Liazon Study Reveals Carrier Choice in a Multi-Carrier Exchange Driven by Incumbency Bias and Price

October 30, 2015

Liazon Study Reveals Carrier Choice in a Multi-Carrier Exchange Driven by Incumbency Bias and Price

BUFFALO, NY – October 30, 2015 – Liazon, the industry-leading private benefits exchange operator, today announced the results of a first-of-its-kind study examining carrier choice on a multi-carrier private exchange.

In a constantly evolving benefits landscape where control over carrier and plan decisions is shifting from the employer to the individual employee, consumer behavior is becoming increasingly important to all providers. And while previous industry research has focused primarily on plan choice in an exchange environment, Liazon’s analysis set out to determine the main factors that influence employees’ choice of carriers.

According to the new analysis, employee choice is driven almost completely by carrier incumbency and premium price. The findings also cast a spotlight on the expected rates of gain or loss in market share.

Key findings from the October 2015 study include:

  1. Incumbency Bias: Employees are more likely to choose their pre-existing health insurance carrier, all else being equal. On average, an incumbent carrier can expect an advantage of 37 percentage points in market share over non-incumbents.
  2. Price Sensitivity: Employees are highly price sensitive – seemingly much more so than employers. If a carrier’s price is just 1 percent higher than average, it can expect to lose 3.5 percentage points of market share, on average.

The insights Liazon has uncovered into carrier choice will help brokers and carriers better understand the drivers of a carrier’s market share vis-á-vis the competition within each market.

“The major takeaway of these findings is that individuals have significant buying power in a multi-carrier exchange environment,” said Alan Cohen, co-founder and chief strategy officer of Liazon. “Carriers will need to start communicating with this new consumer to relay their value so buyers can make decisions on factors other than price and familiarity.”

About the Survey 
In this inaugural study, data were collected from nine employers who have implemented a multi-carrier private exchange, each with an employee group size between 3,000 – 16,000. Employees of each company were able to choose among four carriers across a number of markets throughout the U.S. (with the exception of a few markets in which there was a choice of five carriers). Multivariate regression analysis was used to estimate the impact of “price” and “incumbency” on the market share achieved by carriers in the markets examined.

Survey Resources Available

A complimentary survey report is available for download here.

About Liazon

Founded in 2007, Liazon Corporation operates the industry-leading private benefits exchange for businesses. Its flagship product, the Bright Choices® Exchange, is an online benefits store that is changing the way employers and employees buy benefits. Bright Choices helps employers manage their health care costs by setting predictable budgets through a defined contribution funding strategy while guiding employees to purchase better coverage of health, dental, vision, life, disability and other benefits. Advanced cloud computing infrastructure and robust security protection ensures continual access and safeguards confidentiality of data transmission. Liazon works with top national and regional insurance providers and supports businesses nationwide through a distribution network of leading broker partners. Liazon was acquired by Towers Watson in November, 2013. To learn more about Liazon and the Bright Choices Exchange, go to