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Episode 16: Happenings and Challenges in the Advisor/TPA Community

In episode 16, host David Willows welcomes Faizel Alladina from People Corporation and Mike McClenahan from BBD. From the advisor/TPA perspective, they discuss the changing benefits environment, the emerging focus on technology and customer experience, and their perspectives on G19 compensation disclosure.
And now for something completely indifferent

And now for something completely indifferent

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Episode 16 Transcript

[INTRODUCTION]

[0:00:14.9] SM: Hello and welcome to another episode of GSC’s Podcast; And Now For Something Completely Indifferent, where we’ll be discussing the hottest topics and trends in Canadian health benefits. I am the producer and editor, Sarah Murphy.

Before we get started with today’s episode, we would like to remind our listeners that the views expressed in this podcast are those of the individual speaking and not necessarily the views of GSC. We may talk about possibly controversial subjects and therefore, reserve the right to potentially offend some listeners, but are apologizing for it upfront.

You can download this podcast from our website at greenshield.ca\podcast, or subscribe to it from wherever you get your podcasts. We also encourage you to read our publications, the inside story and follow the script, which you can also download from our website. Please be sure to follow the conversation on Twitter and LinkedIn.

Now let’s get started. Today’s episode is hosted by David Willows, GSC’s Chief Innovation and Marketing Officer. Hello David.

[0:01:14.5] DW: Hi, Sarah. Are we actually recording right now?

[0:01:17.4] SM: It looks like the equipment is working. It says ‘recording’. It's flashing. I think we're good to go.

[0:01:22.2] DW: It's a good sign. I only ask that, because the podcast that's attached to this little intro brought with it a fair bit of drama for us first-time, where we had guests that we’re about to hear, Faizel Alladina and Mike McClenahan. We're sitting here. We're all ready to go. You press play and what happened?

[0:01:41.1] SM: Nothing.

[0:01:41.6] DW: Nothing happened.

[0:01:42.3] SM: No.

[0:01:43.8] DW: Normally, we try to be cool about this. I mean, Faizel's a good guy, lives down at Eglinton and Avenue Road, took 15 minutes to get here.

[0:01:50.5] SM: Easy.

[0:01:50.9] DW: Mike –

[0:01:51.3] SM: Not the case.

[0:01:52.1] DW: - booked months ago, came from Vancouver and he's sitting in here and he's got a meeting –

[0:01:56.0] SM: Like an hour later or something?

[0:01:57.9] DW: An hour later, because that's what you do when you come to Toronto, you lineup their meetings, and we could not pull off this podcast thing, which was in our world, at least for you and me, a true emergency.

[0:02:08.2] SM: Full-on.

[0:02:09.0] DW: It resulted in a page going out.

[0:02:12.4] SM: Across the office. Entire office.

[0:02:14.3] DW: Yeah, to our friend, Johnny.

[0:02:16.2] SM: Johnny. Yes.

[0:02:17.7] DW: Yes. Johnny in the IT team, and this was not a page because our adjudication system was down, payment and billings weren't working. We had a podcast –

[0:02:25.7] SM: Emergency.

[0:02:26.2] DW: - emergency. Johnny, God bless him, got it going. For that reason today, for the first time ever, we're going to dedicate this particular podcast to our helper in IT, Johnny. I hope he's very moved by having a podcast about the state of the consulting advisory and TPA community dedicated to him.

[0:02:47.6] SM: Oh, he does.

[0:02:48.6] DW: He'll be very touched by this.

[0:02:49.2] SM: That’ll mean a lot to him.

[0:02:50.4] DW: Okay. Let’s get to it.

[EPISODE]

[0:02:56.6] DW: Faizel, tell us a bit about yourself, the role that you have now. I'm sure a lot of people have met you there listening to this podcast, and give folks an idea of your background in the industry.

[0:03:06.5] FA: Sure. First of all, thank you for having me on the podcast. I'm going to start with my company first, because I just want to give you a little flavor for what we do at People Corporation. Then I'll turn to what my role is within the organization and where I've come from in terms of my background, if that makes sense.

People Corp has been around for probably just over 10 years as a company, but started before that as a slightly different name, Group Works, and involved to People Corporation back in 2009. We've been recognized as one of those fastest-growing companies by Growth 500, which is a Canadian business publication done annually. We've got several partner brands across the country. Those have been very long-established brands that are part of the People Corporation umbrella.

