So, why are underwriting standards such an issue for insurers? The simple fact is, none of this works as well as old-fashioned enrollment meetings.

Most private exchange providers require that any level of participation be accepted, because their premise is that employees will buy based on system recommendations—and they will recommend products as needed—so the right people will buy. One reason for this premise is due to private exchanges' origins in marketing health insurance, not life, disability, or critical illness. It's easy to get participation on a product line that everyone wants. People worry about health insurance, but no one wakes up saying “I better buy disability insurance today.”

Brokers using ben admin systems have increasingly requested “no participation requirements” on voluntary products. In order to keep the enrollment process simple, they don't want the complication of underwriting, but they also don't want a line of business to be rejected for poor participation.

It's also easy to see why this is an issue for insurers. After all, we sell more business when participation is good, and underwriters and actuaries relax a bit about the inherent anti-selection in voluntary business relative to the group business, where all eligible employees are covered. It's a given that insurance companies want good participation.

What's the solution? Whenever possible, we suggest that online enrollment be organized as an ongoing process and not a “two weeks open a year” event. Educational communication about benefit options should be sent year round. If possible, enrollment meetings should still be available, and at the very least, the campaign should include webinars and a call center to help employees during enrollment.

A brief summary of an online case our sales team managed accompanies this article. It shows the kind of success that's possible when the employer, broker, benefit administration system and carrier set up the suggested type of campaign.