Small and mid-size employers will turn to private exchanges in the very near future, predicted a speaker Friday at an America’s Health Insurance Plans conference in Washington, and that will change the game once again for small and mid-size brokerages.

Also see: The private HIX road ahead

Kris Weber, principal at Booz & Co., said at first private exchanges only attracted large companies. But now, the large brokerages have entered the small-group private exchange market as well. Mercer’s Mercer Marketplace goes down to 100 lives, and Towers Watson bought Liazon's Bright Choices Exchange, which serves small-to-middle market groups.

Also see: Why Towers bought Liazon
These moves caught small brokerages “off guard, as others were moving faster than they thought,” Weber said. These companies “used to operate at the 20,000 [life] level and now they are in my backyard and pitching this shiny new object — private exchanges.”

This means that those mom-and-pop brokerages that traditionally sell to small and mid-size employers are changing their game to keep up. In a business that was historically relationship-based, in the near term it is becoming more technology focused, Weber said.

It’s a phenomenon that has already affected other industries, he added. Stock brokers and travel agents used to be relationship brokers, but now the focus is on what platform they use to perform services.

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