John Cerasani says he sleeps pretty well at night, which is no small feat for benefits brokers in the PPACA era.
Cerasani, the founder of the Chicago-based Northwest Comprehensive, has built his business by focusing on the needs of colleges and universities.
As it turns out, they are the sort of employers who are unlikely to ask their employees to migrate to health care exchanges resulting from the passage and imminent implementation of the Patient Protection and Affordable Care Act.
Related story: Shifting workers to exchanges
“I’d worked in the industry before founding the company, and it seemed like a great value proposition for us to focus on employment expertise rather than geography,” Cerasani said.
“College and university employment practices are just so unique, and we walk in speaking their language, already have a good sense of their needs and can engage in specific and strategic conversations immediately.”
This strategy, to carve out an industry niche, rather than work a specific geographic area, is less commonly seen. But it is one that health insurance marketers are paying more attention to as research continues to suggest a gradual shift toward consumer-driven health care through plan design and an increase in exchange options.
Niches can and are being pursued in a variety of areas including nonprofits (another Northwest Comprehensive target), manufacturing, municipalities, even the LGBT community.
“Most new business comes from referrals. Referrals are more often than not from firms in the same industry or associated with that industry,” Catherine Oak said in a recent Insurance Journal article. “Producers (who carve out a niche) build up a reputation as well as a high comfort level due to knowing the jargon and unique needs of particular industries.”
Oak, whose firm Oak and Associates specializes in financial and management consulting for independent insurance agents and brokers, also said that niche marketing usually results in higher-than-average profit margins because of built-in efficiencies. Selling the same products to the same type of client usually enables a more productive staff, she said.
Of course, knowing which niche to target is still uncertain and fairly uncharted territory for brokerage firms.
A survey from insurance researcher HealthPocket revealed that 65 percent of employee respondents said they’d like to select their health insurance company rather than have their employer choose. Conversely, only 22 percent said they’d prefer for their employer to make that decision.
“The stage is set under ‘Obamacare’ for a decline in employer-sponsored health insurance and a rise in individually purchased coverage,” said Bruce Telkamp, CEO of HealthPocket. “For those workers who will migrate from employer-sponsored to individually purchased health insurance, they’ll get the control they desire.”
Of course, the number of people who will shift from employer-sponsored care to the public exchanges remains unknown.
The National Business Group on Health, an association of large employers offering what are often substantial medical benefits, polled its membership about their plans for 2014.
Specifically, NBGH queried whether employers expected various groups “who may currently be covered by your plans will choose public exchange coverage when it becomes available in 2014.”
Forty percent predicted no change. A fifth of those responding expected part-time workers to buy exchange plans next year. Fifteen percent of the employers in the NBGH survey saw spouses or other dependents shifting to the online marketplaces next year; 12 percent saw full-time workers making the switch.
Cerasani said he isn’t really sweating it either way. Colleges and universities employ a varied group, from full- and part-time professors to seasonal workers and athletic team coaches. Cerasani said they typically offer excellent benefits but aren’t what you’d consider cutting edge in terms of what they offer.
Northwest Comprehensive specializes in small- to mid-size colleges and universities, with typically 100 to 2,500 benefits-eligible employees. It boasts a client roster of about 75, with roughly 45,000 lives covered.
“Most people don’t work on college campuses for money, so recruitment and retention strategy is based on competitive benefits packages,” he said. “It’s not likely they will get rid of the benefits programs and send people on the exchange.”