Next Level of Disruption in the Employee Benefits Industry

By Dan Eisner, Employee Benefits Advisor

Over the last five to ten years in the employee benefits industry there was a flurry of activity around self-proclaimed “Disruptors”. In the earlier days, these Disruptors were setting up shop with promises to revolutionize the way plan sponsors provided benefits to employees and promises to change how benefits advisors worked with plan sponsors. In spite of the initial passion and vision expressed by many Disruptors, there were a couple of new ideas and solutions in the market but, in my opinion, nothing really revolutionary.

Now comes Artificial Intelligence ("AI"), with arguably the most significant disruption that broader society has ever encountered, and one that reaches well beyond the employee benefits industry.  It is hard for each of us to get through the day without hearing or seeing something about how AI will change the world. Rather than focusing on far-fetched ideas, like flying cars and travel to Mars, might AI actually be able to help plan sponsors, insurers and advisors in the employee benefits industry? The answer is definitely yes, but like with all tech-supported service-based industries, there are some potential issues and concerns for the employee benefits industry. Here are some of my thoughts, both good and bad, for your consideration.

• Garbage In and Garbage Out – The most widely used form of AI to the average person would likely be conversational AI tools like ChatGPT or Claude. When you are looking for information, you can use these AI Assistants to generate information on an endless number of topics, including employee benefits. Traditional search engines find and surface information that already exists on the internet. Conversational AI tools do something fundamentally different in that they generate responses by drawing on information and patterns learned during training.  Unfortunately, just like with traditional search engines, there is no way to guarantee that the information being accessed is completely reliable, which is concerning when it comes to a specialized area like the employee benefits industry.  As well, there is no one person or entity designated as being responsible for validating the results. Why rely on “artificial” intelligence for information on your employee benefits program when you can access “real” intelligence through the services of an experienced team of benefits advisors?

• Call Centre Frustrations – Those of us old enough can remember the advent of automated call centres. Instead of speaking to a human being, you were prompted to listen to options and push buttons to get to someone who could help you or solve your problem, hopefully. It sounded simple enough and sounded promising and exciting when it came out, but the reality is that almost everyone then and now is looking to hit “#”, “*”, or “0” to speak with a human being. The concept of “conversing” with AI tools might initially  promise the same types of benefits but may also generate the same levels of frustration when our questions are not understood or properly interpreted.

• Automated Underwriting – Undoubtedly the insurance industry is looking for cost savings and the concept of AI tools being built for generating underwriting quotes rather than teams of human professionals seems appealing. Simply, if purpose built around the necessary knowledge, could AI tools generate the quotes faster and easier than our historical models?  It’s possible given the mathematical and technical side of insurance models currently used. That said, we find that even the current human-based underwriting model has difficulties with, for example, unique client situations, less common industries, and special insurance situations, so how would an AI-driven model handle those situations and generate reliable responses?

• Enhanced Fraud Detection – It is hard to be fully accurate, but many estimates are that fraud costs the employee benefits industry about 5% of premiums, which is significant.  Fraud can be initiated by employees, practitioners or service providers, but regardless of who or how, it is costly and not likely to go away. Finding solutions driven by AI that could be informed by all of the insurers in Canada to identify potential fraudsters seems plausible, and likely possible.  We understand that the industry has made some inroads but there is more work to be done. Let’s not forget that the fraudsters too are also utilizing AI to enhance their operations.

• • True Versus Generated Innovation – True innovation will always need the human element, so people can never truly be replaced. Any new solution that leverages AI could potentially be initiated using AI, but a human likely needs to be involved for it to succeed.  Right now, humans carry the ultimate role of having “professional skepticism”, based on experience, intuition and “gut feeling”. There should always be a role for “human intelligence” versus relying on just “artificial intelligence”.

As the employee benefits industry moves forward, AI is likely to be front and center in many discussions and AI will lead this latest wave of disruption. Given the corporate nature of the insurance industry, cost savings will likely be the lead motivator but hopefully there will also be a focus on enhanced services for plan members. The scope of changes driven by AI is hard to predict as we all deal with the question as to whether AI is “essential” or “experimental”. AI is not going away any time soon and it will transform our industry and might replace some things, but it could also augment them.  People will always be required but likely in a different way, so we need to be strategic and cautiously optimistic.

Perhaps there is an underlying reason why many parts of the employee benefits industry have remained intact over the last 30 years. Employers continue to provide benefits and employees continue to value them. At ZLC Employee Benefits Solutions we believe there is a better way for employee benefits, but we also believe the solution is not in “throwing the baby out with the bath water”. Disruption is really about changing the way we all think about the key issues our clients face for employee benefits and the way we find solutions for the long term.

Should you have any questions about the above, please do not hesitate to contact any member of our team.

Most employee benefits advisors come from an insurance background, but Dan Eisner began his career as a CPA and now he has almost 25 years’ experience in the group benefits industry.  This unique experience allows him to:

• Challenge the norms and historical practices in the employee benefits industry over the past 20-30 years
• Facilitate better discussions between HR and Finance professionals
• Analyze benefits plans through a financial and risk-management lens
• Support CFOs and Finance teams with cost forecasting and sustainability modeling
• Align employee benefits strategy with long-term corporate goals and HR strategies
• Leverage the most experienced team in the industry at ZLC Employee Benefits Solutions

ZLC Employee Benefits Solutions is one of the fastest growing advisors for employee benefits and group retirement programs in Vancouver and we are fortunate to have the best people, resources, and clients. We provide value by leveraging one of the most skilled benefits teams – collectively almost 500 years of experience within our team of 21 employee benefits specialists. We have been working with businesses ranging from 3 to over 75,000 plan members for over 40 years.