The Evolution of the Employee Benefits Broker
Every year at Assurance we have a cool theme that defines our efforts for the year. In homage to the 80's classic movie Back to the Future, this year’s theme is the song The Power of Love by Huey Lewis and the News. With that, I’d like you all to hop into Doc Brown’s DeLorean and take a trip back in time to 1995…
This was my first year in the business, hired as a small group sales rep for New York Life’s group operation at the time. There were upwards of 15 medical carriers in the Chicago marketplace then; it was a mix of local, regional and national firms.
Brokers at the time came in all shapes and sizes including life agents, single person shops, small, medium and large firms offering benefits, P&C, financial planning, etc. Not much different than today with the exception that there were a lot more of them back in the mid-90's. The broker market could be categorized as saturated to say the least. The resources needed for success were simple and scalable.
What were the primary roles of the employee benefits broker at that time?
- The transaction of insurance was the foundation for most brokers. Having access to so many carriers in the market allowed for many smaller brokerage firms to flourish. The “leverage” larger brokerage firms touted was actually mitigated due to the sheer number of insurers and brokers competing for market share.
- Answering the phone (or reading the fax) and handling service issues like an unpaid claim or incorrect bill was hugely important (and still is).
- Marketing the plan(s) annually to the vast assortment of carriers, as well as basic negotiation, was to be expected (and still is, albeit to a far less number of carriers).
- Compliance included the understanding of HIPAA, FSA and COBRA rules.
- Comprehensive wellness programs meant scheduling onsite flu shots.
- The broker’s “consultative” approach was beginning to scratch the surface, but not prevalent throughout the marketplace.
Fast forward to today…
The continued consolidation of brokerage firms, hospital systems and insurance companies has impacted the industry in many ways. Large brokerage firms have become larger, with private equity money being invested heavily into our industry (in 2015, private equity-backed insurance brokers accounted for the largest share (39.8 percent) of the 349 publicly announced M&A deals). The smaller brokerage firms have had to sell off their business, merge with a larger firm or firms, or simply close their doors for good because they couldn’t remain scalable and lost the ability to stay competitive in today’s post-ACA environment. Compliance alone has been the undoing of many.
Today, with increased top-end competition, the need to differentiate goes far beyond the “transaction of insurance”. Thinking ahead, not behind, and supporting clients in ways that were beyond imagination for the common broker in 1995 is what’s required in today’s uber-competitive employee benefits consulting marketplace.
Today’s employee benefits producer must be a jack of all trades; adept at consulting in a wide array of areas to remain market competitive. More specifically, the successful producer of today must be a(n):
- Wellness guru
- Cost management expert
- Analytics aficionado
- Technology champion
- Compliance whiz
- Generational communications specialist
- Public speaking pundit
- Prospecting genius
- Client retention maven
- Relationship enthusiast
- Product connoisseur
- Networking authority
- Social media devotee
- Customer service fanatic
- Solutions champion
- Employee engagement buff
- Presentation professional
- Entrepreneurial spirit
Broker of insurance? And then some. Business consultant to all things employee benefits? That’s more like it.
If your benefits broker is missing many of the 18 qualities mentioned above, contact us! We'd be happy to help.
- What’s Your Benefits Program Vision Statement?
- The Value of Benchmarking
- Assurance Calculator: Total Cost of Employee Benefits
- Employee Benefits, Easy as 1-2-3 Webinar Replay
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