Faced with the dual threat of rising medical costs and decreasing health plan enrollment among small businesses, carriers are reevaluating the way they do business.
Despite what some health insurance carriers may wish, and sometimes even attempt, the middleman’s cut isn’t going away.
Broker disintermediation is not about to happen. Nor is it something a smart carrier should desire. As the small-business health-insurance market becomes more challenging, carriers should seek out all the help they can in building their books.
Where carriers do go wrong with brokers is in managing the relationship. Too often, they fail to identify and reward brokers who provide the best business.
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Broker analytics is nothing new, yet how many carriers do it? In reviewing brokers, carriers should use the tool to understand details such as the following: Are they bringing in profitable business? Are they retaining my book? Which brokers have the highest service levels? What is their close ratio? What are the reasons why they lose deals? Are there indicators that a deal is likely to be lost?
Small businesses are a valuable segment of the health insurance market — and underserved. Only 53% of them offered coverage in 2016, meaning carriers should think of this as a growth play, not a cost play. A proactive approach to analytics is central to building this opportunity into lasting success.
Questions should continue to be asked throughout the broker relationship: How do you best incentivize your channel partners? Are you doing enough with technology? Are you creating relationships built around value?
Too often, in my consulting work, I find carriers identify good brokers simply based on past relationships. Analytics provide objective insights to support subjective hypotheses about who the best brokers are. These insights can help the carrier determine where to focus time and resources to service brokers appropriately.
There is also a lack of appreciation for the value a good broker brings. In interviewing small businesses, Accenture learned how brokers are seen as more than middlemen. They provide closer relationships to employers than carriers. They offer a more diverse range of products than your typical carrier (e. g. dental, vision, life insurance, etc.) Often the cost of doing business with a broker is practically invisible to employers. By contrast the cost of switching to a direct channel looms large.
Finally, there is the innovation a broker can provide as their relative smallness makes them more agile than carriers. Brokers today are building digital platforms that make it easier for their clients to get quotes, enroll in new plans and products, and operate more efficiently. All this is in the carriers’ best interests, too.