What's nice about the way that the acquisitions have occurred over the last 10, 15 years is really we've been able to participate in pretty much all parts of the market, so small, medium, large, both Union, Blue Collar, both hospitals, white collar. It's pretty much given us a very diverse block of business.

I guess as organizations are coming together, the opportunity to leverage scale, especially as we're going through this fast-growing stage of our lives, in terms of People Corporation into this second phase of transformation, I'll call it. We have the opportunity to leverage synergies. We have the opportunity to leverage our scale, to create differentiated product offerings. My role is really to work with all of our constituents, our stakeholders, our partners. My background? I’m an actuary. I think I'm going to be the second actuary on your show.

[0:04:36.2] DW: Erin Crump is going to be angry to hear that.

[0:04:39.0] FA: Which is a little scary.

[0:04:40.0] DW: It’s technically true, you're an actuary.

[0:04:41.0] FA: I'm an actuary in the industry a long time, 30 years. I guess, I've been fortunate enough, I guess to have had the opportunity to work in three different parts of the value chain. Actually, started my career in direct insurance for a Canadian global company, moved to a large US global firm in consulting; covered that front-end. Then move into a back-end reinsurance role, which is about as far away from the customer as you can probably go, but it allows me to actually leverage my experiences in a very unique way, because I see the customer through three different lenses. That's given me the opportunity to see how to solve a customer problem a little bit differently.

[0:05:21.2] DW: Yeah. That's perfect, because we're going to ask you a bit about the evolution of our customers over the last couple decades. Mike, thank you for coming from so far away.

[0:05:30.3] MM: You’re welcome.

[0:05:31.0] DW: Faizel just comes from basically, Avenue Road in Eglinton. You came from British, Columbia. Thank you for –

[0:05:36.1] FA: My alarm would be going off right about now. Just getting out of that.

[0:05:38.7] DW: That's true. Yeah, you have an added stress here. You have to be on point very early in the morning on your body clock. Tell us a bit about Benefits by Design, BBD, as most of us know it, and some of your history.

[0:05:49.9] MM: Sure. Yeah, I'd like to suggest one of those. Started when I was 12, but you can see me, so you know that’s not true. Much like Faizel, I’ve been around the business almost 30 years. I got my start with one of the large insurance companies in Canada who's no longer with us, London Life, way back in the early 90s. Joined Benefits by Design in ’98. At that point, we had one office and seven employees. Today, we have three offices and about a 100 employees across the country.

I have the pleasure of helping working Canadians, which is our vision at Benefits by Design. We do that through helping advisers grow. Our distribution, we’ll probably touch a little bit on this later, is exclusively through employee benefits-focused advisers across the country. Just a pleasure working with a fantastic team. If you ask what do I do there, hopefully as little as possible, because we hire great people, give them the tools to do their jobs effectively and then get out of the way. That's our philosophy from a management standpoint. It allows me to come and do podcasts.

[0:06:48.2] DW: Okay, yes. Exactly, exactly. We’ll have to get you down here more often. It sounds like you have some gaps in your calendar. I joked to our two guests weeks ago as we were preparing for this day about why I had specifically asked them. One thing you can already determine is they're both comfortable at talking, which is very valuable in podcasts, we found a year into this.

Also, I was watching golf all weekend and that Farmers Insurance commercial company line says, “We know a thing or two, because we've seen a thing or two.” I think in this room today, we've all seen a thing or two. That's where I'm going to start off, in terms of the world today, versus the world maybe 15, or 20 years ago. I know all three of us were in the advisory world then. Just maybe ask, Mike I'll start with you on the advisory side, what changes have you seen over the last couple decades in terms of how you interact with your customers and what they're looking for?

[0:07:38.9] MM: Sure. Okay, and an important point of clarification is we don't deliver the advice. That’s through our customers being those independent advisors. That said, I do have the –

[0:07:49.5] DW: Yeah. You do have the experience.

[0:07:50.8] FA: The experience and so on. Yeah, I've been around long enough to see the whole demutualization process, where – so I started with a captive distribution force at London Life. Then of course, the mutualization came through in the 90s and so on, and the big insurers all said to their advisors, “You're free.” Translation, “You're fired.” Up through that, sprung things like managing general agencies, etc.

