It ceases to amaze me that in this day and age that some benefit advisors still have clients or are holding onto their clients using the same approach that they’ve used for the past decade or longer. So when is it that you should look at changing benefit advisors?
A case in point. I had a meeting with a new prospective client earlier this week. He was running late in a meeting and gave me his renewal report that he had just received to review. The renewal report, which is often the case, was this fancy, tree-killing document with industry filler that for the most part tried to justify an increase.
In this particular case, the broker had “negotiated” an 0.8% decrease after the carrier had proposed a 4% increase to next year’s premiums. The broker did a good job. Wrong, the report showed that the claims over the past year were half of what the carrier had taken in for premiums! Basically, they were trying to screw the client. I wish I could say that this situation was an anomaly, but it is quite common in the benefits industry.
Unfortunately, many clients will see a 1% decrease in premiums and sign off on it for another year. Has this happened to you? Perhaps you should be changing benefit advisors.
Here are the top signs you may want to look at changing benefit advisors:
- Sustainability of your plan. If your provider isn’t talking about sustainability measures for your group plan, then chances are you’re going to be facing significant increases in the coming years. By the way,
hoping to have low claims in the coming years of your benefit plan is not a sustainable practice.
- Marketing Your Plan To Multiple Carriers. This is the way most brokers get a better price for your group plan, but unfortunately, it all comes down to which carrier is hungriest for business on any given day. The company who bought your benefits business this year will give you a renewal wake-up call in the next year or two. All the carriers work off of pretty much the same actuarial tables, so if they don’t get you this year, they will get you next year. Also, every time you change carriers, you lose your IBNR reserve and need to start a new one with a brand new carrier. You need to be introducing features like disability management, a pharmaceutical drug strategy, wellness measures, employee education.
- Employee Education. Employees need to understand how to make a claim, understand their benefits coverage, but they need to understand that they are just as responsible for the sustainability of the plan. Coaching employees on how to save money for themselves, and the company should be a primary focus of your broker.
- Transparency. The renewal process should be transparent and predictable to the client. Within reason, you should know in advance what your renewal rate will be before you receive that hefty renewal report from the broker.
- Meeting with your broker shouldn’t be as painful as a trip to the Dentist. I’ve heard from several clients that sitting through a renewal review is one of the most confusing and time wasted exercises to go through. Brokers use insurance vernacular and expect you to follow along. They try to confuse you so you won’t ask questions, or you’ll be lulled into a deep coma. Renewal reviews should be informative, relevant and straight forward. If it’s not, ask for a better explanation because they make it confusing for a reason.
- Return of IBNR Reserve. If a broker has suggested taking you to another carrier, ask if the new carrier has a return of IBNR reserve. In cases where there are less than 20 employees, it may not be possible, but otherwise, hold your broker to task on this. By the way, your IBNR reserve makes up about 8% of your health and dental claims.
- Goal Setting. Your benefit plan is supposed to serve both you and your employees’ needs. Remember why you have a group plan, and is it still helping to achieve those objectives? There are ways of enhancing your plan without increasing your costs and exposure. This always needs to be in mind through your discussions.
- Client Advocate. Brokers are supposed to represent the interests of the client, but many are incentivized to watch out for the insurance carrier. Brokers need to be talking market trends, fund model options and plan sustainability.
- Employee Financial Wellness: There’s a reason why over 80% of medium and large companies incorporate some employee financial wellness. Not only will it help to alleviate the stress that inevitably will impact their productivity but also create tremendous loyalty to your company. Your advisor should be conducting educational sessions for your staff….and it doesn’t have to cost your company a cent!
Making a change to your benefits provider is never an easy decision. There is often a personal relationship involved. They may handle other components of your business or personal insurance needs. The cost, time and disruption of bringing a new benefit advisor on board can also act as a significant deterrent.
You need to ask yourself if your benefit plan is contributing to the overall goals to your company or has it become another line item on your income statement that is continually heading in an upward direction.
Chris Coulter is the Founder and President of The Finish Line Group. He works with business owners to leverage their businesses to increase their wealth, reduce corporate and personal taxes, create viable succession strategies, enable employee retention strategies and allow them to exit their businesses on their terms.
Chris’ passion for what he does evolve from the mistakes he made in his first business; by not diversifying his risk and not utilizing a lot of the opportunities within his business to create significant wealth. Chris found out the difficult way and now educates business owners on how to avoid many of his former oversights and ultimately control where their finish line ends.
Changing Benefit Advisors