FINEOS : Does your core have the strength to address $10M in premium leakage a year?

Imagine this:your employer uses an outdatedtechnology for payroll. Because of this, your paycheck is a different amount each week. Assumingyou're a salaried employee, can you imagine accessing your bank balanceandscanning your recent transactions each week to confirm if the amount deposited is close enough to what you were expecting? If it's not close enough, you have to callyour bank, employer and potentially another third party to find out why.

Under these circumstances,you'd consistentlylose money you expected to make. Would you acceptit as okayif itwas within a certain standard deviation? I'm guessing no. It seemsabsurd to work all week long and end up with less paythan you and your employer agreed upon. Now,put this into the context of employee benefits carriers.Formany, thisscenariois a reality.

Howdoes 5-10% of revenue vanish?

Due to legacy systems, disparate technology, and antiquated processes, many insurance carriers lose out on 5-10% of premium (revenue) annually. This adds up andcan potentially cost carriersup toten million dollars annually. That moneymay beearmarked to pay claims, fund employee benefits,pay to turn on the lights (when we go into the office),orcoverthe bill for remote video conferencing.

The persistent loss of money every year is real, but it's not a universally understood problem. We call this 'premium leakage'and broadly define itas:the premium you don't collect due to inefficiencies, inaccuracies,and otherwiserisky processes.

How can the issueof premium leakage be addressed?

In the insurance industry, much plan administration is done outside the insurance carrier's walls either due to self-insuredplans or broader self-administration. That's not going away, nor should it. Thinking about enrollment and the broader benefits administration market, I see a more focused conversation occurring around the options to address this issue. However, the solution won't be one-sided: it's going to be a partnership between self-administration technology providers andinsurers.

The answer iscore strength

Just like whenyou experience back pain or other pulls and strainsthe solution is to strengthen your core.The core solutions an insurer deploys can prevent premium leakage and create a superior customer experience.Going a little deeper:we'removing towardan environment where the insurance carrier can beasource of truth for the current plan and policy, as well as member data for the employer.

All of this can be accomplished by leveraging a modern SaaS platform purpose-built for the Employee Benefits market. Using a repurposed Property and Casualty system can only compound the issue. Attemptingthis is like forcing a square peg into a round hole.

How does a purpose-builtcore system for Employee Benefits addressthe $10M/yearpremium leakagequestion?

By integrating the enrollment and benefits administration ecosystem into the carrier's source of truth, all service providers and administrators will be usingthe same data set. That means the same class structure, plan design, GI limit, etc. Everything is currentand accurate.

Now when the monthly payment comes in,the employer and the insurance carrier are both calculating it from the same source of truth.This ensures an efficient and accurate processwith proper claims payment output, resulting in zero premium leakage.

Leverage one source of truthto solve premium leakage

This is the next frontier in expanding the integration possibilities in Employee Benefits. The good news is, this is what FINEOS has been pursuing for the past few years.We've invested in building solutionswithin the FINEOS Platformfor the Employee Benefitsmarket; Integrated Disability and Absence Management(IDAM), policy administration, and multi-administrationbilling.

Ourlatest addition to the FINEOS Platform, the FINEOS New Business & Underwriting solution (formerly Limelight Health), further expands our ability to leverage one source of truth for the plan, policy,and member datafrom quote to claim, including absence - all equipped tohelpsolve the problemsof premium leakage. This is the future.

If you'd like to havea deeper conversation about this, feel free to reach out to me directly. Inmy next blog, we'll address how premium leakage impacts the employee and member and why that is the most important aspect of this conversation.