This Web Pioneer Survived By Supporting Brokers
Some Web companies once bragged that they were going to replace the benefits middlemen.
Digital Insurance Inc., Atlanta, is one of the Web benefits pioneers that survived by supporting the middlemen.
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When the company started up in 2000, it hoped to help health insurers sell coverage directly to individuals and small groups. A few months later, the company began to specialize in handling benefits brokers small group benefits clients.
Today, “our entire model is built around helping agents,” says Mike Sullivan, an executive vice president at Digital Insurance.
The company manages health, dental, life, disability and 401(k) plan benefits for more than 10,000 small groups. The typical group has about 15 employees, and Digital Insurance usually hands administration off to its broker partners when the head count exceeds 30, Sullivan says.
The brokers pay Digital Insurance by giving it a fixed percentage of their base commission revenue. Turning small groups over to Digital can help a broker lock in a smaller but steadier revenue stream, and that can be appealing at a time when “commissions are either being compressed or being locked into a certain dollar amount,” Sullivan says.