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

Benefit brokers moving from sales to service

Complex market requires new approach

Benefit brokers moving from sales to service

COLORADO SPRINGS, Colorado — As employers demand more services from benefits brokers, brokers are seeking new ways to deliver value and cost savings.

Fortunately for brokers, the evolving benefits landscape has offered several opportunities to transform their business models from transactional insurance middlemen to one-stop-shops for benefits and human resources.

“There's a transition from brokers really being focused strictly on the employee benefits arena and everything around helping employers secure benefit rates and best plan designs for employees, and it's getting much more into everything around supporting the human resources team,” said Adam Bruckman, president and CEO of Digital Insurance Inc. in Atlanta.

The shift, which has been in the works for several years, is partially driven by the health care reform law's complexity, which has left employers in need of broker support for compliance and regulatory issues. Rising health care costs have prompted many employers to shift to high-deductible health plans, which demand more communication with workers and a menu of voluntary benefit options for brokers to help assess.

Techcentric benefits startups that combine benefits brokering with HR capabilities have driven employers to think of brokers as consultants and providers of anything benefits and HR managers could need, including payroll, absence management, onboarding, wellness and benefits design, several brokers said during interviews at the Council of Insurance Agents and Brokers May 31-June 3 Employee Benefits Leadership Forum in Colorado Springs, Colorado.

Employers in the past “may have looked at a technology company for this, and a HR outsource company for this, and a broker for negotiating rates. Now there's a convergence of all those things,” under the brokerage umbrella, Mr. Bruckman said.

That means brokers “are really trying to expand their full capabilities, not just their ability to negotiate rates and plan design,” he said. “It's a lot of hard work because you have to train producers on these new solutions, and you have to address all these employer needs.”

Digital Insurance, for example, has hired specialists in everything from technology to wellness to meet employers' needs.

Brokers have evolved from advisers to “a very, very heavy service mode. It's a business partner mode,” said Kent Crawford, Newport Beach, California-based managing principal at Integro Insurance Brokers.

Employers expect brokers to devise benefits strategies as well as execute them, he said. As benefits have become more complex and employers introduce high-deductible health plans to save costs, communicating those changes has become a major broker role.

“You are introducing plan designs that are requiring that employee to be much more engaged in the process” of selecting and using the benefit plan, Mr. Crawford said. “That discussion is becoming more complex on a day-to-day basis.”

“The broker, as we strive to be relevant to our clients, has moved from just being a product expert and delivering a quality product ... (to) you being the product yourself,” said Jim O'Connor, Manasquan, New Jersey-based president of employee benefits at CBIZ Inc., which has its own platform that integrates benefits consulting and human resources processes.

Brokers are acting as benefits administrators, compliance advisers, communication experts and sometimes even outsourced HR departments, he said.

Importantly, brokers have also taken a leading role in helping employers to “bend” the health care cost trend, Mr. O'Connor said.

“This is where the broker has to evolve his or her knowledge (to) be an expert in the provider side of the equation: What's going on in the world of doctors and hospitals and how are they changing in the equation of benefits?” he said, pointing to accountable care organizations and high-performance physician networks.

Because spending on all health plan types and prescription drugs has risen steadily, cost savings won't come from “shopping for better rates and finding a network that has a huge difference in the amount of provider discounts they provide,” said Dan Gowen, Chicago-based senior vice president and national employee benefits practice leader with Wells Fargo Insurance Services USA Inc.

Instead, brokers “need to be making sure that we're spending a lot of time with our clients, understanding the risks in their population, how to keep the healthy (people) healthy, and how to try to keep those that are in the chronic condition stages from moving into more acute types conditions. The more that you can balance that out the better you are going to be from a total cost perspective on a year-over-year basis.”

“We are spending a tremendous amount of time on transparency and cost control, especially around pharmacy strategies, given the explosion in cost relative to pharmacy and specialty drugs,” said Mike Barone, San Diego-based president of employee benefits at Hub International Ltd. “Brokers who have an ability to understand the space and propose strategies to their clients to reduce cost and improve outcomes are going to have a unique competitive advantage relative to those who don't.”

While brokers' roles have expanded, their commissions haven't.

“You are working with potentially the same dollar, but you've got more that you are trying to do to meet the needs of our clients,” Digital's Mr. Bruckman said.

Part of the reason commissions haven't grown is health care costs make it difficult for employers to spend their money elsewhere, said Jennifer Walsh, San Francisco-based senior vice president and national employee benefits business leader at Woodruff-Sawyer & Co.

Competition also is keeping commissions down. “I have more competitors today than I had five years ago,” she said.

On the plus side, some sources said they are making more money in fees.

“We're seeing some movement away from commissions and into fees,” said Mr. Barone. “What we're seeing in the marketplace are several larger consulting firms take their commissions down a little bit, but build them up significantly on the technology side and benefits administration side.”

“So in aggregate, especially when larger and mid-market clients are buying technology, they're actually paying a lot more than they ever have,” Mr. Barone said.