Finding the right carrier partner

When your office is the first stop for the new president of your state’s biggest health insurance carrier, you can bet you’re an influential player in the distribution system. Bob Taylor, owner of Combined Insurance Services in Ocala, Fla., earned that visit from Florida Blue’s president thanks to his nearly 40-year connection with the carrier and his standing among the top 1% of the approximately 3,000 agents selling Blue Cross and Blue Shield of Florida plans in the Sunshine State.

The broker-carrier relationship, especially one as long-lasting as Taylor’s with Florida Blue, is dynamic and continuously evolving. EBA, in partnership with business intelligence data analytics firm miEdge, introduces the top large-group insurance carriers in the country. The listings are based on Form 5500 Schedule A reporting data on premiums for large-group business submitted to the Department of Labor as of Dec. 31, 2014. (As such, groups under 100 lives, government entities and church plans are not required to file and any disclosure on Schedule C's are also not contemplated in the numbers.)

See all of the top carrier charts here.

In conjunction with the ranking, leading carriers, Taylor and other veteran advisers share what makes for a strong broker-carrier partnership and examine how both parties can improve the connection.

First, it helps to be able to put yourself in the other party’s shoes. Taylor — who started his career as a deputy sheriff before realizing his side job as a benefit broker brought in more money with “nobody shooting at me” — first made a name for himself as a sales rep for Florida Blue in 1977. In two years, he was leading the state in sales and moved to Miami to become a manager. Two years later, he moved back to Ocala and served in a hybrid sales-training role until he decided to start his own brokerage in December of 1981. “The reason I decided to start my own business was I wanted something where I wouldn’t have to depend on other decision-makers regarding my success,” says Taylor, who credits “a significant amount” of that success to Florida Blue (No. 22).

See also: The top 50 large-group insurance carriers in the U.S., part 1

It was with Florida Blue that Taylor acquired inside knowledge as to how and why carriers make the decisions that they do. Through his large clients in Miami, he learned the benefits of self-funding. “When I started my agency … I tried to really start out self-funding and most all of my early clients were self-funded clients,” says Taylor. “I learned that expertise from Blue Cross.”

Eight and half years at The Standard (No. 29) gave Pam Hublitz, senior vice president, employee benefits, at Golsan Scruggs Insurance and Risk Management in Battle Ground, Wash., not only an education on medical underwriting but also a keen understanding of how to make the broker-carrier relationship work. “If you’re with a carrier for a long time or just only working on the carrier side, until you’re out there on the broker side, you can kind of be in a box ... It really is an eye-opener to be on both sides of the table,” says Hublitz. “Once you’re on both sides, I think you have a better skillset.”

The end result is that all parties give the client “the best that you have,” she adds.

See also: The top 50 large-group insurance carriers in the U.S., part 2

For carriers, that means continuing to rely on the broker distribution model, many say.

Importance of the broker

Darnell Smith, North Florida market president for Florida Blue, has worked with Taylor and Combined Insurance Services for 20 years. “They’re just incredible individuals,” he says, adding that they’ve talked personally as often as once a week, but usually check in monthly.

“We think the broker community is an extremely important part of the future for health care,” says Smith. “They are experts at what they do. They know the business, they know the industry. … We see that relationship continuing to flourish.”

Smith appreciates Taylor’s focus on the customer, knowledge of the industry and the Affordable Care Act as well as his firm’s ability to stay up on the latest technology and emphasize wellness. “You talk about innovation, there’s a lot of things we’re trying to do to drive costs down while driving quality up and they very much partake in that,” he adds.

The vast majority of Cigna’s business is conducted through brokers and consultants — “in the high nineties,” according to Gary Kirkner, president of sales for Cigna's group insurance business. Cigna (No. 6 overall and in the group health category, No. 4 in dental, No. 1 for short- and long-term disability, No.3 for life and No. 7 in voluntary) keeps track of who they’re calling on, how they’re doing with clients, and shares the information with the whole organization. “We do monitor producer penetration around the country so we have a pretty good barometer of who the producers are out there and how we’re interacting with them,” says Kirkner. “We want to make sure we certainly interact with a broad swath of producers.”

See also: The top 50 large-group dental insurance carriers in the U.S.

