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From the Great Resignation to record inflation and mass layoffs, 2022 was full of challenging economic conditions for the industry and beyond. Benefits became even more important to workers and their families, and we saw an acceleration of trends like embedded benefits, non-traditional benefits, data transparency, and an evolution of brokers' roles. Now, new priorities are emerging.
In the face of economic uncertainty, there's less appetite for risk. Rising health care costs, a looming recession, and a cooling labor market are just some of the factors already influencing benefits in 2023. Families with employer-sponsored plans now pay 47% higher insurance premiums than a decade ago. But there's hope on the horizon: Empowering people to understand their benefits helps them make better decisions. That's why I believe 2023 will see the industry prioritize members even while doing more with less. Technology will play a vital role in paving the way for better outcomes.
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2023: The year of frictionless benefits
As employers grapple with navigating benefits programs amidst economic downturn, they will require more from their benefits software. This in turn will put greater pressure on insurance companies to modernize their systems and accelerate new partnerships and digital experiences to meet their members where they are.
Here are the five trends I think will define benefits in 2023:
Data quality takes center stage
The ability to access accurate, trusted, and usable benefits data is no longer a nice-to-have. It's imperative for members to have access to their data in the right place at the right time, which means more interoperability and emphasis on keeping data clean and organized. For members to feel confident in their coverage, they have to believe the insurance company is always up to date and won't add unnecessary friction at the point of care. Insurance providers will have what they need in order to process a claim. Benefits software can build better member experiences when they can safely sync with carrier systems. And third parties will build tools on top of it to enable modern member experiences across decision support, wellness providers, and more.
Employees prioritize choice in their benefits
A diverse, distributed workforce will continue to put pressure on employers to shift away from a one-size-fits-all approach to benefits. Instead, employers will find value in creating packages that have the flexibility to serve people with varied needs and priorities. The year ahead will see employers explore contemporary benefits like fertility, elder care, tuition reimbursement, and pet care as critical additions to mainstays like major medical, dental, vision, and disability.
Benefits buyers look for proven outcomes
Employers are already managing their benefits on tighter budgets alongside less stability. Although it's ultimately in their best interest to provide more support to their employees, increased choices and economic uncertainty will make it even harder to find the right balance. This will lead to an emphasis on demonstrating the impact of each benefit across outcomes and retention. Expect to see greater focus on ROI analysis to assess the true value of an investment.
All-in-one business models set a new standard
As employers look to streamline their systems and prioritize a great employee experience, all-in-one HR software will have a competitive edge. These systems unify data, offer a more complete user experience, and consolidate many point solutions in one place. In 2023, expect to see HR software companies adding new modules to their solution (e.g. payroll companies adding benefits administration tools, or benefits software adding other HRIS features).
Consolidation and acquisitions alter the landscape
While insurance merger and acquisitions deals in the insurance industry dropped heavily at the end of 2022 ($2 billion compared to $15.4 billion in 2021), brokerage transactions are continuing to drive deal volume in the space. Consolidation will only continue in the benefits industry, with brokerages acquiring brokerages, point solutions in the HR and benefits space joining forces, and even big tech buying up insurtech startups as a way to build out new capabilities quickly.
Turning uncertainty into opportunity
Despite the challenges facing employee benefits, the industry remains inspired by technology's power to deliver better outcomes. As part of the new generation of benefits technology helping to solve the industry's toughest challenges, I'm inspired by the energy and adaptability across all facets of the ecosystem to boldly imagine a different future. 2023 will be a year where tech innovators and benefits pros continue to co-create solutions that will change the industry forever.
