4 reasons why algorithms wont replace insurance brokers
Benefits brokers are getting a bad rap these days. Assertive critics claim theyre becoming obsolete with the introduction of online insurance and HR services, but nothing could be further from the truth.
With the implementation of the Affordable Care Act, the insurance industry is undergoing massive changes. Health insurance commissions most brokerages bread and butter are shrinking, and tech companies have seized the opportunity, becoming aggressive competitors in the industry.
HR technology platforms often have massive marketing budgets and effectively target employers looking for a tech solution to manage benefits. But benefits are complicated, and these platforms dont provide the same service or location-specific expertise that innovative brokers do.
Unless an employer is an insurance expert and an HR professional, they might find themselves in hot water if they dont develop a benefits strategy that keeps them compliant and protects them from liability. Smart brokers provide awesome service, killer expertise and modern technology solutions that can compete with any online platform.
The ACA introduced new regulations and plan structures and created layers of complexity for companies and individuals. This makes brokers more important than ever, especially when it comes to a businesss benefits package.
Brokers are the human connection in the complicated, manual and highly emotional insurance industry. Brokers are still crucial to building the best workplace benefits plan because:
1) Brokers look beyond the algorithm to make the best decisions. When you buy insurance, youre essentially entrusting a company with your physical and financial security. If you crash your car tomorrow, will you be able to afford the repairs? If you die, will your family struggle with debt? These are really important questions that touch on deep emotions. I wouldnt leave these decisions to an algorithm.
Personally, I want to know that I have an expert working with my company to pick the insurance plan that suits my unique needs. I want an adviser who can help answer questions and guide me through the complicated health care system. A good broker is more than an insurance salesman; hes an advocate, an expert and a trusted adviser. The best brokers provide benefits technology that offers the same (or better) functionality as the tech platforms.
2) Brokers are experts in a wide range of products and services. The best brokers look at health, wealth and wellness holistically, and they provide tools to help employers understand and work within the financial planning and health care systems. For instance, many Americans are overinsured, buying premium health plans they dont understand and wont use. That money comes out of employees savings accounts, not their grocery budgets.
Although algorithms arent all bad, they must be used in tandem with human expertise. An algorithm alone wont alert you to these issues, and it certainly wont advise your employees to choose a different plan or invest in a 401(k) or Roth IRA instead. Its important that 401(k) contribution decisions and benefits decisions are made at the same time, and a benefit broker can be incredibly helpful both to companies and their employees.
3) Brokers help keep companies compliant with local and federal regulations. Employee benefits are complex and way too important to mess up. The Affordable Care Act introduced new compliance requirements, and brokers have the expertise to keep abreast of evolving rules. Brokers also have expert knowledge of laws specific to each city and state. A self-service tech platform cant offer that same level of service and local expertise.
Whats more, because insurance is a relationship-based business, experienced brokers often have standing relationships with the carriers they work with. They can leverage those relationships to your benefit, whether theyre negotiating rates, ensuring claims are dealt with in a timely manner, or resolving any other insurance-related issues.
4) Brokers can help navigate and plan for recent or upcoming national changes. The ACA will continue to spur changes in the market, and this will dramatically alter the way a company does business and thinks about insurance. For example, the so-called Cadillac tax, which goes into effect in 2018, will charge steep fees for high-end plans. A broker can help plan for these changes now so employers arent caught off guard later.
If an employers coverage was rejected by their carrier, wouldnt it be helpful to have a licensed professional who knows their business and is dedicated to solving the problem? Benefit brokers bring experience, expertise and impartial recommendations to the table. When an employer chooses the right benefits broker, they and their employees will be thankful to have an expert and advocate on their side if things go awry.
Veer Gidwaney is the CEO and co-founder of Maxwell Health.