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Copyright © 2015 by The Hartford. Confidential. For internal distribution only. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
VOLUNTARY BENEFITS: PROVIDING CHOICE IN A
CONSUMER-DRIVEN WORLD
Mike Fish
SVP, Product & Strategy
June 22, 2016
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Agenda
2
Topic
Insurance Industry Trends
• Evolution of market trends
• Employer & carrier investments
Voluntary Products
• Categories of benefit offerings
• Ownership & funding
Employee Preferences
• Current knowledge level
• Enrollment method preferences
• Decision making
Voluntary Enrollment Strategies
• Marketing insights & research
• Communication strategies
• Engagement
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
INSURANCE INDUSTRY TRENDS
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Employees in the Middle
4
INSURANCE INDUSTRY
• Strategic investments in technology & service
• Heavy integration with enrollment & ben admin
platforms
• External data changing the game of pricing
sophistication
PRODUCT & DISTRIBUTION
• Voluntary products continue to expand
• Customer experience and technology
becoming main drivers of placement
• Continued distributor consolidation
• Private exchange growth slower than
predicted
EMPLOYEES
• High customer experience and digital
expectations shaped by e-commerce
• Continued reliance on the workplace
as primary marketplace for benefits
• Increase in benefit decision making
but lack of knowledge
EMPLOYERS
• Remain committed to offering benefits
• Continued adoption of high deductible
plans
• Increased interest in vendor support
for administration
AFFORDABLE CARE ACT
• Cadillac tax delayed until 2020
• Healthcare inflation continues
• Heightened concern on reporting requirements
CONSUMERS
are quickly
becoming the
decision makers
for employee
benefits
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Continued healthcare inflation despite ACA reforms
cutting into employer and employee budgets
However, employers of all sizes plan
to continue to offer health coverage
% of employers “very likely” or “likely” to
terminate health plans in the next 5 years (Mercer
Employer Study, 1/16)
Medical inflation continues despite ACA
and the upcoming “Cadillac Tax”
Medical cost trend over the last 10 years
(PwC Health Research Institute medical cost trends report,
2016)
11.9
9.9 9.2 9.0 9.0
8.5
7.5
6.5 6.8 6.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
While healthcare inflation has moderated, it
is significantly higher than CPI and now
represents 17% of GDP
5
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Estimated that 75% of employers will offer high
deductible plans by 2018
6
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Employers are investing in technology, citing enrollment
& benefit admin systems as top priorities
Market Observations
• Today, employers’ overall benefits and HR systems are
not well integrated.
• New investments are being directed toward employee
portals and front-end systems to better integrate and
utilize benefits (health, retirement, voluntary, etc.)
Sources: EBN Employer Survey November 2015 7
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Not surprisingly, carriers are investing in enrollment &
technology to gain competitive advantage
Source: Eastbridge Voluntary/Worksite Marketing: An Executive Perspective, November 2015 (please note
Technological Innovations was not included as an option in prior years surveys)
8
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VOLUNTARY PRODUCTS
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Employees have access to numerous products that address
three different but integrated needs
Sources: 2015 Employee Benefits SHRM, An Overview of Employee Benefits Offerings in the U.S., SHRM, 2015,
Voluntary Benefits are Necessary Benefits, HUB International, 2015
PERSONAL
Auto Homeowners
Pet Insurance Identity Theft
Travel Insurance Legal Service
INCOME PROTECTION
Life Insurance AD&D
Short & Long Term Disability
Retirement Plans
Financial Wellness
HEALTH
Medical Plans Accident
Hospital Indemnity Critical Illness
Prescription Drugs Cancer
Dental Plans Vision Care
LTC Wellness Programs
10
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
The majority of employers today offer medical
insurance, disability, life and dental
Source: Employee Benefits at a Crossroads, LIMRA, Q42014
Base = All private employers with 10+ employees
11
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Employee surveys reported benefit ownership has shifted
over time to more employee funded at some level
• 71 percent of employers believe voluntary benefits improve worker morale and satisfaction1
• Nearly 60 percent of employees prefer to buy health benefits at work and half prefer to buy life
insurance through work1
• Employees like payroll deduction and they trust their employer has done some vetting on the
carriers that were selected.1
• A long-term trend of employers shifting more benefits costs to employees
12
1. Source: LIMRA 2015 Worksite Sales Report 2. Source: Eastbridge 2015 Employee Viewpoint Report, used with permission
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
• The fastest growing voluntary health lines were critical illness(CI) and accident insurance, both of
which experienced double-digit growth for five consecutive years.
