US Group and Voluntary Employee Benefits: Changing Markets, Changing Technology

by Chuck Johnston, February 27, 2013
Industry Trends
North America

Abstract

Celent delves into the implications the Affordable Care Act, depressed interest rates, and aging Gen X/Y consumers will have for group and voluntary insurers as markets consolidate, requirements shift, and consumers set a new standard for service.

In the report, US Group and Voluntary Employee Benefits: Changing Markets, Changing Technology, Celent explores the impact regulatory, demographic, and financial changes are having on distribution, service, and supporting technology in the benefits space. This report analyzes new and changing distribution models, standards of service, and the impact on IT departments with aging application architecture and systems.

“As the group and voluntary insurance markets converge, changing distribution and service models will strain IT application architectures and legacy systems past the breaking point,” says Chuck Johnston, Director, Americas Life/Annuity & Group Practice with Celent’s Insurance Group and author of the report. “Insurers and brokers have underinvested in Group and voluntary insurance solutions over the last 20+ years, and will struggle to meet new market requirements.”

This report sets the stage by examining group and voluntary market structures, including market segments and value chain players. It then focuses on the impact of the Affordable Care Act on insurance products and distribution models, detailing the disruptive effects of state/federal exchanges on current distribution models, and how “shelf space” is managed. Finally, the report discusses critical technology issues that arise from meeting the requirements of evolving group insurance business models, setting the stage for a series of technology-focused reports for the group market.

This 22-page report contains six figures.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

2

Market Overview

3

 

Group, Voluntary, and Individual Products

3

 

Distribution

4

 

Group Market Segments

5

Market Issues and Opportunities

6

 

Regulation

6

 

Economy and Shift to Consumerism

7

 

Market Collision in the Making

7

Technology Implications

13

 

The Architecture Gap

14

 

Starting with the Basics

15

Conclusion

16

 

For Insurers

16

 

For Vendors

16

 

For Vendors

16

Leveraging Celent’s Expertise

17

 

Support for Financial Institutions

17

 

Support for Vendors

17

Related Celent Research

18

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