Business owners may thrive on the art of the deal, but when it comes to negotiating an employee health insurance package, their deal-making skills often fall short. They quickly find that their most valuable asset in making a deal with an insurance company is a good insurance broker.
Insurance brokers and agents vary widely in quality, from the questionable types with slick patter who solicit your business over the phone to those who are worth their weight in gold. How do you tell the difference?
The most important thing to remember when hiring a broker to negotiate an employee health insurance package is to get a referral. I asked trusted advisers, other business owners, and contacts within my professional organization, the National Association of Professional Employer Organizations, for recommendations.
If you don't get recommendations from valued sources, you could leave yourself open to everything from inflated rates to late renewals to sneaky practices. Unfortunately, I've learned from experience.
At a former company, we found a broker through tenuous network contacts. This man offered bill administration services at what he claimed would be no extra charge. After months of working with him, I found out, almost accidentally, that he'd been adding 10 percent to each bill without our knowledge.
Before I chose Bill Frazier of Leeson & Frazier Insurance as my broker for Employer Advantage, I interviewed him just as I would a candidate for a top executive position -- a broker can have that much impact on your company. I asked questions such as:
* Do you handle businesses similar to mine? Which ones?
* What are your major markets?
* How many years have you been a broker?
* How many employees are in your office to handle customer service?
* When claims issues come up with employees, how actively involved do you get as an agent?
I found out how many firms he'd represented, because a good broker will have close relationships with several reputable insurance companies. I checked with businesses he'd worked with for a long time, one he'd worked with for a short time and one he no longer worked with, to get their opinions.
For the purposes of employee health insurance packages, make sure the broker is certified with the state and is a Certified Employee Benefit Specialist (CEBS) from the International Foundation of Employee Benefit Plans, or a Health Insurance Underwriter (HIU).
I simply asked the candidate where I could verify his credentials. You can also verify them with the accrediting institutions and the State Insurance Board. While credentials don't guarantee a broker is good, they do indicate the kind of specialized knowledge you need.
Here are a few other characteristics I kept in mind as I looked for the best insurance broker for my needs.
* Honesty. I'm not just talking about a broker who stays within the law, which is an obvious asset. A good broker should also be willing to tell you things you might not want to hear, such as that your expectations from a certain package proposal are not realistic. Beware the broker who promises you'll reach the impossible goal of a cheap plan with maximum choice and the highest level of benefits.
* Informative. You need all the information you can get, both about the insurance companies you might be dealing with and about the insurance business, so you can make a reasoned decision about the health insurance package. A good broker is something of an educator and consultant.
For instance, mine told me about possible changes in COBRA legislation and the parts of the Patients' Bill of Rights most likely to be passed, both of which will have an impact on the way I do business. A good broker will answer any questions you have, even if he or she has to check with the insurance company to find the answers.
* Specialization. Just as you'd want a heart specialist for your transplant, you want a health insurance specialist to negotiate your health insurance package. The very best brokers will even refer you to another broker if you have additional needs, such as key man life insurance, that are outside their field of specialization. Frazier is a health insurance specialist, and when I turned to him for life insurance advice, he referred me to a trustworthy life insurance specialist I've now been working with for some time.
A good broker can become practically a strategic partner in your business. Mine is my primary liaison with the insurance companies. He also operates my employee benefits hotline, which means I don't have to add in-house staff for that.
But more than that, he's taken the time to get to know my specialized business and can help me in less tangible ways. How to reach: Rich Shearrow, Employer Advantage, 923-9331 or email@example.com; Bill Frazier, Leeson & Frazier Insurance, 882-8535