There are three types of brokers: the transactional broker, the Zenefits-style broker and the new school premier broker — but soon only one of them will be successful.

The old school broker is transactional in nature and renewal-centric, said Ernie Harris, executive vice president of Maestro Health, at the Private Healthcare Exchanges conference in Chicago recently. These brokers have been in business 15-20 years, “get a case, get a commission check, and then don’t do much,” Harris said.

But the market is changing for HR departments seeking brokers who do more than show up every 364 and a half days to tell them a year-over-year health plan increase and get a signature, Harris adds.

“These [brokers] are quickly fading out, I think two years from now I don’t need to acquire another brokerage but can go out and get them at zero cost,” he adds about those transactional brokers.

The relationship aspect of being a broker is not going to remain. “You need to create solutions and give value,” said Russ Carpentieri, managing director of Purchase, N.Y.-based Opus Advisory Group, at the conference sponsored by Employee Benefit Adviser. He said he has been getting calls from folks who have had the same broker for 20 years but now believe they are not receiving value.

Zenefits

The second type of broker is a Zenefits-style agency that is advertising everything. They created awareness, “and moved people to the level of awareness of what I need to do to compete in this space and fortify my existing client base,” Carpentieri said.

But in this model, the broker is not ready to serve a client, Harris believes. “A ton of marketing is a brilliant approach but they are not there when you need them,” he said.

“They are going to the [HR] person and saying, ‘This will be a simple, easy process, but you have to give up your broker in exchange for a free platform,” Harris added. “We feel it is never free. There is always a price. The client pays 20%-30% more in premium.”

Premier school broker

The broker that will remain is what Harris called a premier school broker. This style of broker reinvents themselves every six months to stay ahead of the curve. Carpentieri said this broker is always paranoid about people stealing their clients, so is always thinking what capabilities they need to add by going to HR and asking where they need to be three months from now. “Tell us and we will build it,” is how this broker thinks, he explained.

Everything is a strategy in this school of thinking. “Where we were five years ago was a better version of the old school broker, but where we are today is the new school premier broker,” Carpentieri said. “You have to have these things to remain competitive and drive measurable value to clients.”

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