General Insurance Article - Data Analytics to help cut cost of employee benefits

According to a qualitative global study, commissioned by MAXIS Global Benefits Network, the international joint venture between MetLife and AXA, looking at the future of the global employee benefits industry, data analytics and a new breed of digital tools and solutions will be central to how stakeholders in the global employee benefits (EB) chain cut the costs of providing benefits to staff and deliver a more sophisticated, flexible service for employees.

 The research was conducted by an independent market research agency on behalf of MAXIS GBN and canvassed views from multinational employers, global employee benefits consultants, and local member insurance firms.

 Multinationals warned that the key challenges include the pressure to reduce costs but still provide benefits that support and retain staff, and managing employee benefits across a global organisation, which is often decentralised. Local insurance firms highlighted that product commoditisation, low interest rates, increasing loss ratios and procurement-led purchasing are putting pressure on margins to the point that in some markets multinationals are switching EB providers for minimal cost savings.

 Mauro Dugulin, CEO of MAXIS Global Benefits Network said: “It is clear from our study that multinationals continue to see real value in employee benefits but are concerned at the increasing complexity of cross-border programmes as well as costs. The evolving demographic profile of the global workforce, with ever higher volumes of older employees, is having an impact on claims volumes and making it harder to manage benefits across a global organisation.

 “As a result, many consultants are being asked to not only offer help with premium control but also to utilise data and statistical analysis to support claims cost containment strategies, including preventative measures. The challenge for a global benefits network is therefore to work with consultants, multinationals and local insurance companies to pull all the pieces together and turn data into actionable insight at global headquarters level.”

 Looking forward, multinational employers highlighted four opportunities to address market challenges:

 Data excellence: focus on claims data and trends, as well as identifying what factors are driving claims volumes;
 Preventative measures: for instance, health and wellness programmes and educating the workforce to improve health and reduce claims;
 Sophisticated but easy-to-use digital tools, for both employers and employees; and
 Flexible benefits: offering employees a choice of benefits so they can decide on the best benefits themselves.

 EB consultants also identified ‘data’ – particularly using data to manage claims – as the biggest opportunity to help reduce costs, followed by preventative measures such as health and wellness programmes. One objective, for instance, should be for organisations and consultants alike to be able to access data digitally on the web via real-time dashboards and reporting tools. Employees are increasingly used to managing and receiving their benefits online or via mobile apps so the aim is to simply integrate the backend claims process.

 The study found that data management solutions are allowing corporations to identify issues such as why claims in one jurisdiction are so high, with brokers offering guidance on accident prevention programmes to reduce claims volumes. Powerful aggregating tools and forensic data analysis are enabling brokers and their clients to identify if, for example, a specific occupational issue is driving claims, or why in a particular country there are so many disability reimbursements.

 Mauro Dugulin, CEO of MAXIS Global Benefits Network said: “Data – and the development of digital tools to collect and manage this data – have become key in the race for excellence in EB management. Our research clearly demonstrates that the increased application of analytics will help address the biggest market challenge, which is cost containment.

 “As a primary stakeholder in the global EB chain, we know how important data has become for the industry. That’s why MAXIS GBN is investing significantly in robust, state-of-the-art digital platforms. We are working with global consultancies, brokers, multinational clients and our local members to continue developing added-value services in terms of data management, control and analysis. This is a key differentiator for us in the service we provide to our partners.”

 The research also revealed an increased appetite from consultants to offer captive and pooled arrangements, with an opportunity to educate clients further on the benefits of these vehicles. In particular, global EB consultancies reported an uplift in the need for central underwriting of risk – clients are looking at solutions where they can move to a single global provider that can deliver a broader insurance proposition for upwards of 20 or 30 countries, built on a single pricing structure and with potential for better terms and conditions.

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