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September 5, 2014

Insurer Embraces Data Analytics to Shape Benefits Coverage

The U.S. insurance industry is attempting to move beyond actuarial tables to leverage data analytics in helping insurance brokers and employers tailor benefit plans for those workers still covered under employer benefit plans.

Sun Life Financial Inc. said this week it has launched a benefits planning tool that uses data analytics to customized employee benefits plans. The “Benefit Profile” uses employer demographics and industry benchmark data to aide brokers in designing benefit plans and “enrollment strategies” for employers.

Data analysis includes synthesizing employers’ internal workforce data and comparing it to industry benchmarks. The output is a graphic analysis comparing age, gender and income to industry benchmarks. Those metrics are drawn from Sun Life’s policy records along with other industry statistics from groups like Marketshare, LLC.

Sun Life said the benefits tool attempts to address rising healthcare costs while allowing employers to customize benefit packages to reflect the demographics of their workforce. To that end, the data tool correlates demographics such as the incidence rates of illnesses and other medical issues.

Most plans, including the Affordable Care Act, or “Obamacare,” often rely on premium payments by younger members to offset the cost of healthcare for older employees.

The benefit tool’s graphic analysis shows typical demographic purchasing patterns for insurance coverage, including life insurance for both men and women. It then illustrates benefit offerings from competing companies in the same industry and region to help employers gauge how to design a benefits package that contains costs while promoting recruitment and employee retention.

The results of the analysis are presented in a dashboard format, according to Sun Life’s Bilal Kazmi, who heads its analytics and innovations marketing unit. The data analysis tool is designed “to help employers fine tune what’s working, adapt to changes in their industry and region, protect their employees, and stay competitive,” Kazmi explained in a statement.

Among the tool’s “hypothetical insights” is a scenario in which a state offers long term disability insurance with a higher percentage of salary replacement than the industry or regional average. The Sun Life benefits tool would either flag and promote that detail to current or prospective employees or adjust the disability plan to create a more affordable option for employees that keeps pace with disability coverage across their industry.

In another Sun Life scenario, a regional hospital considering the addition of new benefits isn’t sure what new coverage to offer. A demographic analysis finds, for instance, that the majority of hospital workers are women and individuals over the age of 40. After reviewing illness incidence data, the tool would likely recommend that the hospital offer critical illness coverage.

Sun Life said it is also developing a “stop-loss” analytical tool to help insurance brokers promote coverage for employers offering health and disability benefits.

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