Imagine a world where people can buy all types of insurance without placing a phone call. Perhaps it’s on a Sunday afternoon just after paying the bills, with feet up, relaxing on the couch, computer in hand. Brian Harrigan of Group Benefit Options says this is possible, and he wants brokers to make it happen for American consumers.

In the last year, more and more brokerages have launched their own brand name private exchanges and more and more companies are popping up to provide the backend software to enable them to do this. Harrigan is setting his technology company’s sights on the independent broker who caters to small- and mid-sized employers and may not have thought a private exchange was within their financial reach.

“They can have a digital store where customers can come in, put things in a shopping cart … we worry about the billing, admin, premium remittance to the carriers, eligibility to the carriers,” says the chairman, president and CEO of the private exchange platform with offices in the New York City area.

For more on what a private exchange really is see: Cigna launch spurs question: What is a private exchange, anyway?

For more on the future of private exchanges see: One-third of employers eyeing private exchanges

GBO works by allowing a broker to sign on and choose the types of insurance or non-insurance voluntary products that they want to offer to their clientele out of the group’s “digital warehouse.” Harrigan notes  they have many types of products from pet insurance to identity theft and are in talks with major carriers like MetLife and Transamerica to add more, including life, auto and home. A broker not only brands the exchange, but ultimately gets a customized marketplace with an array of goods selected by them, Harrigan explains. After that, GBO sets up the technology and then hooks it up to the broker’s website for shopping to begin.

“Most brokers look at employers and employees for voluntary benefit sales,” says Harrigan. “This can work for that, but they can also offer individual voluntary, so it expands beyond the traditional voluntary” and also opens up a new revenue stream for someone who normally just sells group benefits. He says this individual option is what differentiates their company from other enrollment platforms. He envisions insurance agents and brokers handing out cards to anyone, whether they’re an employee of a client or a passerby they meet in line at the grocery store, and being able to tell them to check out their online store for products 24/7.

GBO has 50 agencies “up and running” with private exchanges, Harrigan says. The agencies are, so far, mostly in the financial market.

Depending on a broker’s size and vision for their exchange, there is a set-up fee ranging from $2,000 to $3,000 and then monthly upkeep charges between $100 and $500. He notes this is “early-adopter” pricing and the costs could change. Brokers receive commissions on all product sales on the exchange.

“We really want to empower every agent in the country to bring an exchange to their customers,” Harrigan says.

Many industry insiders are eager to see how private exchanges grow in the future. In fact, this year began with the release of an Aon Hewitt study showing that 33% of employers in a nationwide poll are considering a private exchange in the next three to five years, up from the 5% that currently provide the option.

Other options

The other option brokers are taking is an even more customizable approach — contracting a technology vendor to set up a private exchange for them from scratch. This is something mostly larger brokers are taking on, like First Niagara Benefit Consulting, which is in the top 50 biggest brokerages in the U.S. Their exchange can be customized to each employer client, explains Tom Henshke, manager of exchange solutions at the firm’s Mechanicsburg, Penn. location.

He says they’ve been building their technology platforms for this solution, and others, for nearly eight years. The news about the exchange — now ready for their client’s employees — came in early April.

“We’ve talked a lot internally about how an employee might say, ‘My neighbor has all these options, why don’t I have it yet?’” he notes. “It behooves us to help our clients. I think if you’re in this business, you’ve gotta look at it.”

Many large consulting firms like Aon, Mercer and Towers Watson were at the forefront of private exchange creation. United Benefit Advisors and Benefit Advisors Network have both also launched broker-specific options for their brokerage members.

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