Michael W Levin, co-founder and CEO, Vericred
Health insurance carriers are facing more pressure than ever to evolve how they distribute their products. The sheer volume of new technologies and distribution channels they’re being asked to support can be overwhelming, especially in an industry coping with ageing, and often siloed, legacy systems.
For carriers open to change, this is an exciting time that will enable them to expand sales, deliver a more personal service, and increase efficiency – all at the same time. Their challenge is to respond to the market today in a way that gives them the time to evolve their systems for tomorrow.
That’s exactly what a data infrastructure platform delivers.
Allow me to explain.
The health insurance market is simultaneously shifting in two ways. First, every participant in the health insurance distribution chain desires and expects the same modern experiences that they’ve come to rely on in other industries. Members want to manage coverage on smartphones. Employers want to manage health insurance through user-friendly human resources (HR) and benefits administration (benadmin) platforms. Brokers want to be freed from the carriers’ inflexible systems so they can reduce their administrative burden and focus on servicing clients. And the carriers themselves, of course, want to both enable and benefit from all of the above, as well as increase their own efficiency.
Secondly, sales and distribution are shifting away from means that carriers control to multi-carrier marketplaces, broker-quoting platforms and enrolment solutions. Starting with the launch of healthcare.gov as a part of the United States Affordable Care Act (ACA), carriers have had to adapt to an increasingly open and transparent market for their products. Since then, marketplaces have been built for consumers not covered by the ACA, including large group employees and Medicare participants. Some HR platforms offer comparison shopping for employee benefits. And even traditional brokers are using systems that compare plans from multiple carriers, saving them time while offering clients a more sophisticated analysis of their options.
In an industry accustomed to doing business with a limited set of partners, using manual processes, and sharing little information, the prospect of automated, multi-party, transparent distribution requires a substantial change in mindset. But as they consider the alternatives, many carriers are concluding that in the long run these new technologies empower them to expand their markets, improve efficiency and build deeper relationships with brokers, employers and members.
To embrace this vision, the carriers must also find an effective way to interact with the hundreds of tech companies that facilitate the quoting, enrolment and management of health insurance and employee benefits. These insurtech companies often assume insurance carriers will offer modern platforms designed to exchange accurate information in an instant using protocols called application programming interfaces (APIs).
In reality, most health insurance carriers have systems that trace their origins back many decades and have been patched to accommodate countless mergers, regulatory regimes and business changes. The result: technology that simply can’t interact with the insurtech systems through APIs.
How, then, can a carrier meet the demands of its brokers and clients for modern digital experiences?
One option is to ask each insurtech company to build an interface to the carrier’s legacy systems. But many are understandably reluctant to devote precious developers to navigating archaic technologies, data formats and communications protocols – some of which are many decades old.
Conversely, the carriers could try to build or buy the technology they need to exchange data through APIs. Those that go down this path soon discover they still need seven-figure budgets and several years to rebuild the relevant tech.
Faced with these unattractive options, many carriers are simply not connecting to the various insurtech systems, accepting the risk of alienating existing clients and making it more difficult to meet the demands of potential new ones.
But that’s a price carriers need not pay. Instead, they can connect to insurtechs via a platform such as Vericred. With a single connection, a carrier can exchange data with hundreds of broker quoting platforms, benefit administration systems, and other insurtech companies. The tech companies benefit the same way: one connection links them to many carriers.
Platforms such as Vericred, moreover, can invest in critical services such as security, data validation and error handling that wouldn’t be economical in a world where every connection between carrier and insurtech company had to be managed independently.
In other words, everyone benefits.
Brokers, employers and members all have the up-to-date information and powerful capabilities they expect. Technology firms can devote their resources to product innovation. And carriers improve their service immediately with the flexibility to upgrade their systems down the road when it makes the most sense.