Sun Life Buys Maxwell Health - So What?
Today it was announced that Sun Life acquired Maxwell Health. The first thing I asked was why? I don’t see the benefit to an employer or their employees. I see no benefit to the broker distributors. In fact, I hardly see a benefit to Sun Life. I can see the benefits to Maxwell if they either needed cash or their investors wanted out. I don’t really need to speculate around that here, but I am sure someone will tell me I am wrong. Someone please tell me why this is a good or even “relevant to the market” transaction. I will print it if the reason is sound.
If I am an employer, why would I want a technology solution coming from a single carrier? Technology to manage benefits, HR, and payroll should be owned by the employer, with no attachments. It should be something you invest in to make better every day. It should be engaging and provide employees with all the relevant company information that they need. In a survey I had done, the number one thing employees wanted to see via web or mobile in an employer sponsored HR system was how many vacation days they have left. Most employee benefits technology systems don’t track time off and those that do are bad at it.
As a broker, one would think you would want to represent the employer’s interests. You would want to have more options than representing a single vendor. And why would I need a carrier to bring me a technology solution as I could easily pick up the phone and find ten systems in one hour? Providing choice in health insurance, disability, and other benefits is an asset and the core to being an insurance broker versus an agent for a single company.
Other carriers are already out there providing a broad range of technology solutions. Many are providing discounts. This move by Sun Life could create a competitive advantage, to everyone other than Sun. In my business I could bring a dozen benefits enrollment systems, HR, and payroll to any employer, all with carrier subsidies available from many carriers. I have choice for technology. Choice of carriers. And subsidies for the employer if needed. It is easy to do, and I would add not a real differentiator.
Now if Maxwell develops something real special then maybe there could be something there. However, as I have learned from being in the technology business for years, technology is easily replicated. As the saying goes, “You can’t win or stop a technology war”. So, Sun Life better have a real lot of money to continue to fight the battles of this very active HR/Benefits/Payroll technology war that is going on. I would expect investments of over $100 million per year in their technology would be required simply to compete.
So, my assessment of this transaction is, So What? It is just more noise in a very noisy market that in my opinion doesn’t change the world a bit. (Other than for some employees or investors in Maxwell.)
Commercial Insurance Brokerage
6 年They needed money and I have personal knowledge that they were a sinking ship.
Owner at Premier Pools and Spas
6 年Yes, having been a Maxwell broker partner in a past life, I am not understanding the model here. Employers have already bailed on the proprietary (payroll and HRIS) services offered by carriers. The carriers that understand this have placed their investment in reimbursing the broker, client (or both) a pepm to assist in benadmin costs for platforms such as Employee Navigator.
Head of Marketing and Product Solutions @ Businessolver | Strategic Planning
6 年Great post, Joe. This has continued to happen across our industry and being on the technology side, I have seen first hand how independence is critical to driving your destiny, inclusive of your roadmap. When M&A like this takes place, two things suffer: clients and innovation. I will be interested in seeing how Sun Life executes their strategy. Thanks for the share & perspective.
Retired from an incredible career
6 年I am reading a lot of questions on the Maxwell Health purchase by Sun Life and as I read I can only conclude a few things. First , Sun Life and all reputable organizations rarely purchase companies unless there is an advantage which the outsiders to the org seem to be struggling with . Secondary to the first there is clearly a niche , though any niche can be duplicated, Sun Life is obviously aware of the said advantage from both a technology and administrative advantage. I look forward to further clarification from Sun Life but I assure my opinion is based upon Suns past track record of highly methodical and tactical purchases.
VP, Group Markets at Atlantic American
6 年I struggle to see how this was a good buy as well. ?Maxwell is losing in the broker market compared to other ben admin platforms. ?Maxwell had raised $56m through March 2016 so this couldn't have been a cheap purchase. ?It will be interesting to see how Sun can apply this to the under 500 employee segment they picked up from Assurant. ?If Maxwell is left as a stand-alone business, similar to bSwift/Aetna, the market probably won't treat them much differently than today. ?If Sunlife brings Maxwell in-house to make the software a proprietary offering that will be a difficult sell to the broker and employer market.