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Employee Benefit Innovations: Wave of the Future? It's Already Here...

Employee Benefit Innovations and Technology: The Wave of the Future?  If You Haven't Noticed, It's Already Here


April 10, 2015

(Fort Lauderdale, FL) – In 1971, a guy named Bill Joy was 16 years old but was already proving to be a mathematical genius, evidenced by his admission to the University of Michigan at such a young age.  By a stroke of luck, Bill encountered the brand new computer center which, at the time, was state of the art.  At that time, computers still took up entire rooms, and early programmers still worked on a system of outdated cardboard punch cards.  Each line of computer code was applied on the card using a key punch machine.  With particularly complex programs, it might require hundreds or thousands of the cards in tall stacks.  Furthermore, computers at that time could only process one task at a time.  Each computer had an operator and you would hand over your program cards and wait to see how it worked.  This sometimes took hours or days.  One glitch would take days to track the error and the process started again. 

A few years earlier, computers began to emerge that could handle hundreds of tasks at once.  This meant that programmers didn’t have to use stacks of cards or wait in line any longer.  There could be literally dozens of programmers “online” at once, which greatly accelerated the programming revolution.  It was called time-sharing, and according to one historical account, “This was not just a revolution.  It was a revelation.”  Of course, if you don’t know Bill Joy he was the guy who went on the found Sun Microsystems and then rewrote the computer language called “Java” which today virtually every computer, every device, and basically everything electronic in the entire world uses to operate.  He is widely considered to be the Godfather of modern programming.

So, what does this have to do with the insurance industry?  Specifically, what does it have to do with Employee Benefits?  We are currently in the midst of a similar kind of revolution-or “revelation”, as it were, in our industry.   I’m sitting at a conference in Fort Lauderdale waiting to present to a group that promotes nutritional supplements, meal replacement, and other individual health products.  Really, a super bunch of people-so motivated and empowered by the science, the technology, and the potential to improve lives.  I was approached by a friend of mine asking about wanting to get me involved in the promotion.  Of course, my interest has and always will be improving the “lives” of employers.  So I immediately thought about corporate wellness strategies and the fact that every wellness program out there does nothing to actually take the guess work out of good nutrition and healthy lifestyles for employees.  We know there is a definitive link between poor health and insurance costs, but what is out there that will help employees become healthier and make better choices?  This might just be the answer.  We’re piloting the program now and ultimately I will form a distinct and undeniable correlation between a reduction in obesity and a reduction in employer health insurance costs.  We might call this innovation.

It’s hard to argue with the innovation, but what about technology?  For healthcare and risk management consultants like me, there is a new breed of technology that is changing our world.  It’s all about integration these days.  Still, the vast majority of professionals in our industry are still using cardboard programming cards to execute commands, rather than embracing the revolution, or revelation, that is time-sharing, or in our case, technological integrations, advanced claim analysis, predictive analytics, and pattern recognition.  To employers, this isn’t science fiction, its stark reality.  It’s amazing to me how many employers still manage their programs by shopping brokers, shopping plans, quoting carriers, and making miniscule adjustments to plan designs just to buy yet one more year of price relief.  The entire industry is in a perpetual state of reaction. 

What I’m talking about is the inexorable need to be proactive, rather than reactive.  Insurance, by its very nature, is a reactive beast whereby we look at historical patterns, historical losses, and historical risk profiles to determine where we should set rates to account for future losses.  That, ladies and gentlemen, is the notion of pure, insurable risk.  Why are we not trying to predict what will happen in the future by looking at what’s happening right now, as opposed to waiting twelve months to decide?  This is where technology is transforming our industry, but it is shocking how few brokers, let alone employers, are embracing this technology and even more who don’t know it exists. 

Take meal replacement options at the work place.  We attack obesity and we attack costs.  Improve the lifestyles of employees and costs recede.  From there, we deal with conditions that have already manifested and are unavoidable.  Using advanced data mining software and predictive analytics we can analyze with amazing certainty what the costs will be in any given population by looking at the types of specialists seen, what kinds of drugs are being utilized, and what types of procedures have taken place.  We develop forecasts and immediately begin to intervene to coach employees, to steer to less expensive treatment options with higher quality outcomes, and ultimately we can drive down costs simply through more effective management.  This is technology.  This is the renaissance of time sharing as it was in early computer programming.

Then, take the headache with compliance.  Those three ugly words: Affordable Care Act.  Not to mention compliance with HIPAA, ERISA, DOL, HHS, and a myriad of other hassles that employers have to deal with.  In our practice, we talk a lot about disparate systems, or those systems that are necessary to manage employee onboarding, terminations, benefit selection, time keeping, administration, and compliance but are all separate and distinctly not integrated.  Why is this?  Well, the delta between insurance programs, HR protocols, and compliance has always been extremely wide.  Today, this delta has nearly evaporated to the point that they are so closely intertwined that there is no choice but to innovate or succumb to penalties and inefficiencies that it is putting some companies out of business. 

Advanced consulting firms, or those that have embraced the significance of the technology revelation, are working to bridge this gap and integrate all of these separate, disparate systems into a single platform whereby delivering a single solution to employers with a single log in.  This saves time, it saves resources, and it eliminates mistakes, which all save money.  There are few software platforms that have really nailed it and, truly, are quite amazing.  For others lagging behind, they’re still stuck in the old analog disparity that has plagued our industry for decades.

There are firms popping up out of Silicon Valley that have been described as “tech companies that accidently became a broker”.  To me, this is chilling and should prove as a warning to each and every employer out there.  To take a few hundred years of experience and boil it down into a tech platform that gives employees a “30 day crash course” on insurance is, frankly, dangerous.  I would much rather be a “broker that accidently became a tech expert”.  Seriously, our industry is too complex to rely solely on technology to solve our problems.  Technology can quote.  Technology can analyze.  And technology allows us to solve many, many problems.  But it can’t replace the expertise that is the genesis of innovation, which will always belong to humans. 

Diversified Benefits Group is a leading insurance, risk management, and business consulting company focused on driving real, measurable results within an organization.  Diversified’s continuing mission is to never stop innovating and to constantly challenge the status quo.