In the business of benefits

Hub International’s Mike Barone is leading a change in mid-market employee benefits. He tells IBC about the trends taking shape in this dynamic space

IBC: Where are voids in the Canadian employee benefits space?
Mike Barone: There are several very large insurance organizations that focus on employers with 500 to 1,000-plus employees – the upper end of the market. Then there are hundreds of firms that focus on the small business customer, but no broker has really oriented themselves specifically around the needs of the small mid-market customer in a way that is consistent with what one might experience as a larger organization.

For example, we don’t see a lot of firms employing multi-year strategies; it’s more transactional. They connect at renewal and then do it again the next year. That’s one example of a void we see in the market – a lot of great relationships exist with customers, especially with small businesses, and a lot of resources exist in the upper market, but no one is putting together both resources and relationships for the mid-market.

IBC: How is Hub trying to fill this void?
MB: As an organization with over $600 million in revenue in Canada, we have the ability to make significant investments. While our market competitors can certainly make investments, and have made investments, their interests really are in serving much larger organizations. We plan to staff up and develop a model where we are able to deliver a unique suite of services through our consult­ants to that small mid-market customer that will be consistent with what’s being delivered to upper-market organizations.

IBC: What are the key trends affecting employee benefits today?
MB: The tight labour market is one. What we’ve seen over the past few years is that organizations and customers are coming to us and asking what things they need to do to be really competitive when it pertains to attracting talent, retaining talent and building a benefits package that allows them to recruit the next wave of employees.

Extraordinarily high drug costs are another factor affecting the space. Companies are trying to enhance their benefits package, which comes at an expense; meanwhile, drug costs are increasing significantly. This then becomes a double effect in terms of premiums and expenses affecting an employee.

Lastly, there is a trend around mental health and wellness, and taking a look at how to address those unique needs in the workforce.

IBC: Do you expect technology to have an effect on employee benefits?
MB: I don’t think technology has had a signifi­cant impact on our business, but when you see what organizations like Google, Facebook and Amazon are doing, it’s only a matter of time before artificial intelligence and machine learning have an impact on our business when it comes to how employees and their families optimize insurance products.

With wearables, we haven’t seen them impact benefits or premiums, but we have seen them incorporated into wellness strat­egies to engage employees and help them become healthier, more productive and happier. If you work for an organization that is making those investments, as a human being, you are more likely to appreciate the benefits package and stay with that company. I see wearables as being more of an impact on an employee engagement strategy than I see it as a mechanism to reduce cost.

IBC: What emerging trends are on the horizon for employee benefits?
MB: Paramedical services, such as massage therapy, naturalistic therapy and physio­therapy, is something not too many people are talking about. I think Canada is actually leading the US when it comes to thinking about how to address this specific need and building awareness around the availability of these services. However, any time you do have a big emerging trend, we all have to be cognizant of folks who are not as altruistic and are looking to take advantage of the situ­ation, which leads to fraud in the space.

Another emerging trend is the legaliza­tion of marijuana. I think it’s an interesting thing for all of us to think about how it will change the way we select employees. So the question is, how do we play with that? It’s a very new paradigm.