I'd say in the employee benefits field, certainly one of the trends and evolutions we've seen, and I don't know this is a bad thing at all, is that the need for knowledge-specific to that area of the benefits field and financial services become critical. In other words, it's very difficult today to be a generalist. That probably applies, I'm just not as familiar, but in other areas of financial planning and investing and so on and so forth. As an example, I almost feel I have to be a part-time pharmacist today. I couldn't pronounce atorvastatin. I'm still not sure I'm pronouncing it right, by the way.

[0:08:47.7] DW: Close.

[0:08:48.1] MM: Okay. Close enough? Okay. I think that also, it creates opportunity as well, because if you can develop that specialty and that knowledge, the value you can deliver to customers is amplified. Therefore, both maintaining and I would argue amplifying the value of independent advice at the end of the day.

The other thing we see a little bit of is a scope creep, I guess I might call it. It's not unusual for advisors today to be asked for advice around areas that aren't necessarily specific to the group insurance plan. They delve into the HR space, often employment issues and legal issues, financial, etc. I'd say those are some of the trends that we've seen.

[0:09:33.8] DW: Okay. Faizel, what's your response to that long-term question?

[0:09:37.5] FA: Well first of all, I agree with everything Mike has said. We also add and we see it within the People Corporation world, because we are the one-stop-shop through the compilation of all the companies we've acquired over the years. We've created quite a value proposition around all those spaces, so we can actually provide that service that's dealing with HR consultation, or dealing with something to do with helping an employer with a very specific issue around employment as an example, right? Or like you had described earlier, being able to just deliver various solutions that will strengthen that advisor’s ability to meet the customers needs.

From the perspective of the administrator or the member, I've actually seen a very common theme over the last 20 years, I'd say. In fact, I would say there's very little change around the theme. It's just the question of how this is actually applied. The theme I'm thinking about here is the change related to moving away from paper-based solutions to digital.

If you guys remember back in the 90s, we think about – and this is just around the time when companies were moving towards the mutualization and there's much more fierce competition. There’s a lot more players in the market too if you look back and some of the market studies, Mike, then there must have been 35 to 40 players in the early 90s. Right now, we're down well below that.

The race towards getting to that customer and it started with what we used to call plan member self-service. We'd say, “Hey, get your access to your booklets. Get your access to your drug cards.” Maybe being able to check the status of a claim, those are all back in the 90s that we started to work towards those types of digital solutions.

You fast forward today, we're still doing much of the same, but we're now talking about mobile apps, we're talking about more intimate customer experience, we're talking about data and insights, but we're still trying to get to that customer in a way that we can strengthen that experience. We're calling it now plan member experience, right? Or customer experience, customer journeys, but there hasn't been a whole lot of change when it comes to the insurance products themselves. The insurance products have stayed virtually the same.

Maybe claims management. If there's one place where I'd say there's been a lot of change, in terms of how carriers have approached claims management, and other providers that have stepped into that space. There's been a lot more advances around again, the use probably of technology to deliver better claims outcomes in the use of data, to deliver better claims outcomes. Otherwise, I'd say it's been more about the speed at which technology is changing.

We're going from a slow pace in the 90s, to a much, much more rapid pace. We've talked about cycle times and the ability to actually deliver on that customer's needs. Of course, they're shaped by B2C now a lot more. Plant members are obviously consumers of other services and products outside of insurance. Those various different types of services that they have an interaction with and an experience with, they want to have the same, basically apply to them in their insurance world.

They want to have the ability to get customized solutions at their fingertips right now, or yesterday. I think carriers and other providers, TPAs and others within the space of insurance field are actually having to move much more faster, to be able to keep up. You think about the Blackberry, the Apple experience, I mean, if you aren't moving fast enough these days, or if you don't take it seriously and if you don't change, let's call it change from the inside, as you see the outside changing really fast, I think you run the risk of really becoming obsolete pretty quickly.

[0:13:05.4] DW: Yeah, yeah. In this world we live in now, day-to-day as a health benefits advisor, Mike, you hinted at this a bit when saying it's hard to be a generalist any more. Specifically, do plan sponsors expect more than they did 10 or 20 years ago from an advisor? Two, just in terms of business models, are they willing to pay more, or are you doing more and really the needle is not moving on compensation?

[0:13:32.4] MM: Yeah, I'd say the expectations have changed certainly. There is, as Faizel was alluding to, there is technology drives an immediacy aspect. I think bluntly, planned sponsors do expect more. I think an interesting challenge that those plan sponsors and administrators have is the volume of information.