It’s the same story at MetLife (No. 7 overall, No.1 in dental, No. 3 in short- and long-term disability and No. 1 in life). Brokers are the primary distributor for nearly all products in all market segments, says Scott Beck, vice president, broker and consultant relationship management. It’s MetLife’s overall goal to be more customer-centric, “and that definition includes brokers,” Beck says. “We want to accentuate our focus on brokers by developing a broker-centric model and providing exceptional services to brokers as well as the right solutions to offer to their clients.”

Kaiser Permanente (No. 1 overall and in the group health category) is “extremely supportive” of the broker community as well, says Peter Andrade, senior vice president of California sales and account management. “With health care reform, I know a lot of people thought that perhaps brokers would become less important, and our position continues to be, because of the complexities of health care reform, brokers are actually more important than ever,” Andrade says. “… [I]n partnership with health plans, the brokers are educating their clients around the choices and then demonstrating value to their clients in a partnership with us. We absolutely see it as a partnership and a joint go-to-market capability with the brokers that we work with and the brokers that we want to work with.”

What makes the broker-carrier relationship strong

The first step in building a strong relationship with a carrier is establishing trust, says Florida Blue’s Smith. “It starts with honesty, it starts with candor, respect. We don’t always win every deal, but when we don’t, we understand what it is we did or didn’t do. … We get great feedback,” he says.

Smith says Florida Blue gets calls from brokers and agents all the time asking for them to bend the rules, be it a late enrollment or other exception. Those, like Taylor, who have built a good rapport will “literally fight on behalf of their customers,” Smith says, and Florida Blue is often able to grant those exceptions “because they do work so well with us. … It really helps to know they’re going to be here for a while.”

Taylor met Smith when he was on Florida Blue’s North Florida agents council. Smith was the head of membership and billing at the time. “If I had a problem with membership and billing, I didn’t have to go to their 800 number or anything,” says Taylor. “I could just pick up the phone and call Darnell and say, ‘Hey, there’s a problem here.’ … and Darnell would make it happen.”

Golsan Scruggs’ Hublitz agrees. “When you need someone to go to bat for you, you really need to have that relationship. I think it’s crucial in our business so I’m a very big advocate for that,” she says. “They get to know  you and they know how you do business and they know you’re ethical. Our brokerage firm has an excellent reputation and when we ask for something … I always give a reason of why we need it or why they should at least consider it. When you’re building those relationships with your carrier reps and you treat them with respect and their support staffs with respect then your life just goes easier.”

Having a close relationship with someone at the top of the carrier business means the ability to get things done easier and faster for clients — a real market differentiator for Combined Insurance Services, Taylor points out. “Our way of doing business is that we don’t want the client to ever call the 800 number at Blue Cross and try and get a problem solved.”

“That’s how we have brought value to our customers,” Taylor adds. “Because typically, and sadly, most brokers will make a sale, give the employee their new ID card … and they’ll say, ‘You have a problem, call the number on the back of your ID card.’”

Where brokers can improve

Taylor suggests a simple way for brokers to improve their relationship with carriers: Give them business. “Nothing says, ‘you love me’ like a lot of business coming in,” he says. “The reason we have such a good relationship with Blue Cross is we provide a lot of business to them,” adding that Combined Insurance Services renews around 95% of its business every year.  “And they don’t hear from our customers on their service lines because we’re taking care of all the problems here in our office for them. So we have cut down a lot on their service overhead.

That’s important in these post-ACA, medical loss ratio days. Jim Edwards, co-owner of Leavitt Great West Insurance Services in Helena, Mont., worked for Blue Cross and Blue Shield of Montana in the past. “Carriers are always looking for brokers that stay active, bring them new business, market intelligence, what the buyers like and dislike about the policy provisions,” he says. “Brokers are conduit, so they’re the ears back to the carrier, ‘Hey groups really like this new co-pay plan …’”

Cigna’s Kirkner says before the implementation of the ACA there was too much focus on price over value. “I think producers have done an excellent job of refocusing not only their efforts, but their clients’ efforts … in really speaking more and more about value.”

Because employee benefit programs “are far more strategic now,” Kirkner suggests advisers whose clients have gone to high-deductible health plans and have not already had the “natural discussion around voluntary products and talk about accidental injury, critical illness to fill in the gaps … on the way to hitting a high deductible” need to do so.

Those who want to invoke a strategic approach need to address voluntary benefits, “coordinating ancillary plans with health care plans and voluntary plans and making sure that hopefully every dollar a client spends, as well as a customer or employee spends, is giving them maximum value,” he says. “That’s something that we absolutely have been pushing and will continue to push both with our producers.”

