Factors shaping the benefits administration industry this fall

With more than a billion dollars invested in the HR tech industry last year, adoption continues to rise for both brokers and employers. Business leaders increasingly want to take benefits and HR administration online and, as a result, many benefits and HR platforms are in a period of growth.

A number of factors are affecting that growth and the future of the benefits administration industry. As benefits administration providers vie for market share and brokers continue to make the move online to meet employer demand, these trends will continue to affect the benefits industry throughout the rest of the year and into 2019.

Here are a few of the factors shaping the benefits administration industry this fall.

1. More brokers making decisions 

Our data indicates that 78 percent more brokers are making a decision this year versus how many did last year after reviewing the market. Many are still taking a “wait and see” approach, but increasing numbers of brokers are moving ahead with helping their employer clients be online than ever before.

One factor driving this trend is the number of solutions marketed directly toward employers. As these systems become more prevalent, more employers are seeing the value of working with a broker who provides a tech solution with a layer of support.

Employers using a broker-supported system have the benefit of a trusted advisor in their market to assist in implementation and use rather than relying on the technology provider alone. In most cases, this produces better outcomes and more success with the platform.

There is currently a window of opportunity around this, as most employers want to administer benefits online but aren’t yet doing so. This presents a clear competitive advantage to brokers who do offer a platform as part of their value proposition, and this is one reason more brokers are making a decision this year.

2. Sun Life Financial acquires Maxwell Health

 In June, life insurance carrier and financial services company Sun Life Financial announced plans to acquire benefits administration platform Maxwell Health.

Depending on your position on platforms operated or offered by insurance carriers, this could make Maxwell Health a more — or less — attractive choice.

The deal could create a streamlined experience for employees with Sun Life coverage, but some brokers may have concerns about a carrier-owned platform. Questions include whether brokers will have to offer the carrier’s products in order to use the enrollment software or whether other carriers will integrate with the system.

If these questions make Maxwell Health less attractive for some agencies, the number of comprehensive benefits platforms marketed to brokers is arguably down to a handful.

Market leaders in this space have been emerging over the last few years, and this acquisition may further impact the playing field for benefits administration systems.

3. Millennials continue to rise up the ranks 

This year, millennials are on the cusp of becoming the largest generation in America. Already the largest generation in the workforce, millennials continue to grow in their careers. This generation has different expectations when it comes to technology, and as millennials continue to become decision-makers in their workplaces, they will increasingly demand tech solutions for benefits and HR challenges.

This is another factor driving the increased adoption of enrollment platforms and other tech solutions by brokers and agencies, as brokers compete to win the business of millennial decision-makers.

Further, user growth is on the rise for benefits systems, a trend that will likely continue as millennials make up a larger percentage of the workforce. Millennials are extremely comfortable with technology in both their personal and professional lives. Employers, brokers, and benefits administration providers are likely to see less and less apprehension around implementation as the workforce evolves.

How will these factors affect benefits administration systems and their users moving forward? Ultimately, these trends are all leading the industry toward increased adoption and additional market opportunity for HR and benefits administration platforms.

Eventually, the industry will reach a tipping point where the majority of employers are administering benefits through an online system. The above trends will play a role in getting the industry there, as well as in which systems wind up holding meaningful market share when that tipping point is reached.

Alex Tolbert is the author of “Online Benefits Technology: The Strategic Broker’s Guide” and leads BerniePortal, an all-in-one HR platform built for brokers by brokers. Before he started the BerniePortal, he worked primarily as a group health insurance broker.