Do you remember one of the most famous Super Bowl commercials, Apple’s 1984?
In a homage to George Orwell's dystopian novel 1984, an army of gray drones march into an assembly as a totalitarian figure harangues them from a towering screen. Suddenly, someone bursts into the gathering and flings a mallet at the screen, unleashing an explosion and the announcement that Apple Computer will launch the Macintosh.
This commercial transformed advertising, revolutionized personal computing, and cemented Apple as an innovator. Yet when I see it, I think of group benefits open enrollment season and the Help Protect Our Families campaign.
Let me explain.
Every year, millions of employees across the U.S. embark on a familiar ritual. We receive a general communication inviting us to enroll in the employer-sponsored benefits plan after scrolling through the insurer website, listening to a scripted conference call, or flipping through a brochure to understand the array of options available. Then, we often elect a basic level of coverage regardless of whether it is the best fit for our needs.
The reliance on this type of process is a contributing factor as to why so many Americans are underinsured. According to the LIMRA 2020 Insurance Barometer Study, just 54% of Americans have any life insurance coverage, a notable decline from 63% just a decade ago. And most of that coverage is sponsored by employers as part of a basic benefits package. There are 60 million uninsured and underinsured households with an average life insurance gap of $200,000.2 Year after year it seems, the mortality protection gap widens as life insurance growth lags.
It is time, as Apple would say, to “think different” about how we as an industry communicate the advantages of life coverage and how employees enroll. RGA, in partnership with seven U.S. life insurance trade associations, numerous life insurers, and other financial security professionals, set out to stop the widening protection gap with Help Protect Our Families, an initiative to rethink how the industry engages and educates potential policyholders. The group insurance sector must be at the center of the solution because, in many ways, group enrollment presents so many of those missed opportunities.
Every year, at open enrollment time, group insurers get to meet employees at a slightly different stage of life. A previously single employee might be newly married with a child on the way. A middle-aged worker might have a larger family to protect or new concerns about caring for an elderly parent and affording a child’s college tuition. Employees are not identical Orwellian drones with the same needs. People change, and yet, communication about their options often doesn’t. For example, a default $50,000 employer paid life insurance benefit may support an employee who is single and at the start of one’s career, it won’t take care of a family of five. Yet it is all too easy to re-enroll for the same life cover year after year.
Companies are not in the business of communicating the finer distinctions of life insurance policies to their employees. And how many of us have the time or financial sophistication to sort through the options available and think critically about how much coverage would be necessary for our loved ones in the event of a sudden death?
Now, imagine a different scenario for open enrollment. Rather than hearing a universal presentation or reading a standardized email, I am presented with a personalized offer that calculates the coverage level needed to replace my current income and sustain my three kids and spouse by making specific recommendations for benefit elections based on my unique needs.
Group insurers are already turning to digitization and personalized offers to improve employee engagement and education. In 2020 RGA conducted our first survey of major North American group insurers since 2017 on the open enrollment period. One finding suggested that even before the outbreak of COVID-19, more group insurers than ever were relying on third-party digital platforms to drive and measure participation and expand interest in non-traditional products such as voluntary accident, critical illness, short-term disability, and hospital indemnity. In fact, participation in each of these categories rose by 10% or more. A revolution in predictive modeling is also underway, empowering insurance companies to provide higher level of coverage by using new data sources to unlock insights into the employee base without requiring extensive medical questions or exams.
Without a doubt, underinsurance is an existential challenge for the insurance industry, and yet the digital tools are available to the group insurance sector to help enroll more employees at an affordable price.