Today, I wanted to go through a little 1 on 1 training session. It is just you and me now! Anytime your company purchases health or ancillary insurance coverage’s it is done through a broker. Oh, by the way; I am one of those aforementioned brokers/agents. Insurance companies don’t typically sell directly to consumers unless you are a very large employer and even then it is RARE. Now, this is not the case when a individual/family are purchasing individual health insurance. Yes, Brokers or Agents are the middle man. Brokers, like a real estate agent, are licensed to go to the market place to solicit and negotiate on your behalf with one exception. You must have an insurance broker to work within the insurance arena whereas some folks will “cut out” the real estate agent if they are daredevils!
Insurance companies (this list includes Blue Cross, Aetna, Sun Life, etc.) and agents can really have a tumultuous relationship. I speak from personal experience when saying this relationship can be rockier than the Keeping up with the Kardashian household! The insurance carrier love brokers because the broker can provide competitive information from the other carriers and they dislike men and women like me because we can move our clients (their current revenue stream) based on competitive information. Carriers (industry jargon for any insurance company) hate to be put on the “spreadsheet”. This is because they feel that the spreadsheet eliminates their advantages and breaks down their plan to the lowest common denominator: PRICE. An example of a major stumbling block: simple spreadsheets don’t breakdown the reasons for higher renewal rates.
Companies can fire/hire through a broker of record letter (BOR). The BOR lets the insurance company know that this specific broker is the chosen person to work on their behalf. This means several things… If you change brokers/agents with a BOR letter then your former agent will no longer be receiving commissions from the insurance carrier. Now, you larger companies are probably saying… “Wait, my broker only gets a flat fee for his services.” My retort: That is a great idea and I am a firm believer in fee for service agencies. The dilemma and why I am vastly ignoring the fee for service model? 85% of businesses in America are under the size that would be a fee transaction.
What can a Broker of Record letter can change? When you want to change brokers/agents and the BOR letter comes up in conversation please put your mind at ease. As long as the group’s demographics stay the same (by the way, there should be no reason for any demographic changes) then an agent change will have no impact to your current coverages. YES, let me say it again… If you decide to change brokers a BOR letter will not give you any change in your current plan, current rates, current employee coverage, or any other current wording I can come up with in this sentence! Some “sleazy” brokers will tell you different. They are exactly that, sleazy. They tell you these things because their “cash cow” client is about to leave for a better broker and they don’t want to lose that easy income they have had for years.
If the insurance company receives Request for Proposals (also known as an RFP) from different brokers the carrier can/will decline to quote your company. Insurance companies are looking for a long term relationship with a client. If they see many brokers bidding on the same client there is a good chance carrier loyalty won’t ever exist. If the broker does not meet your anticipation then meet with the broker as you would an employee and express your problems and concerns. Tell the broker why you do not feel well represented. Another huge key is so important to follow… Armed with the same medical/demographic information brokers/agents CANNOT get different rates. That means if agent A and agent B are competing for ABC companies business both of those agents will receive identical quotes from the health carriers. Important Key: This is only true if broker A and B have the same information.