Niche players seek advantage in PPACA era

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.

Cerasani

“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.