The health care benefits marketplace is a hot topic these days, and for good reason. There have been a lot of industry changes in recent years, and more are on the way. For insurance agents and brokers, this has meant much more than simply needing to learn about new plans and strategies.
A peek behind the scenes of the benefits sales business reveals that there have been sweeping changes to carriers’ compensation policies and rates. It has left many agents and brokers grappling to develop new strategies to keep revenue coming in.
Complicating matters even further, today’s business clients expect more from their relationships with brokers than just a transaction. For many professionals in the industry, it’s a struggle to figure out how to do more with less.
Smart Business spoke with Cheryl Cooper Perez, president and director of sales at Benefit Innovations Group, about what insurance agencies need to do to be competitive in today’s market.
How has the insurance business changed in recent years?
Agents and brokers who’ve been in the game for a while are familiar with what was once the typical system of compensation: If you sold a policy, you’d receive a commission and would usually continue to receive income from these sales for as long as the policies remained in force.
For many, this compensation plan was very appealing. As agents built their books of business, the accumulated income from commissions and renewals made it possible for them to succeed and grow their agencies. Those days have gone, though, and it’s unlikely that they’re coming back. Carriers have dramatically slashed commission rates, sometimes by as much as 50 percent, and with fewer plan options to sell.
In addition, today’s business clients are often much more knowledgeable and engaged in the benefits selection process than they used to be. They are more educated about their options and responsibilities, and have higher service expectations than ever before.
They’re not just looking for shoppers and quoters; they’re looking for consultants and advisers. They want to offer more to their employees, but often have little to no extra money to do it. Perhaps most importantly, these busy employers want a one-stop shopping experience that’s efficient, effective and innovative.
How can agencies grow in today’s market?
Today’s brokers must not only provide in-depth consulting before and after the sale, they should also offer additional services throughout the relationship that help mitigate insurance costs or streamline insurance-related problems.
Clients and prospects should see your organization as a resource for solving issues — not just an order taker or salesperson, but the risk management consultant to the client. This type of service approach will produce additional revenues for your agency, and will increase retention. Clients will appreciate the value your relationship brings to their business and will pay you for it.
But first, you must determine what you are willing to learn and implement yourself. Offer a wide range of options and diversify your products, services and revenue streams, for instance by incorporating a fee-for-service model. You must become an expert in your clients’ risks, help them develop a plan and provide the tools to mitigate those risks.
Become an expert in HR and benefits compliance to round out your service package and mitigate your clients’ legal risks. Also, learn work site, telemedicine, legal protection and other business owner-related products.
You must develop plans, pricing structures, staffing, infrastructure and processes, and find partners that can help you expand your lines of business and meet your clients’ needs without transforming your business model and starting from scratch.
Consider adding an easy solution, such as benefits compliance, to your portfolio as a start, and eventually incorporate more HR-related services. After all, you have already been in HR all this time, at least on the benefits side. Now is your time to spread your wings and fly. ●
Insights HR & Consulting is brought to you by Benefit Innovations Group.