How can AI shape a benefits strategy?

Artificial intelligence (AI) is transforming the workplace, automating processes, turning data into insights, and enhancing customer service. It is also shaping the way organisations deliver employee benefits, with potential risks as well as rewards.

One of the key benefits of AI is its ability to crunch through data, as Gethin Nadin, chief innovation officer at Benifex, explains: “It can turn vast, fragmented data into actionable insights. This can help employers design smarter schemes by benchmarking against millions of data points to recommend benefits that fit budget and workforce profile.”

Health and wellbeing is a good example of where AI is helping employers design benefits programmes. David Kirk, growth leader, technology at Aon, says: “We’re using claims data to identify future health risks and help employers put appropriate preventative measures in place. With medical costs rising sharply, this can be played back to insurers to influence premiums.”

Enhancing employee experience

AI can also enhance the employee experience. Sebastian Fallert, chief executive officer (CEO) of Ben, explains: “An employer can feed a benefits policy into AI and it’ll bring it to life by pulling out the key facts. This makes products more visible, increasing the level of benefits understanding and appreciation.”

Personalisation gets easier too. Benefits can be recommended based on factors such as an employee’s role, lifestyle or the products they have already selected. Similarly, any communications will automatically match an employee’s preferences whether that is how they receive them or even the language that is used. “This makes benefits and benefits education far more inclusive and accessible,” adds Nadin. “It can even read responses.”

Alongside greater appreciation for the benefits they offer, reward professionals can also hand over many of the back-office administration tasks to AI. “Tasks such as how to connect to suppliers and the day-to-day payroll processing can be undertaken by AI,” says Fallert. “This frees up time to focus on strategy.”

Data challenges

But, alongside the opportunities AI brings to the employee benefits space, there are some significant challenges. For example, there are issues around the data that is accessed, says Lucie McGrath, European health, equity and wellbeing leader at Willis Towers Watson (WTW). “Employees are happy to engage with AI but not when their sensitive, personal data may be at risk,” she explains. ”Data security must be really robust.”

Even where systems are bulletproof, the logistics around accessing data can cause problems. “The challenge is the segmentation of the data,” explains McGrath. ”It’s not always possible to join up the data to deliver meaningful insights.”

To illustrate this, she points to the different approaches in the US and the UK. On the other side of the Atlantic, an individual’s health journey can be tracked across different services and products. In the UK, data from healthcare benefits is aggregated to ensure anonymity, but it is also impossible to get access to a key source of employee health data, the NHS.

While data laws can hinder AI’s potential, there is also a risk it does not do what was intended. AI hallucinations, where false or misleading information is generated, could undermine these tools. Therefore, it is essential the right rules are in place, says Kirk. “We’re rolling out an AI concierge service in January giving employees access to benefit information and coaching,” he explains. “We’re restricting the information it can access to remove the risk of hallucinations.”

Tapping the potential

It is still early days for AI in the employee benefits space but, with more providers poised to roll out AI-related products, its potential is huge. “AI’s ability to combine predictive analytics with personalisation makes it one of the most significant innovations in employee experience,” says Nadin.

Future applications could see it pulling in data from more sources, such as individual employees’ health records and wearables, to provide personalised lifestyle coaching. While for organisations, there is the potential to take all the guesswork out of benefits. As an example, expansion into new territories could come with an instant AI-generated scheme design.

But it is important not to be dazzled by AI’s potential, says Kirk. “Employers need to have their eyes open and understand the risks,” he says. “Being laser focused on what they want to achieve and thinking about the safety aspects before adopting any AI application is essential.”

Taking this approach will ensure that organisations see the positives of AI in their employee benefits strategies.