The Future of Benefits & Insurance: Best-in-Class Benchmarking and Risk Implications

1. Sean Durkin, Eric Henley & Felipe Jose Cuartas | May 8, 2019 The Future of Benefits & Insurance Best-in-Class Benchmarking, The Changing Landscape of Technology & Risk Implications

2. Top 4 Ways of Getting Data • Ask your broker • Participate in a benchmarking study(benchmarking data is not cheap but most of the time, if you participate the data is free) • Workforce evaluation • Self-funding(not always an option)

3. Today’s Employee Benefits World is Changing Employers are looking to their brokers and consultants to help them evolve their benefits 64% Cost savings 60% Recommending innovative benefits solutions 58% Benefit administration solutions Source: 16th Annual MetLife’s Annual Employee Benefit trends survey

4. 58% Legal, regulatory, and compliance solutions 57% Provide insights regarding benefit trends 54% Employee well-being strategies 53% Financial well-being strategies Source: 16th Annual MetLife’s Annual Employee Benefit trends survey

5. Dynamic workforce, diverse needs Gen Z (21-22) 9 million workers (5% of workforce) Gen X (37-52) 53 million workers (33% of workforce) • Work is an integral part of who they are • Want work that enriches who they are in their personal lives • Want their unique identities to enrich their work life • Least confident in their finances • Least likely to have a savings cushion or understand the benefits of a financial planner • Sandwich generation Gen Y (23-36) 56 million workers (35% of workforce) Boomers (53+) 41 million workers (25% of workforce) • Approaching retirement age, but still find purpose and belonging at work • Many are exploring alternative options for their future, (phased retirement and gig-work) • A ‘purpose-driven’ generation • Working on/for something they’re passionate about • Regularly accomplishing tasks as fulfilling their purpose Source: 16th Annual MetLife’s Annual Employee Benefit trends survey

6. Workforce Evaluation Workforce Evaluation

7. Methodology • Out of 1,307employers… • 387qualified as best in class for healthcare cost control • 313qualified as best in class for human resource management • 112qualified as best of the best

8. Top Trends of 2019 The #1 Challenge for Employers – Employee Burnout • 37% said it’s their top challenge The #1 Employer Concern – Employee Productivity • 79% of ER’s reported this as a top concern Source: 17th Annual MetLife’s Annual Employee Benefit trends survey

10. Physical & Emotional Wellbeing

11. Concerns about healthcare costs Organizations continue to grapple with providing healthcare access while limiting cost hikes. $ 57% 74% Health Benefits Cost Strategy DON’T HAVE AN EFFECTIVE STRATEGY Consider health benefits cost management a top priority 1 Arthur J. Gallagher & Co., “Benefits Strategy & Benchmarking Survey — Executive Summary,” 2017

12. Investing in employee growth and wellbeing to boost job performance and engagement AVERAGE COST OF EMPLOYER-PAID BENEFITS PER ELIGIBLE EMPLOYEE 10%21% 34%25% Less than $6,000 $15,000 or more

13. Employing best-fit health plan design and management strategies USE OF HEALTHCARE APPROACHES AND PLAN DESIGN ELEMENTS TO REDUCE SPEND 72%64% 55%40% 29%20% Offer 1-2 medical plans Self-insure benefits funding Use a specialty PBM 24% 18% 21% 13% 15%11% Apply a surcharge or exclusion for spouses with access to other coverage Use reference-based pricing for healthcare services Carve out pharmacy benefits

14. Reducing financial barriers to appropriate care INCREASES TO EMPLOYEE COST SHARING (IN 2018) 47%37% 40%55% 40%52% No Increase Employee contributions to premiums Overall plan design changes (e.g., higher deductibles, copays or coinsurance) 11%19% 9%16% Deductibles Out-of-pocket maximums

15. Financial Wellbeing

16. A top cause of employees stress. Over half 68% 71% of workers said they used time during the workday to deal with personal financial matters of all U.S. workers say they’re in debt of employees report that they expect to postpone their retirement due to their financial situation 1 Online U.S. Harris Poll on behalf of CareerBuilder, between May 24 and June 2017 2 Source: 17th Annual MetLife’s Annual Employee Benefit trends survey 3 Financial Stress on the Rise Among American Workers, Workplace Options, April 6, 2016