I don't think it's so much, I can't get my hands on enough good data. It's can I get my hands on meaningful data? Obviously, speaking your language, I know you guys are data geeks, respectfully. A great analogy, I don’t know if you've read any of Daniel Pink's work, author of a book from To Sell is Human. He talks about, he uses the analogy of buying a car, but the same thing holds, which is we've moved from decades ago of being in a world of information asymmetry. The analogy he would use there is that when you used to go buy a car, so David, back when you probably bought your first car. I’m putting you on the spot. I’m aging you.

[0:14:34.7] DW: Sold the horse.

[0:14:36.4] MM: Yeah, precisely. Yeah, that's really. I think the stat was something in the range of people would visits five, six dealerships before they made a decision. The idea being that it was the salesperson who had the information. That was the asymmetry. He or she leaked it out to the potential customer as it suited their needs notionally.

Today, the average consumer goes to something like – it's less than 1; 0.5, 0.7, something like this dealerships don't even go obviously. Now we're in a world of information parity, the research, the car, the features. You know pretty much what you want before you walk into the dealership. The difference is that the ability – this is where it applies I think to plan sponsors in the complex world of employee benefits is the ability to curate that information in a meaningful way, is where the value comes in, obviously both for suppliers, like yourselves, I think. Then through the advice channel as well.

I think as a result of all that, they expect different things, but I think they certainly expect more value. At the compensation question, what are people willing to pay for that? Is an ever-evolving conversation.

[0:15:38.9] DW: Yes. Fair enough. What's your take on this?

[0:15:41.3] FA: Elaborate for me.

[0:15:43.2] DW: In your shop now and the conversations you have with advisers that are out there day-to-day, do you feel they are sensing that they're always being asked to do more? How does that fit into a broader business model?

[0:15:54.8] FA: Absolutely. In our world, we do go through the third-party distribution channel as well, third-party advisors, as well as direct-to-customers. What we're seeing is that with the complexities of the environment we're in today, especially around compliance and regulation, there's more need for help. You think about smaller organizations, smaller adviser shops, they don't necessarily have the wherewithal, the resources, the deep bench to be able to actually comply with some of the changes that are happening inside in the world around them.

They're coming to organizations like us asking for help. That's where I think third-party administrators actually play a really interesting role in the marketplace. They can provide a lot of the services that they're looking, that the adviser is looking for to help support them in delivering their value proposition ultimately to that client.

[0:16:43.6] DW: Yeah. Since I've got you talking, I promised this question would come up. To those of us on the outside of your world now, it seems there's a lot of acquisition activity happening right now. Tell me if it's true, is there something different going on the last few years? If so, why is that happening now? What's happening in 2018 and 19 that's driving this activity?

[0:17:04.8] FA: Right. I'll take you back to again, the 90s when we started consolidation on the carrier side. It hasn't really stopped in terms – it started there. It moved to distribution after that and I think the large consulting house is probably where you saw a lot of it happen first.  I mean, it started there, but it's continued, and it's just I think that the pace has just become significantly faster.

If you ask yourself why is it happening? What's driving it? Well first of all, there's a lot of public companies that are actually – they're trying to grow. They're trying to find opportunities to grow. How do they grow? Part of that growth is going to come from acquisitive growth. They need to deliver to their stakeholders, the shareholder meaningful growth. That's number one.

The second thing I think that you probably need to think about when we think about what's driving the wave of consolidation is these smaller players that I just referred to. Again, they've built businesses, some tremendous businesses, but they don't necessarily have the ability to sustain some of the changes that are happening within the industry, compliance regulation, etc. They're looking to find a solution for that.

Thirdly, you've got what I would describe as the succession, if you will, around some of these smaller firms. They don't have a succession plan, they don’t have a retirement plan. Again, they need to find a way to capitalize the value in their business. They're looking for organizations that can partner with them. When you see this wavy, described as a wave of consolidation, or wave of acquisitions, I mean, that wave just fuels more fire, right? When multiples start to go up and organizations are getting a nice return, relative to what they could have sold that business for five or 10 years ago, it again gets them interested in looking for someone to partner with, to be able to again, succeed the business, but also to be able to strengthen their bench, right?

Some of them are smaller players. They don't have the ability necessarily to keep up with what's happening around them. They might sell, they might stay in the business. They might not necessarily leave that business right away.

