An emerging trend sees tech companies becoming in-house insurers for their workforces – a strategy that analysts say should be concerning for traditional insurance companies.
Amazon recently became the latest member of Big Tech to bypass traditional insurers by trialling an in-house insurance and health benefit scheme called Amazon Care. The scheme will include virtual and actual care through apps, chat facilities, remote videos, and follow-up visits.
Ben Carey-Evans, insurance analyst at GlobalData, said that there are many benefits to moving insurance services in-house.
“Moving medical insurance services in-house provides companies with more control over what they offer employees, allowing them to tailor packages specifically to their workforce’s needs,” he said. “It should also allow them to reduce costs by cutting out the middleman. [And] the fact that so many large corporations are experimenting with this approach suggests it is an emerging theme – and one that must be concerning for health insurers and employee benefit providers.”
However, Carey-Evans said that it also means that employers need to learn what their workers expect from their health insurance in order to hold on to them in the competitive marketplace – with a new report from GlobalData showing “clear differences” in what employees from different generations want.
“Baby boomers value basic salary most highly (53%), followed by another financial-based bonus in pension contributions (21%). This is similar among Generation X (53% basic salary and 12% pension contributions), but there is a clear shift in Generation Y. This younger generation of workers are less incentivized by basic salary (44%) and are more interested in work-life balance (13%), which they consider to be the second most important benefit.”
According to Carey-Evans, this insight is important because tech companies such as Amazon tend to hire younger employees.
“Tech companies such as Amazon – which often employ younger (or at least digitally savvy) employees – are ideally placed to design products that address the work-life balance,” he said. “By focusing on what their employees value most, the likes of Amazon will be able to attract and retain individuals in the competitive tech space.”