The Role of Brokers in an Exchange Marketplace
Earlier this year, we published highlights from Liazon’s Chief Strategist Alan Cohen’s interview with Employer Benefits Advisor on the changing role of brokers in the benefits industry. Here, we take a deeper dive into some of Alan’s thoughts about which brokers will succeed, and why.
The following discussion is adapted from IHC HealthCare Consumerism Radio’s February 28th interview, How are Private Exchanges Impacting Employee Benefits? on BlogTalkRadio.
IHC: What does an advisor need to do stay relevant in a private exchange marketplace?
Alan Cohen: There’s a talk track out there that says exchanges disintermediate the role of brokers, that we don’t need them anymore. I think it’s absolutely the opposite. Private Exchanges are heralding a golden age for advisors, really the best advisors since it will raise the stakes on what it means to be a good advisor.
In the world of exchanges, advice and counsel will be far more complex and far reaching than who’s got the best rate on what plan this year. That’s a world in which brokers may not really be needed so much, simply quoting rates and ratings.
But in the exchange world, brokers will matter more than ever for four important reasons.
1. Choosing the Right Exchange
There are lots of choices out there, and while we believe our Bright Choices Exchange is the right choice, (and 8 out of 10 leading, national brokers agree with us), a multi-dimensional conversation still needs to take place between brokers and employers thinking of moving to an exchange. Which type of exchange is good for them, how to plug their employees into it, these types of questions will become much more far reaching than simply choosing among a few different carriers.
2. How Much Money to Allocate
Moving to a benefits marketplace or exchange means there’s a dollar decision that needs to be made – how much money to earmark for employees to spend and on what types of options, such as wellness to keep them healthy – is a complex discussion. It affects the budget of a company, which is a very important area to consult on and far more difficult than operating in the old world of benefits.
3. Choosing a Store
With Bright Choices we’ve negotiated with carriers to create over 200 prebuilt stores whose shelves are stocked full of benefits choices for customers to choose from to create their own portfolios. Deciding what choices to make available and trying to understand how many employees will pick certain products will and should be an integral part of the consulting process.
4. Meeting the Needs of People
The ultimate role of an advisor should be to deliver service to the people, not so much the HR departments. With so many types of benefits to choose from (health, dental, accident hospital indemnity, critical illness, disability, ID theft, legal, etc…) every person has a different combination of benefits that works best for them and the broker should be serving these individuals, helping them to manage their personal portfolio of benefits.
This is why the role of a broker or benefits advisor in an exchange world is different than in a pre-exchange world. The best insurance broker will raise their game and become schooled in all these different areas. They should be thinking about service in a different way – serving employees as well as the HR office and carriers in understanding these new store configurations. So we will see the crème rise to the top. We’ll see more differentiation in the future. Those insurance brokers and advisors who don’t raise their game will have difficulty. Just as the brokers who helped to usher in the age of 401(s) and managed care – those who became experts in what were then new approaches in the industry, became successful.
When we imagine the world of the exchange, we focus on the consumer and make them the centerpiece. Everything from the dollars you allocate to the store you choose to the technology you employ, to the services you provide –the dimensions that you will win or lose on are how well you serve the individual and put the consumer at the center of your strategy. It’s critically important to rethink how we do things in a different way.
If you’re wondering if you’re pursuing the right strategy, ask yourself if it’s helping consumers more. If it is, then you’re doing right thing. We’re part of a very important revolution, as opposed to the evolution we’ve seen for the last 30 years. When we put more emphasis on individuals and what’s right for them as opposed to organization – that will be the ultimate evolution.
IHC: This evolution is all part of health care consumerism – moving from defined benefit to defined contribution, from indemnity to managed care and now voluntary benefits – it’s all part of it.