Then the final comment about what I would say is driving this is some of the blurred lines between various different constituents in the market, whether it's distribution, whether it's manufacturing, ensures risk – reinsurers and examples, these are all players that are within the group space today. They're all looking for ways to be able to either innovate, or again, to sustain growth, to keep up with technology. They're partnering with various different players in the channel. You can think about accelerators out there, innovation labs, right? Who's behind some of those, are generally the bigger, larger carriers, or they are the reinsurers, or others, so that they can actually protect.

It’s a bit of a defensive strategy I'd say as well. They're buying some of these, or investing in some of these organizations as a way for them to stay relevant and make sure that they keep up the change.

[0:19:56.0] DW: Any potential downside to consumers in this?

[0:19:58.5] FA: Consolidation?

[0:19:59.6] DW: Yeah.

[0:20:00.2] FA: There's definitely, I would say the risk that if someone becomes too large and you'd start to take away competition in any space, there is that risk. Today, the group and transfer market, it's a big market. I mean, we already got three players that dominate the market in Canada. When we look at ourselves, even though we’re –

[0:20:17.0] DW: We like to say four. A little awkward, but keep on in front of this.

[0:20:22.4] SM: We won’t name them.

[0:20:24.5] FA: You’re right. There’s at least four, there’s probably more. When I think about the market, what? 41 billion roughly, say 41, 42 billion today, we're about 1.9 billion within the group space. We're still a relatively small share of the entire market, but we're becoming a bigger player through all that acquisition that we've been making over the last five years in particular. We're still a fraction of what that market is, right? Absolutely, yeah. I think, no risk from what I see within the distribution channel today. If someone becomes really dominant hen I think you've got a concern.

[0:21:00.0] DW: Okay. One of the questions I had thrown out there in advance, then I want you to noodle along a little bit are around broad industry challenges for the two of you for your organizations that are current right now. Mike.

[0:21:13.6] MM: I get to start, do I?

[0:21:14.2] DW: Yeah.

[0:21:16.3] MM: Given your health and dental specialists, will throw the high-cost specialty drug trend, etc., but I think –

[0:21:21.8] DW: Heard of it.

[0:21:23.2] MM: Yeah. I don't know. Obviously, we drink the green kool-aid. You guys know that. You can edit that if you want. All the, I shouldn't say obvious, but apparent things that go with that in terms of stressing stop-loss and affordability, drug maxes, etc. I think you've had other podcasts, or will that will better address those issues.

I think another area that whether you're a risk provider like yourselves and a service provider, or us as an intermediary is the area of cyber protection and security, every day goes, a day doesn't go by that you don't hear hopefully, not so much in our industry, but there's some a threat, or what have you. Coupled with that, you've got the increase and importantly, requirements for compliance.

A good example of that one, obviously we have – I don't remember what it – I'm going to do a acronym violation with CASL. You would know Sarah better than I would what that actually stands for, the spam thing.

[0:22:16.5] SM: Canadian Anti-Spam Legislation.

[0:22:18.5] MM: Yes. To my team back in our offices, especially my equivalent of Sarah, we are compliant. I just can't pronounce it. You look at something like, this one I actually wrote down, the GDPR, the General Data Protection Regulation, which is coming out of the EU, and it makes CASL look like – well, it's like CASL on steroids thing.

In terms of that and that governance and compliance issues, obviously apply to our customers as well. I think that's a trend that we're seeing. The technology as we talked about earlier, it creates those challenges around scale, I think that Faizel was also alluding to, but also some amazing opportunities in terms of how we can improve outcomes for customers and health and so on and so forth.

One of the areas within that compliance and I'll make a comment here when I say we, so also I didn't mention this at the beginning, but the president of the Third-Party Administrators Association of Canada. Just a wonderful voluntary organization of third-party administrators across the country, including People Corporation. Most recently, I know you had Stephen Frank, the president of Canadian Life Health Insurance Association on recently. There's what's referred to as G19, or Guideline 19, which is around dealing with compensation disclosure and transparency and it's specifically insurance in group retirement space.

I would say in that area, we do have some concerns. Let me state that we T-back and other industry stakeholders are certainly not against transparency. It's not about saying this doesn't apply and it shouldn't be part of what we look at in financial services. I think if we talked about our overarching concern, specifically with G19, is our feeling and true belief that it has not been a collaborative process, in terms of how it's come to the marketplace. It's also very rushed, to be honest.

