How the private exchange model has become more ‘refined’
When private benefit exchanges first came into the mainstream, there were hopes they would be a silver bullet to cut costs and increase choice.
But as enrollment has lagged behind initial estimates, according to consultancy Accenture, advisers are learning the true strengths of an exchange and are changing their selling tactics, explains Rob Harkins, mid-market private exchange practice leader at Willis Towers Watson.
Including large-market clients, Willis Towers Watson’s exchange grew 35% in 2016 and continues to see growth to date. Exact numbers are difficult to pinpoint due to the completion of the merger between Willis and Towers Watson in January 2016 and the acquisition of private exchange operator Liazon in 2013, Harkins says.
To understand more about how the view of exchanges is evolving, EBA spoke with Harkins. What follows is an edited version of the conversation.
EBA: As the private exchange market evolves, what changes have you made to your platform?
Harkins: We have made things more configurable. When you create more pre-built type of programs and services, they are great and able to be delivered more turnkey. But, the [desire for] something that is customized around a client’s own particular needs has become more evident, as we’ve seen the in the past couple of years. We’ve always had the capabilities of configuring exchanges for clients, but now we are seeing clients have a much more different set of expectations and demands to do that.
We continue to build out and to create programs that we know will be supportive of clients’ needs, such as wellbeing models … where they want to have some pre-built solutions. When it comes to plan design and to the portfolio of benefits that they are offering, they like choice as well as their employees, and we are able to accommodate that.
EBA: Why do you think clients now want more choice?
Harkins: I feel like there has always been a need for addressing the client’s specifications and desires. That’s always been part of the process. In the beginning, a lot of what we were doing was required collaboration with carriers in building out products and services. There was hesitancy as we were building those things not to deviate too much from a particular norm.
Additionally, two or three years ago, there wasn’t a broad acceptance and understanding of the value of the exchange concept in the marketplace. We were in the beginning stages of client understanding and comprehension, but also we were building the model as we went along. Even though we had been doing this for 10 years through our exchange business with Liazon, a lot of what was done was working with the carriers in the markets to create products and services that were built and then finding clients who would be interested.
Now that the interest is there, clients have more interest in building models that are based on their configuration of employees and we, in our consultative role, help them and facilitate them to do that.
EBA: How has your employees’ (brokers) understanding of the exchange changed?
Harkins: There may have been more of a latching on to this belief that it was going to fix some of the pricing and cost issues that we had in our industry. It does address cost, but that that is not all of what it does.
The evolution is the broker today understands that what this is is a more modern way of giving our clients access to a portfolio of choice of benefits and a system to help them navigate through it.
It is really just an enhanced technology capability — it is not a silver bullet — and it is not some kind of defined model. It is taking the benefit delivery model, modernizing it with technology, offering choice that wasn’t able to be delivered in the past because of a lack of technology and then pulling all those things together under a single umbrella that we call a marketplace or an exchange.