• Disability and Life show continued steady growth with a larger market share
Source: Eastbridge 2015 Voluntary/Worksite Sales Report, used with permission
Industry sales of voluntary products continue to
show positive momentum
13
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EMPLOYEE PREFERENCES
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Employees are expected to make more decisions about
products they really do not understand
HR Gets Strategic about Voluntary Benefits, SHRM; MetLife Benefit Trends 2014; LIMRA 2015
Employees who strongly agree that they need more help understanding how their
benefits work and how these options help meet their needs…over 50% agree they
need more help and are confident they use their benefits effectively now
15
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Employees prefer electronic enrollment, but employers
and insurers have been slow to meet these demands
68%
16%
6% 8%
2% 1% 0
38%
27%
13% 10%
1% 1%
9%
Online orelectronically
Paperenrollment
form
In a one-on-one meeting
Choicesautomatically
rolled overfrom last year
By phone With a mobileapp (mobile
device)
Depends onthe benefit
Preferred Enrollment Methods Employee vs Employer Perspective
Employee Preferred Method Employers Think Employees Prefer
Sources: Employee Views of Benefits Enrollment, LIMRA, 2015 Preliminary data from LIMRA’s Employer study on
Benefits Communication and Enrollment, 2016
16
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
• Most tend to make a short sighted evaluation of
the worth of Voluntary Benefits, by looking just
at the per-paycheck deductions.
• One in five do nothing to consider the value and
benefits of Voluntary Benefits.
21%
8%
22%
25%
33%
46%
Did nothing to evaluate whether it wasworth it to sign up for VBs through
employer
Obtain a recommendation from afinancial professional (outside of
employer)
Compare options against similarproducts that can be obtained outside
of the employer
Seek information to determine theoptimal level of coverage for a person
in same life stage/life situation
Assess the long term cost of not beingcovered vs. the per paycheck
deduction
Evaluate the per paycheck deductionin context of monthly household
budget
Ways Used to Evaluate Whether VBs Were Worth It
Employees want choice but need assistance in their benefit
choices, including how to evaluate what is right for them
• Younger Millennials (in their 20’s) are more likely
than their older counterparts to claim they assess
the long term cost of not being covered vs their
paycheck deduction.
• Those with children are more likely than those
without to evaluate the paycheck deduction in
context to their monthly income, as are renters in
relation to homeowners.
Source: The Hartford Employee Decision Research, 2015 Radius
17
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Employees also want choices across their benefit
portfolio to best fit their specific needs
4%
10%
33%
30%
23%
Not At All Important
Not Very Important
Important
Very Important
Extremely Important
Importance of Customizing Benefits
53%
86%
Base: 1456 Employed Consumers
Source: Consumer Omnibus Study, December 2012
18
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
VOLUNTARY ENROLLMENT STRATEGIES
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How are we meeting employees & employers needs at time of
enrollment?
20 Available for qualified cases.
• Insights from research allow us to
create highly targeted campaigns
• Data goes beyond age and
gender,
and explores voluntary buying
behavior
and attitudes
• Communication materials during
benefits enrollment are tailored to
specific employee profiles
• Drives participation in Voluntary
benefit plans
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
The five benefits purchasing personas of employees
21
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Using the personas to create a customized
communications strategy
22
• Timing
Start communication early in the enrollment journey, giving employees
information to consider all year long.
• Messaging
Reinforce the value of protection and affirm their choice. Information should be
easy to scan and compare - using brief descriptions/vignettes and clear cost
comparisons.
• Tactics
Email and digital education tools on a benefits website may enable
employees to get access to information throughout the year. Consider modern
means of communications via SMS or Social Media in combination with the
more traditional benefits fair or enrollment meeting.
INFORMATION
SEEKERS
&
BUSY
BUDGET-
STRETCHERS
Available for qualified cases.
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Communications in all the right places
23
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Keeping it Simple
Consumer Humor Video – Accident
insurance
Chalk Talk – Critical Illness insurance
24
Copyright © 2016 by The Hartford. Confidential. For internal distribution only. All rights reserved.
No part of this document may be reproduced, published or posted without the permission of The Hartford.
Ongoing engagement through non-traditional
sources of consumer data
Peer-to-peer Ratings and Reviews
• Voice of Customer reviews of claims and
enrollment experiences
The Hartford’s Benefits Community Council
• Online community of 300 consumers providing
ongoing feedback
• Ongoing measurement of communications
relevance, clarity and engagement
25