17. Trending Benefit – Student Loans Delaying contributions to a retirement plan early in an employee’s career can greatly reduce an employee’s savings at retirement • A new employee (age 25) who decides to delay retirement savings by 10 years in order to payback student loan debt, accumulates • Based on a 7% annual investment return, 3% wage growth, 6% employee contribution and 3% employer contribution $590,000 Less for retirement savings at age 65

18. 92%are likely to expand their financial wellness programs 2 Source: 17th Annual MetLife’s Annual Employee Benefit trends survey

19. Investing in employee growth and wellbeing to boost job performance and engagement HOLISTIC WELLBEING INITIATIVES — PROGRAM ELEMENTS FINANCIAL Wellbeing 42%29% 34%27% Financial advisor sessions Employee discount programs 33%21% 29%21% Financial literacy and other education opportunities Gym subsidies 16%10% Debt counseling

20. Solutions for financial strain Evaluate gaps and opportunities Health savings accounts Voluntary programs Student debt relief • Critical illness • Hospital indemnity • Accident • Supplemental disability • Long-term care coverage $4,527 AVG DEDUCTIBLE Arthur J. Gallagher & Co., “2017 Benefits Strategy & Benchmarking Survey — Executive Summary,” August 2017

21. Plan transition management Employers can reshape employee expectations by communicating proactively and building toward a sustainable future. Best practices Communicating changes to the plan Personalized retirement readiness statements Other modeling tools • Estimated social security • Pension • Spousal income Encourage employees to set up additional savings Layer in appropriate insurance offerings

22. Career wellbeing

23. Investing in employee growth and wellbeing to boost job performance and engagement SUPPORT FOR EMPLOYEE GROWTH AND PURPOSE Improvement of engagement 55%29% 53%30% 52%27% Define clear performance goals Give timely and constructive feedback Identify development needs and create action plans 51%25% 46%23% 44%24% Communicate in a way that fosters trust and confidence Support employees in developing and pursuing a career path Connect employees’ efforts to positive impacts on strategy, mission, vision or values 33%15% 29%14% Provide interesting and challenging work Communicate clearly and transparently on how to earn bonuses or pay increases

24. Investing in employee growth and wellbeing to boost job performance and engagement HOLISTIC WELLBEING INITIATIVES — PROGRAM ELEMENTS Career Wellbeing 57%48% 46%30% Performance reviews Employee development training 42%29% 25%14% Management or leadership development training Mentoring programs 13%4% Career counseling

25. The ROI of a respectful workplace 2.5x REDUCTION IN VOLUNTARY TURNOVER* MORE LIKELY TO ACHIEVE OR EXCEED REVENUE GOALS *With an improvement in engagement of just 1 point on a 6-point scale 1 Gallagher engagement survey research, 2015 2 Aptitude Research Partners, “The Power of Pay Equity,” March 2017

26. Organizational Wellbeing

27. Most desired solution to better manage HR-related challenges and opportunities People Strategy 60% 30% 43% More effective communications Investment in HR technology More consistent enforcement of, and accountability to, HR policies and programs

28. Strategic approach to HR and benefits technology Technology Strategy 20% 48% Don’t have any HR and benefits technology strategy Have some HR and benefits technology strategies in place 18% 14% Have a HR and benefits technology strategy that supports our people strategy Have a HR and benefits technology strategy that aligns with organizational goals

29. Expected changes to current HR and benefit technologies over the next 24 months Investment in Technology 6% 32% Replace HR and benefit technologies Expand HR and benefits technology 8% 55% Both Neither

30. Reasons for replacing and/or adding HR and benefit technologies Investment in Technology 79% 39% 24% Automate processes Support human capital strategy Comply with regulations 47% 7% 54% Increase employee productivity Find a more satisfactory provider Other

31. Protecting employee data No employer with HRBT is free from the risk of heightened cybersecurity threats. • Employee lives disrupted • Trust in employer damaged • Legal and regulatory risk • Crisis situation

32. The Changing Landscape of Technology & Risk Implications Felipe Jose Cuartas | May 8, 2018

33. Technology & Insurance 3D Printing Artificial Intelligence Augmented Reality Biometric Implants Blockchain Cyberwarfare Drones Facial Recognition Genome Mapping Internet of things Machine Learning Nanoparticles Natural Language Processing Quantum Computing Self Driving Cars Sharing Economy Space Exploration/Satellites

34. CORE360

35. 2850 Golf Road Rolling Meadows, IL 60008-4050 USA Thank you! Felipe Jose Cuartas 630-285-3664 Felipe_Cuartas@ajg.com