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”.
Middle-market employers are finding greater need for outside expertise and access to innovative health care cost-containment solutions, making it essential that they find the right benefits brokerage partner.
But after failing to obtain the level of service and expertise it needed from the benefits brokerage community at large, Newtown, Pa.-based Johnson, Kendall & Johnson Inc. decided to create its own employee benefits consultancy.
A property/casualty insurance brokerage, JKJ until 1997 outsourced the placement of health care coverage for the approximately 50 employees it had at the time.
However, “we never felt we had any strategic input,” said John Wright, principal of JKJ. “We would get a fax two to three weeks before our policy expiration with the new premium rates. There was such a concentration among such a few insurers that it became a delivery process of "here's chocolate and here's vanilla.'”
“The genesis of our Johnson, Kendall & Johnson Benefits Inc. was to create a model of service that we felt we were not getting in the benefits brokerage community,” Mr. Wright said. “It's a much more collaborative process, not centered around the price that you're going to pay for benefits, but takes three or four steps back and asks what you're trying to accomplish as a business, starting six or eight months before” renewal time.
Loves Park, Ill.-based Acromatic Products Co. changed brokers in 2009 to gain access to a group stop-loss captive insurance program designed to help the manufacturer gain greater control over its self-funded health benefit costs, according to risk manager Jim Knutson.
“I had friends at Berkley (Accident & Health L.L.C.) whom I worked with on different health care projects. At one of the sessions, I said we really need to get off this individual stop-loss roller coaster. One of the people at Berkley said they had a division that was working on a group captive. They gave me the name of the broker they were working with,” Mr. Knutson said.
“In a small company, the depth of knowledge is not all that great. We don't have enough exposure,” he said. “We needed a broker who would bring special knowledge and expertise.”
Indeed, said Frank Pennachio, co-founder of Tampa Bay, Fla.-based insurance brokerage consultant Oceanus Partners, middle-market employers increasingly are saying to benefits brokers seeking their business, “Don't tell me what insurers you represent, how old your company is or how many employees you have. Tell me about your ability to leverage technology and data analytics to devise strategies that will bend the health care trend.”
Among other things, Mr. Pennachio trains brokers catering to the middle-market clients.
Mr. Knutson said the one thing he did not like about his company's previous broker, which he declined to name, was its “inability or unwillingness to embrace different options. For example, network formation: They would say, "Our discounts are as good as those of Blue Cross.' But discounts only tell you part of the story.”
“A broker must be on the cutting edge, looking for alternative strategies that effectively bend the trend ... engaging with providers to mitigate as much as possible the flawed fee-for-service system,” Mr. Pennachio said.
For example, a benefits broker should have expertise in data analytics “to take an employer population's claims data, upload it into a data warehouse, and analyze how the money is being spent, find the leaks and plug them,” he said.
And especially in today's post-health-care-reform world, benefits brokers also should help middle-market employers decide whether to self-insure or to continue transferring their employees' health care risks to an insurer either directly or via the public exchanges, he added.
By limiting the percentage of health insurance premiums that can be allocated to insurer overhead, minimum medical loss ratio requirements set by the Patient Protection and Affordable Care Act have shed light on broker compensation practices that had been largely invisible to employers.