Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Health care reform mandates force benefits brokers to take a consultative role

Reprints

Employers' demand for greater expertise from their employee benefits brokers in response to health care reform mandates is forcing these intermediaries to become less transaction-focused and to take a more consultative role, experts say.

And as health insurers remove broker commissions from their administrative expenses due to implementation of minimum medical loss ratios under the Patient Protection and Affordable Care Act, brokers have begun offering additional fee-based services to supplement their incomes.

Many benefits brokers that do not have the level of expertise necessary to provide these services are either partnering with other firms that do or are selling out. In fact, merger and acquisition transactions involving benefits brokers surged 19% last year, and are expected to continue to outpace historic levels, according to Rob Lieblein, Harrisburg, Pa.-based executive vice president at Marsh, Berry & Co. Inc., a mergers and acquisition advisory firm that specializes in the insurance brokerage industry.

“The market has become so much more complex. It is changing to population health management, wellness strategy, not spreadsheets and finding out where I can get the lowest rate and shift more costs to employees,” Mr. Lieblein said.

“Everybody's worried about the benefits business. It's the Wild West right now,” said Sam Fleet, president and CEO of AmWINS Group Inc.'s group benefits division, a wholesale provider of benefits products and services to retail insurance brokers.

He said brokers today basically fall into one of two categories: Those who have positioned themselves to provide a higher level of customer service, such as wellness programming, health savings account administration, self-funding options or human resource outsourcing; and those that have not.

The latter probably will not be in business much longer, according to Timothy J. Cunningham, managing director of Chicago-based OPTIS Partners L.L.C., a consulting firm serving the insurance distribution industry.

“The firms that sold defensively needed the resources this year, so doing a transaction in December of 2013 is too late. Clients are asking now what they need to do to get ready” for when the PPACA mandate kicks in, he said.

%%BREAK%%

“What we have to do is get out there and help our clients afford to stay in the game and continue to offer benefits to their employees,” said Robert Klonk, CEO of Oswald Cos., a multiline insurance broker in Cleveland that recently acquired a smaller benefits broker, Westlake, Ohio-based McManamon Financial Services Inc., requiring greater expertise.

“Ramp up health risk management, education, compliance services,” he said. “Customers with a lot of variable-hour employees have a lot of administrative work to do. We now have more attorneys on staff than ever before. We're doing a lot more on education of employers and employees.”

“Whenever there's turmoil in a sector, people have to decide what they want to do,” said Ken Crerar, CEO of the Council of Insurance Agents & Brokers, an industry trade group based in Washington. “The benefits side tends to have a lot of smaller-size firms. So you see a lot of uptick in merging. In some cases, it's books of business being bought or individuals just moving. The business model is in total flux.”