Change and risks in employee benefits – what is the cost of doing nothing and why is no one updating their group benefit plan?

Risks in employee benefits – what is the cost of doing nothing and why is no one updating their employee benefit plan? (This is a long one!)

Let’s talk A little about change, everyone’s most beloved activity.

Doing nothing is easy. Doing nothing is all about change. And Not changing seems easy.
Historically in the benefits biz, change has been driven by outside forces. not by innovation from within. Pharma manufacturers releasing high cost drugs for rare disease, pharma releasing high cost drugs for less rare disease. Employer pressure in Alberta for more tools to compete for employees. Supposed disrupters, COVID, consolidation, government policy, the list goes on. COVID for example has pushed the insurance digital revolution forward at least 5 years.

External change drivers are a risk as it puts the group benefits industry in a position where it’s reacting. We’re passengers in the change vehicle instead of drivers. Group Benefits Insurers and group benefits advisors need to become drivers and I think we are seeing the beginnings of this.

Back in 2016 when Canada Life was still GWL, they told the people attending the Benefits Canada’s Face-to-Face Drug Plan Management Forum the 90% of their clients hadn’t changed the design of their drug plan during the last 10 years. I guarantee you, six years later that this stat is unchanged.

Don’t believe me? Here are a few more stats. The Gallagher Driving Data with Decisions Survey found that 62% of plan sponsors have no plans to make updates to their benefits programs. Let’s give that more weight. In a weird coincidence, the 2022 Benefits Canada Survey also found that 62% of employers made no changes to their benefit program. And of those who did, 7% reduced their benefits.

Why is this? Why aren’t employer making simple updates to their benefits program? Why as an industry are we letting outsiders drive change?

The book Stop Selling and Start Leading nicely lays out this journey. I’m going to use the term buyer now. The buyer is different depending on the context. As an insurer, the advisor is the buyer, maybe the plan sponsor too. For an advisor the plan sponsor is the buyer. You perhaps you’re reading in the context of being the buyer.

When we sell, and when we propose options to people what we’re doing is asking them to change. We all have a limited amount of bandwidth which means we need to factor in which actions are worth doing. This is part of why the status quo is so appealing.

Thinking about the change journey, First the buyer will need to convince others inside her organization about the choice. That may involve conflict, debates, tradeoffs, promises and uncomfortable questions. 

Next the buyer will need budget approval. that choice to allocate a portion of it to your solution means foregoing some or all of something else. This means saying no other others who are advocating for those resources. It may mean severing ties with another vendor who also has a relationship and history with the company.

Once everyone is convinced and the budget is approved, there’s even more work to do. The buyer must coordinate or delegate all process, staff training, alignment, and set up.

The buyers decision will be scrutinized. And they will have to deal with push back and complaints that come with change. All this requires the buyer to take risks, to dedicate time and energy to the change and to disrupt other work. 

No one makes those kinds of sacrifices unless they feel competent, confident and committed. We need to create the conditions for buyers to feel supported and enabled.

How does one accomplish this? By Being available, being responsive and being respectful.

Be available – you’re the quarterback between the client and the implementation team. Educate, explain and answer questions. Keep everyone connected. Set expectations early and check in on them often. The buys needs to absolutely understand what is going on.


Next Be responsive. If the buyer has concerns or doubts, don’t take them lightly.  Confidence gaps can derail a project.  Listen closely to pick up subtle clues
Last, be respectful – two way dialogue that allows your buyer to participate in creating what they want so they will have a sense of ownership.

People embrace new behaviors when the current behavior is really not working for them. The status quo becomes so uncomfortable that you feel compelled to break the inertia and try something new. 

We can get people to embrace new behaviours by offering a unique perspective on their business. Our insights have to be so compelling that the client is willing to go through the pain of change. Because we are selling change.
The goal isn’t to convince a buying group to buy a solution. It is to persuade them to change their behaviors.  
 
I think we understand why people don’t change. What are the risks of not changing? It comes down to money and time. Money First. It’s simple you’re spending more money than you have to because of:

• Employee Turnover – if the plan isn’t relevant to employee’s current needs it’s just one more reason for them to loop for a new job. The cost to replace an employee can range from 90% to 200% of the employee’s salary.
• Drugs - paying for drugs the province can, paying too much for drugs (i.e. brad vs generic and more expensive drug when a lower cost one will work, or a drug being used for something other that it’s indicated use – ie botox for cosmetics instead of migraine)

What about the risk of losing money? Group Benefit advisors could be at risk of losing a client if you’re not at a minimum reviewing client plans, financial arrangements and then advising them on updates. In the drug space alone there’s lots to be reviewed and discussed.
 
Time. It’s likely that you’re using up precious bandwidth and spending time doing things you don’t have to

• Yup employee turnover makes the list again. A massive amount of time goes to posting job ads, interviews, and retraining. Now don’t take my training comment the wrong way, I’m a big believer in continuous learning and improvement and growth. But high turnover means you have employees putting their time to training new hires instead of upskilling and doing their jobs. You’re laso increase the risk of employee burnout and productivity loss.
• I bet that paper is costing a lot of people time. If you’re still with an insurer who has not embraced modern new hire enrolment, claim submission and more it’s time to make a change.
• Bad service is one of the worst time wasters of all. Service and the user experience should be a major consideration when choosing a group benefits provider.

 
While we’re on the topic of risk and change I’ll leave you with a few other risks to ponder.

• A lack of communication – for the plan sponsor it’s a liability. When does the duty of care kick in? If people don’t know what benefits they have they cant use them. Think of a CI claim never submitted. There’s lots of other nitty gritty plan offerings that are under utilized like iCBT being claimed. Or pharmacogenomics. If people don’t use their benefits when they need them, they could become seriously ill or maybe even disabled.
• New entrants into the market - who will they be, how will they shake things up?
• Risks we don’t know about because we cannot fathom that it exists. Imagine telling someone about crypto currency or NFTs in the 1990’s.  Imagine describing social media to someone in the 80’s. This means there are also solutions we don’t know about or are not using. Think the HSA before League entered the market.

 
 End.