longer-term mental health support to members. While younger member populations have been particularly vocal about these service offerings, carriers have recognized the value of increased mental health support for member and plan sponsor satisfaction and are eager to take advantage of this opportunity.
Final Thoughts
Considering the current group insurance environment, it’s easy to see that the first half of the year provided both challenge and opportunity. As the industry continues to adjust to the ongoing pandemic’s “new normal,” carriers can stay ahead by continuing to add to their digital offerings, increasing member-focused solutions, and wise budgeting and investments for a strong second-half. Stay tuned.
