David Kempton

Wednesday, 26 May 2004 12:12

Member of the team

Employers often select their employee benefits broker for the wrong reasons. Even though a broker is hired to help employers manage one of their fastest-growing expenses, the hiring decision is frequently based on his or her status as a neighbor, golf buddy or brother-in-law.

Deciding who should provide your benefits advice and represent you in the benefits market may be as important a decision as who you select to prepare your taxes or represent you in court. As health insurance costs continue to increase and the number of carriers seeking your business decreases, the person giving you benefits advice needs to be focused on and committed to that specialty.

Historically, the role of the employee benefits broker has been to sell insurance. Today's professional needs to be an active member of your company's management team. A qualified benefits adviser should have the ability to interpret financial data for the CFO, add insight to upper management's decision-making and help the human resources director simplify enrollment and communication. A proactive professional will know how and when to communicate the corporate vision, adding value to the benefits program.

Surveys show that a majority of companies ranks rising health insurance cost among their greatest cost concerns; therefore, the employee benefits professional should be interviewed and hired much like any other business consultant. Experience, commitment and a demonstrated ability to provide ongoing plan analysis, benefit services and compliance services are the credentials of a competent broker.

A successful employee benefits adviser will avoid prospects who are simply shopping for the lowest rates. Low rates come and go, while good relationships based on mutual respect and trust can last a career. True professionals will look to invest their time with clients who respect their expertise.

Although insurance company premiums are ultimately based on the risk characteristics of a group, an experienced consultant knows how to present "the case" to the underwriter in a way that will positively impact the outcome for his client. A qualified professional understands the fundamentals of risk assessment and be able to effectively negotiate based on facts and financial analysis. In today's insurance climate, the most valuable advisers are those who know how to "sell risk" to the insurance carrier rather then "sell insurance" to the client.

In this cycle of health care inflation, business owners and managers often confront bad news at the annual health insurance renewal. As medical costs continue to rise by 10 percent to 15 percent annually, management needs to be prepared with accurate projections and reasonable expectations. Though the employee benefits adviser cannot guarantee lower rates, a qualified consultant can guarantee the best deal based on sound, long-term considerations.

The next time you review your health plan, you may want to also review your broker. This checklist can help. Is your benefits broker:

* Focused entirely on employee benefits and group insurance?

* Known and respected by insurance carriers and underwriters?

* Knowledgeable about underwriting methodology and risk assessment?

* Part of a reputable benefits firm that is able to supplement insurance company services?

* Proactive with your management team and on your employees' behalf?

* Selling to you or advising and advocating for you?

The answers may explain a lot about your frustrations and some employees' lack of appreciation for their benefit plans. A professional benefits adviser can help turn that dissatisfaction into knowledgeable appreciation. Considering the significant investment you make in your benefit programs, you should expect nothing less. David D. Kempton, CLU, is an account executive and shareholder at Herbruck Alder; a Cleveland-based employee benefits brokerage and consulting firm established in 1963. Kempton has more than 15 years experience designing and managing benefit programs for Northern Ohio employers. Reach him at (216) 623-2600 or dkempton@herbruckalder.com.