Instead, especially keeping what are the recent fair treatment of consumer guidelines that have come out from the regulators, whether that be CCIR, or FSCO and so on. Again, acronym violation, apologies. Those are really long ones.

We do believe truly that things like G19 not done properly, would have negative consequences for the consumer and our industry as a whole. We're very much and we continue to make these ovations to CLHIA desires of sitting down and entering into a true collaborative process.

[0:24:42.2] DW: You don't feel that's happening right now?

[0:24:43.8] MM: Honestly, no.

[0:24:44.9] DW: Okay. Yeah.

[0:24:45.9] MM: It's been something that has more – have had the appearance of being fully baked. Instead, the focus from CLHI has been all about implementation of the guideline, as opposed to being a true stakeholder in the formation of the guideline.

[0:25:00.0] FA: Yeah. I know. I would echo Mike’s comments. In fact, I think the CLHI went on record to talk about wanting to reconcile and start all over again and involve in a collaborative way the various different players within the industry, including advisors, TPAs and the like, MGAs. They did create working groups. They did give the appearance that this would be a collaborative process.

In fact, I think part of one of the – definitely one of the bigger gaps in round one was there was a lack of understanding of what certain players did within the industry. They do a pretty good understanding of what an advisor does. What do TPAs do? What do MGAs do and how does it differ? How do we work with them in terms of disclosure? That was pretty, I think well acknowledged, when we went into restart and pivot and do this all over again.

Now that we're in these working groups, we're not seeing that real desire to want to work together for solutions that will be in the best interest of consumers, customers, plan sponsors, plan administrators, right? I think, it really is something that we're seeing as an implementation task. How do we get this in as quickly as possible?

We have systems and technology too, right? Not just the carriers, right? We've got to get our systems ready and we're dealing with a TPA in our environment. We're dealing with multiple carriers that have – they're a part of that solution for that one customer. If that customer is going to get several different disclosures, how are they going to make some good sense of what they're seeing and how they can understand and interpret what they're getting correctly? Again, working with us to develop a solution that makes the most sense for that customer I think is critical.

[0:26:38.9] DW: Let me ask a question around that, as somebody who used to be in that industry, your industries, but is no longer. I like in a bit to the work that we've been doing with the Canadian Pharmacy World this year around value-based pharmacy. They're very deep concerns about here comes a carrier, somewhat “imposing this on us.” Certainly, our attempts at collaboration with them. Certainly, I think the pharmacy community has come to us with very much an open mind and have been very collaborative through our process. Still, there certainly are in some in that community who do not and will not accept that an insurance company is coming in and setting some guidelines, measuring them and potentially reimbursing based on them.

Is your world fully aligned, or are certainly, there's some perhaps stragglers out there, that no matter what you put in front of CLHIA, aren't really on board with transparency in the way that it probably has to be going forward? Or is everybody there and now it's just working out the details, or is there just some people that aren't going to buy into this?

[0:27:43.0] MM: I would say and not speaking on behalf of any of the – there's a disclaimer, but there's always stragglers. Do I know who they are? No.

[0:27:51.6] DW: Is it a size enough portion that the noise is going to be in the system?

[0:27:54.1] MM: I don’t think so.

[0:27:54.8] DW: Okay. No. We’re over that.

[0:27:56.6] MM: Yeah. I think there's an acceptance that unless you're somebody who – a dinosaur. Or feels you can outrun this from that close to retirement, let's say kind of thing, that there's an acceptance that some degree of this must and should come to financial services and thereby, employee benefits as well. Well, we're discussing more and hoping to have more collaboration with stakeholders like CLHIA, is not the why, so much as the how, and ultimately, the what, at the end of the day.

[0:28:28.2] DW: Okay. Fair enough. Fair enough. Looking forward. If we take G19 and compensation disclosure out of it next five to 10 years what do you think the challenges will be for you and your role and your firms and in being in the business that you're in today? What new is coming down the pipe at you?

[0:28:44.4] FA: You want to tackle that one first?

[0:28:45.6] MM: Faizel alluded to this for within their practice, so with technology, technology, technology. It's that thing that can keep you up at night as a business owner and somebody who's building an organization from a – so we don't have the same scale that let's say, People Corporation would have, but still invest heavily in technology.

A quarter of our 100 employees are in technology. I suspect that's probably of a similar ratio to GSC. Then conversely, I think about all the wonderful opportunities to differentiate, because again, it's not about certainly for our company with benefits by design about can we serve every customer out there the end of the day? We have to figure out who is our customer, first principles who do we serve? How can we differentiate? What do we know? These kind of things.

