Are You Working with a Broker or a Consultant? There is a Difference!
Are You Working with a Broker or a Consultant? There is a Difference!
I often hear stories of business owners and CEO’s that have finally had enough of out-of-control health costs. They face going from a profitable company to one that is losing money on benefits, and they can’t just continue to send the cost increases to their employees. How can they fix these issues?
My advice to them is: Review whether your benefits team operates like a broker or a consultant.
What is the difference? Here is a comparison of Brokers vs. Consultants:
‘Status Quo’ Benefits Brokers:
- “Shop” insurance every year - shop is in quotes as broker compensation programs are designed to retain clients with a carrier regardless of value. This influences many brokers to make the incumbent look best.
- Facilitate insurance one year at a time.
- Believe costs are dependent on the best offer of the carrier/third party administrator.
- Give limited data on where money is going.
- Provide limited means to control underlying costs.
- Don’t talk about their compensation, or worse, are solely paid on commission. This means more income for them the more rates go up.
- Advocate cost shifting in the form of increased deductibles and copays when premiums increase.
- Blame costs exclusively on employee behavior and poor health.
‘Forward-Thinking’ Benefits Consultants:
- Create a 3-5 year plan.
- Bring transparency to where money is going.
- Talk about their compensation and are willing to tie compensation to performance.
- Provide risk management to suit the needs of the business.
- NEVER surprise a business with a “shock” renewal rate.
- Return control over costs to the business owners.
- Bring the “benefit” of benefits back to the business.
- Make benefits a real attraction and retention tool.
- Understand improving benefits is the only way to lower costs.
- Provide detailed data driven analysis and actionable insight.
Having a strategic plan for the future is extremely important. Work with a consultant that has vision and is bringing in new ideas. Steer clear of the tired old ‘showing-up-once a-year-at-renewal-and-handing-over-some-paper’ broker. Business owners should demand more from their benefits partners and the partners should deliver. Find a forward thinking benefits consultant quickly, and leave the broker who is clinging to the past behind!
Author: Lars Schultz
Benefits Consultant
Hausmann-Johnson Insurance
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