See also: The top 50 large-group vision insurance carriers in the U.S.

The key to keeping business, says MetLife’s Beck, is providing exceptional service. For example, since dental insurance is a high-transaction business, “there’s lots of opportunities to get it right and there’s lots of opportunities to get it wrong,” he says. “We look for those who can figure out ways to get it right as often as possible, and so service is critical — implementation and ongoing service.”

At Kaiser, Andrade looks for broker partners who understand the company’s unique delivery system. He encourages advisers to “get into a facility, meet some of our physicians and look at our technology.”

Commission changes

No discussion of broker-carrier relations would be complete without examining changes to the commission structure that have accelerated post-ACA. “For my first 25 years in the business there was no transparency to [small group] commission,” says Leavitt Great West’s Edwards.

Now it’s not uncommon to find a carrier will pay whatever the employer group directs them to pay, he says. “That’s a little frustrating to agents, because the problem with health insurance and the flat commission is as the rates go up, the compensation goes up,” he adds. “So a 30% increase in premium results in a 30% increase in compensation. And I’m not sure that, historically, we deserved that 30% bump in compensation.”

Transparency is changing the conversation and resulting in “a winnowing out of agents,” Edwards says. “Some groups are going to say, ‘Good lord, I didn’t know I was paying you $1,500 a month to be my agent,’ and I think that is going to create some conflict between agents/brokers and carriers.”

Leavitt’s firm implemented a professional services fee “a long time ago” in order to be more transparent. Meanwhile, Combined Insurance Services is still primarily commission-based, but they make sure their clients know they’re worth every penny, says William Taylor, Bob Taylor’s son and president of the company. “Even prior to the Affordable Care Act, we have spent the last 20, 30 years looking at ways to provide value and to make sure that we are earning every penny that we make and not just during the sale or the renewal but all year long,” says William Taylor. “We feel comfortable having those discussions about how we make a living to our clients, because at the end of the day we can justify it. A lot of the clamoring you’ve heard over the last couple years because of the ACA and the transparency have come from the large amount of the broker population who made their living by showing up whenever renewal time was coming, giving the client a couple of options and moving onto the next one.”

Kaiser’s “commitment to affordability and cost control” has helped the health plan to “have no issues with commissions,” says Andrade. “We don’t anticipate that” changing, he adds. “In fact, we have seen that when we do any kind of webinars or training or even face- to-face meetings, we have more brokers attending now than ever before because we’re trying to share as much information as we can, and then trying to strategize: How do we go to market together to explain a very complex issue on health care reform to the client?”

As for MetLife, “We know competitive costs are important,” says Beck. “We offer a very competitive compensation plan to brokers.”

See also: The top 50 large-group life insurance carriers in the U.S.

The program starts with a base compensation package, “and then for those brokers who place a certain amount of business with us we have a supplemental compensation plan which pays additional compensation to brokers based on production,” he explains, adding that criteria include “new business premium and persistency.”

Even so, Greg Carlton, senior vice president of benefits & wellness at Peel & Holland in Benton, Ky., believes carriers do tend to paint everyone on the distribution side of the business — “whether you’re an agent, broker or true consultant/adviser” — with the same brush. “I know they have their agreements, ‘If you produce more than another one you get more money or this elite broker versus so and so you get more.’” However, after a recent discussion with a top carrier representative where Carlton told the carrier he wasn’t being compensated adequately, “the response I got was, ‘It is sort of what it is. The ACA is bringing a lot of pressures on us. We’re not going to be able to pay any more and the laws really don’t allow you to go out and have separate fee-based structures with that size client.’ So that’s probably why you’re seeing a lot of those agencies not focus on small and key business owners,” Carlton says.

It’s a “huge disruption” for employers in the 2-100 employee range who are now, Carlton says, “going to be very underserved by qualified advisers.”

However, he adds, “That’s not really at the hand of the carrier; it’s really been dealt as a streamline down from the ACA.”

Even so, Carlton questions, “Just because I’m titled ‘adviser’ why do I have to be held to the same pay standard as someone who shows up to work and never gets anything done? That’s the one thing I would say to carriers today is create a system that rewards advisers who are creative and who help solve problems and who bring value to your clients. Get rid of the ones that don’t.”