The introduction of the Affordable Care Act brought with it an increased interest in stop-loss coalition development among brokers of all sizes. What is a stop-loss coalition? Whether you call it a preferred partner arrangement, stop-loss panel or block consolidation, this arrangement consolidates carrier/MGU relationships by reducing the number of vendors utilized. When executed efficiently, this strategy can bring a variety of benefits:
- Favorable underwriting policy provisions based on a critical mass of business
- Better terms with preferred stop-loss partners than brokers might get negotiating with different carriers on each client independently
- Better service agreements
- A menu of stop-loss providers designed to meet specific needs
- Differentiation, allowing brokers to market their advantage over those who cant offer the same consolidation benefits which can lead to a better closing ratio
Consolidating your stop-loss business with a few providers can make life easier. By working with the right partners, you may also benefit from service guarantees focused on claims accuracy and quick turnaround. Or, you may receive an override in addition to your normal compensation, without increasing the cost to your clients. Some stop-loss vendors will even entertain product enhancements such as no new lasers, renewal rate caps or simultaneous reimbursement and advanced funding. Because carriers are considering smaller blocks of business, brokers have more leverage now as they discuss the terms of their book of business.
Also see: "FMLA extension could be 'stepping stone' to more DOL benefits involvement."
When choosing a block consolidation partner, looking at long-established relationships is a good place to start. You will want to partner with an organization that has done this successfully before and you want value. Determine if you are you looking for an exclusive relationship, and how many carrier or MGU partners make sense. Once you answer these questions, examine various providers. Few can act as a one-stop shop, so it is crucial to pick complementary partners.
In addition to long-established relationships and the right mix of stop-loss providers, look for competitive pricing and flexibility; you may need a partner who can design a product around a specific need, so its important to be clear on what you are looking for.
By considering the benefits, careful planning and thoughtfully choosing the right partner, stop-loss coalitions can be key as you help clients navigate challenges ahead.
Fleet is president of AmWINS Group Benefits, a wholesale broker of comprehensive group insurance programs and administrative services. Reach him at email@example.com.
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