Why Say No When Yes Is So Much Better?

When it comes to benefits insurance market expansion…it’s good to be a “yes” man 

What stood out this year at the LIMRA Group and Worksite Benefits Conference was all of the talk around small businesses. Yes, it is an election year. But no, this was not just an echo of every candidate’s familiar refrain about how small business is the growth engine for America and must be supported. For benefits insurers, this is an every year issue. Carriers struggle to make small business a plank in their platform for business growth. The result is that growth opportunities are left on the table while the majority of carriers are forced to battle over the same books of business in the large and jumbo case markets.

Daniel Fishbein, president of Sun Life Financial U.S., said it best in the conference’s “View from the Top” executive panel when he stated that the industry is only growing at a 2% rate and we’re all fighting over the same business. Other conversations were heard where carriers who sell into the fiercely competitive large/jumbo case market echoed Fishbein’s comments. They lamented their inability to go down to the small case market to gain market share due to their underwriting and business processes being tailored to the large case market and the difficulties they experience supporting the level of automation and service required to be profitable with small cases.                              

Insurers shackled to markets

What is painfully obvious is how carriers are shackled to the markets their systems were built to support. When they built their systems, they were built for the characteristics of their market; typically, the large case group markets which represented the biggest opportunity in the past few decades. Now when insurers try to break out of that 2% growth rate to address new market segments, they find themselves making unnatural contortions on the back end which erodes profitability, creates risk and is simply not scalable.

While the biggest opportunity today may be small case expansion, the reality is the problem is not limited to down market expansion. Amy Friedrich, SVP Specialty Benefits at Principal Financial Group spoke in the “View from the Top” panel about Principal’s culture and business processes being uniquely adapted to the small case market and the difficulties that they experience on the back end when they try to do the opposite, to move up market.

Freedom to move up or down market                      

Technology solutions are not the third party spoiler that might have derailed ambitions previously. The technology exists today to enable an insurer to move up or down market whenever and wherever it sees opportunity to grab new market share. It comes in the form of a modern policy administration and underwriting system where the workflow adapts to the characteristics of the market, whatever the unique underwriting, back-office or front office requirements are. For small case market, the system knows that straight-through processing and off-the-shelf products and prices are what win the day and for the large or jumbo case market, customization is king with complex and collaborative underwriting.

A platform to say “Yes!”

All the executives on the panel agreed that the best course is to say “no” to those cases that are outside of their current capabilities as they will only lose money and disappoint the customer at the same time. But what if one of those executives had the system capabilities to be able to say “yes”? What if they could go up or down market in an efficient manner, on the same system, because the system was able to tailor itself to the market characteristics as opposed to the carrier’s staff bending their processes to breakpoint and fighting their rigid legacy system?

This is a carrier who has a compelling competitive advantage, who can break out of the 2% growth rate, who can win new business—not by taking it over from others—but by addressing the 50% of the employment market that does not participate in these insurance products. A carrier who can unshackle themselves from their system constraints and can confidently say “yes.” 

Projections of “plenty for all” growth in the small business market may sound suspiciously like an election year promise. What’s different this time is that technology-enabled expansion into an adjacent market is now possible and is a more promising and sustainable growth option than continuing the practice of constantly lobbying for each other’s customers. It is a platform your constituents will believe in.