Your relationship with your insurance and employee benefits advisor is an important aspect of your business.
“Your advisor should take the time to learn about your business so he or she can find the right solutions for your needs,” says Amy Broadbent, vice president at JRG Advisors, the management arm of ChamberChoice. “The goal should be working together to implement a long-term strategy for your business.”
Smart Business spoke with Broadbent about what to look for when selecting an insurance and employee benefits advisor.
Why is choosing the right insurance and employee benefits advisor so important?
Today’s demanding environment dictates a change in the way you purchase and manage your insurance programs. Securing the best insurance and benefits package for your business begins with planning. Your advisor should be a partner who provides ongoing assistance, consultation, and service that will help you control expenses and choose the best plans for your company’s needs. A consultative advisor will be engaged with you and your business throughout the year — not only to deliver your renewal.
What should you look for in an advisor?
The current benefits arena requires far more than brokering quotes from multiple insurance companies. The value proposition of a successful advisor must encompass more in order to bring value to your employee benefits management and insurance programs. You need an advisor who will:
- Analyze your risks and make cost containment recommendations.
- Evaluate, negotiate with and recommend insurance companies and business partners based on a rigorous selection criteria and performance objectives.
- Implement an action plan to control costs.
- Offer resources for your employees when they have benefits questions and claim problems.
- Promote a healthy work environment for you and your employees.
- Research and recommend possible technology solutions.
- Ensure you are compliant with health care reform, COBRA, HIPAA, FMLA, Medicare, ADA and state-specific legislation.
Employee satisfaction is paramount to retaining top employees and, ultimately, your success. An advisor should help you measure employee satisfaction and engagement,and offer strategies to improve these areas. Employee communications are critical. Many employees do not take full advantage of their benefits because they do not understand them. Your advisor should help you educate employees about their benefits and how to best utilize them; plus, help employees understand how various laws such as health care reform, COBRA and FMLA impact them and their families. Is your advisor creating customized education materials, tools and communications to help streamline and simplify things, not only during open enrollment but also on an ongoing basis throughout the plan year?
When selecting a qualified advisor, what should you specifically ask?
When seeking an advisor, request referrals from existing clients. Also inquire about the advisor’s relationships with insurance companies. Often overlooked, this should be taken into consideration as the advisor will have an easier time resolving issues, securing coverage and getting things accomplished in a timely manner with companies with which he or she has positive working relationships.
Also, ask your advisor to explain how he or she is compensated. A reputable advisor will be happy to disclose this information and will not make recommendations based on insurance company commission or bonus money. Instead, he or she will have the client’s best interest at heart regardless of the payment from any given insurance company. Your advisor relationship is an important aspect of your business and you have a right to know how he or she is compensated for the work done for you.
The main priority for an advisor should be obtaining the best possible plans at the most competitive prices, while providing the best possible client service, technology risk management and cost containment. Not all advisors are created equal. Choosing an advisor to be your long-term strategic partner will make working with him or her much more meaningful to your business.
Amy Broadbent is a vice president at JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7250 or firstname.lastname@example.org.
Insights Employee Benefits is brought to you by ChamberChoice
Every business experiences risk, but determining the true cost of risk can be difficult.
“It’s much harder to calculate the impact that negative publicity has on your revenue versus lost productivity due to equipment downtime,” says Derek M. Hoch, president of Leverity.
“To develop the most appropriate risk management program for your organization, business owners should approach insurance through a variety of cost control strategies. These include identifying exposures, implementing control measures, transferring risk and managing your exposures,” Hoch says.
Smart Business spoke with Hoch about developing a strategic action plan to effectively monitor and manage risk, ultimately resulting in reduced costs.
How do you identify exposures?
Exposures are both qualitative and quantitative. Partnering with an insurance agent who understands these aspects of your business will provide important details that help to solidify a game plan. What keeps you up at night? If your biggest concern were to occur, would you be prepared to keep your business viable? How would your income or cash flow be affected if there were unforeseen depletions of capital or a shutdown in the plant? Is the company in a financial position to take on risk or would you rather transfer that risk to an insurance carrier? It’s also important to consider your industry, market position and competition in developing a risk management solution that fits the changing needs of your business.
Quantitative analysis supports the qualitative interview. Look at the hard numbers and review losses to identify:
• Average incurred costs per loss.
• Top loss drivers and trends.
• Fraud behaviors.
• Reporting lag time.
• Frequency and severity ratios.
• Occupational Safety and Health Administration (OSHA) recordable performance.
Both qualitative and quantitative analysis is important, as they help identify your total costs of risk and lead to the price of your risk management program.
What control measures can be implemented to reduce risk?
Once you’ve identified exposures, focus on control measures — an estimated 75 percent of commercial insurance expenses are claims-driven. A business can control and reduce this percentage through pre- and post-loss control measures. This process should help to establish a safety program that will deliver a comprehensive employee safety education campaign to address your exposures.
How do you decide what risk to transfer?
A trusted insurance adviser can help you balance how much risk you’re willing to take versus the cost of transferring that risk. Important questions to ask are:
• How much risk can I afford to assume in-house?
• How can a business insurance provider assist with contractually transferring that risk to a third party?
• What portion of the exposures do I want to finance through an insurance policy?
Answers to these questions provide direction on how to approach the proper placement of insurance policies. You also need to consider current cash flow needs. If you have a mature loss control program and financial reserves to cover shock losses that occur, self-insurance retentions are also a consideration.
How do you manage exposures?
Roughly 25 percent of businesses that sustain a major catastrophe go out of business within a year. You have to be prepared to respond if there is an interruption in your operations. Planning ahead and developing a comprehensive business continuity plan is vital to achieve this goal and keep your business viable.
Implementing risk management strategies will reduce costs, because the total cost of risk is synonymous with price.
Derek M. Hoch is president at Leverity. Reach him at (216) 861-2727, ext. 517 or email@example.com.
Insights Business Insurance is brought to you by Leverity