I look at some of the opportunities, doing some research for a presentation recently. I think an important point too to amplify for the time being, the customers of financial services today and MDRT, if you're familiar with them, the Million Dollar Round Table organization, a little more in the individual financial planning space, but they came out with a recent survey recently, which was interesting. It was talking about in this case, the preference of customers to deal with the robot advice channel as it were, so technology more so, versus the individual.

Their indication was still a high percentage, 85% has a preference for dealing with a human on that advice component. Here's the kicker, they have an even higher expectation, 95%, that that same advisor and their firm is technology-enabled. What that means is they still value the independent advice, but they want as frictionless of an interaction as possible. That could include even as simple as I'm booking my next appointment, do I have to call you and go back and forth for five minutes to find a time that's agreeable, versus today pretty much table stakes, click the time that works for you and and off you go.

I think it's both sides of those equation from a business building standpoint, to scale question and can you keep up? Then conversely, the ability to provide better solutions to those customers.

[0:30:56.2] DW: Yeah, sounds familiar. Faizel last word to you.

[0:30:58.9] FA: Sure. I would probably focus in on the drug cost side. When we talked a little bit about escalating drug cost, pooling and the challenges that come with that, I did a presentation last year at the Benefits Breakfast Club actually with one of your own colleagues here, Erin Crump and Dan Bertie to talk a little bit about some of the challenges. They look at industry pooling and you think about where it currently is failing, or maybe not as strong a solution today. EP3, it really only applies to fully insured programs and it's 10% of really the drug market, right? The other 90% would be in the category of refund and ASO type business.

There's really a two-tiered system today when it comes to protecting the interests of sponsors that have large recurring drug claims. The one is hey, we got this EP3, we pull, we don't experience rate. We have a backstop in terms of the industry to support those insurance companies that have to deal with something large as well, so that can protect them, right? Because some of this is also to protect the insurance companies that are smaller and maybe you have to deal with a large recurring claim.

Those sponsors that are in that other 90% today, they're really dealing with the Wild West, right? There's no transparency to pricing. You really don't know what's happening at renewal time. You have one large recurring claim, should you really be experience rated, right? Does it make sense to be experience rated? That's what's happening in the industry.

I think trying to find solutions to deal with that other 90% I think is really, really important. We're only going to see the problem of drug cost continuing to escalate. I mean, rare diseases and new technologies, new treatments, new therapies to help deal with more complex health conditions are only going to get better and better, which is good for the consumer, right? That's excellent for the consumer. Hey, I've got a new solution to deal with something. I should be happy about it, but I can't afford it, right? The sponsor can't afford it. The sponsor can't afford it, the solution that we're starting to see happen today is maximums being introduced, which is really not the right answer. Because all we're doing now is shifting the problem to the consumer, right? The consumer is going to deal with this out-of-pocket cost, or they're going to have to reach out to someone for help.

Again, I think as an industry, there's a number of stakeholders that need to come together. It's not just carriers, right? It's carriers, it's pharma, it's drug manufacturers, it's regulators, all of those stakeholders need to work together. The public health care system as well, because we're not in a fully private, or fully public system today. When something benefits the health of an employee, there's a savings potentially on the public program, whether that's hospital cost, or doctor costs, and there might be an extremely high cost on the drug side. How do you bring these stakeholders together? Because it has to be win-win.

I do think that we need to drive solutions that are going to put sponsors and consumers ID, that they'll be taken care of, because ultimately, should be about health outcomes and better healthy employees within the workplace.

[0:33:51.5] DW: Yeah, very well said. Thank you. I think that's an idea for another podcast actually, almost rethinking drug coverage and drug insurance.

[0:33:57.0] MM: Might be an election platform.

[0:33:59.7] DW: We may have to solve for us by the far. We’ll see.

[0:34:02.6] MM: Decide that.

[0:34:03.5] DW: Yeah, yeah. I want to thank you both. I think my early judgement that you guys talk good was correct. You're very thoughtful in preparing your responses. It's been a great conversation around an area that we have not talked about before. If I may be so bold, I will probably be asking you to come back into this strange little room at some point in the future. Thank you very much.

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[0:34:26.6] SM: Thank you to our listeners for tuning in to another episode of And Now for Something Completely Indifferent: A Canadian Health Benefits Industry Podcast.

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