Insurance Benefits Innovation: No Longer Optional
It’s a cliché, but it’s also true; there are powerful forces that are disrupting business as usual, the pandemic the most obvious. It is a unique crisis which has disrupted our way of life more dramatically than any event in generations. Its onset brought rapid shifts to remote work, hundreds of thousands of job losses due to business and school closures, and a myriad of new work hazards and safety protocols. Many of these challenges have persisted, requiring the labor and insurance benefits markets to become more agile and open to innovation as the coronavirus continues and potentially remains a part of our long-term future.
Work’s New Normal
Before the pandemic, according to the U.S. Bureau of Labor statistics (BLS), 15% of employees worked full days exclusively from home, even though 29% of employees had the ability for remote work. Work from home (WFH) rates in “traditional” jobs largely remained stagnant for the previous decade. BLS estimated that the percentage of workers working from home more than doubled nearly overnight as the pandemic took hold, reaching 35% in May of 2020. By July 2021, the remote worker percentages declined, but remained at 24%, a 60% increase over pre-pandemic levels, even though only 13% of employees were required to work remotely. Of white-collar professionals, a Gallup poll showed that 56% preferred WFH as a matter of personal preference. Along with the growing acceptance of remote work as a way of life is the realization by workers and employers that geographic location is not necessarily the limiting factor that it was before.
BLS also reported that about 10% of workers were engaged in alternative work arrangements, including independent contractors, on-call workers, temporary help agency workers, and firm contract workers, plus an additional 1%-4% of employed workers working some other form of contingent work. The effect of the pandemic on gig workers is less straightforward; as expected, some gig workers like remote shoppers on Instacart surged (by 300,000 workers) while Uber/Lyft drivers and Airbnb hosts dropped 70%-85%. There was also a notable shift of knowledge work to the gig economy. A survey of HR leaders suggested that about a third of organizations actively replaced full-time workers with contingent workers. High unemployment also forced workers into the gig space, resulting in high competition for gig work, while causing many who would have previously refused gig work to accept contingent roles.
Today’s Insurance Benefits Landscape
The pandemic also radically changed employee expectations regarding insurance benefits, including increased attention to and awareness of corporate healthcare provisions (or lack thereof). Subjects that were previously background issues, such as mental health, telemedicine, and workplace flexibility, became hot topics. Other benefits, such as commuter benefits, on-site meals, and on-site childcare are being deemphasized for obvious reasons. A recent survey from care.com reveals another notable shift, with 98% of employers indicating that they plan to expand benefits and are investing more heavily in those considered most essential by their employees.
The new insurance benefits landscape requires that employers develop a more holistic understanding of employees as both workers and humans, whose personal and work lives are now comingled. The scope and speed of these changes is daunting — it is now up to providers to determine what benefits employees and employers need, and how to deliver them in more frequent gig work positions. Although it may feel like changing a tire on a moving car, the risk of stagnation can be catastrophic, while the rewards of innovation are tremendous.
Innovation: Now Mandatory
According to the Massachusetts Institute of Technology (MIT), innovation is “the process of bringing ideas from inception to impact.” A funny thing about processes is that investments in them accelerate their outputs in two ways. First, as expected, the added investment delivers additional output. Over time, learnings from process investments create a multiplier effect for future investments, because every innovation cycle creates institutional knowledge that amplifies and accelerates future projects. Sometimes they are tangible project- or technology-specific artifacts that can be reused to support a similar or related future project. Often, they are intangible relationships or process enhancements that make the next project more efficient.
That said, organizations that invest in innovation not only surpass companies that invest less or not at all, but the rate of return on future investments is higher because of learnings from previous innovation efforts.
Bottom line, innovation is no longer an option. If you are falling behind, absent a change, you are likely to fall behind faster and more dramatically in the future. If you are getting ahead, don’t rest on your laurels. One thing for certain is that today’s disruption will be disrupted by tomorrow’s.
However, just throwing money at problems is unwise. The second half of MIT’s definition includes the phrase “to impact,” which means at scale. An innovation program over time must deliver solutions at scale, as was clearly demonstrated by the pandemic. Teams had to learn, adapt, respond, and respond again, often at scale with little or no time for adequate planning.
To deliver innovation at scale, it is critical to have an innovation strategy that aligns with your business strategy. Aligning it with your business strategy ensures that your innovation efforts will deliver impact. Executives should be able to answer how innovation will create value for current and future customers, and what innovations will create and capture value. How will innovation resources be allocated? What percentage will go toward incremental improvements and/or transformational efforts, and why? If there is no strategic alignment between your innovation and business strategies, then there’s no real innovation; rather, it’s a bunch of projects being conducted with no shared vision.
As with any process, innovation can be optimized. It takes ongoing effort and infinite patience before reaping the rewards. But the stagnation alternative leads to a swift decline before inevitable failure. Innovation is no longer an option, so get to it!