Aflac’s Workforces Report for Brokers, released at the end of June, confirms what many in the industry have been hearing all along: It hasn’t been an easy road for brokers. Virtually half of the 300 brokers surveyed said they’re considering leaving the biz, while 67 percent say they’ve seen many of their peers leave in just the past year. Concerns over the Patient Protection and Affordable Care Act (PPACA) is the main culprit, but there are other issues concerning brokers.
Aflac’s report details the top five issues brokers are facing.
5. Client uncertainty about health care reform (27 percent)
Now years into PPACA, a common theme still emerges: confusion over the complex law. Employers and consumers alike are having trouble understanding the law. According to Aflac, just 21 percent of employees say they understand how health care reform affects their lives extremely or very well. Nearly eight in 10 brokers “at least somewhat agree” their clients aren’t prepared for health care reform, while 31 percent “strongly agree” they’re not ready.
Though it doesn’t spell good news for the law itself, it does spell opportunity for brokers, Aflac executives say.
As a result of PPACA confusion, 45 percent of companies surveyed as part of the Aflac WorkForces Report intend to increase their reliance on brokers or insurance providers when making changes to their benefits plans.
Companies’ use of brokers increased from 56 percent in 2011 to 61 percent in 2013 to 64 percent in 2014.
4. Diversifying benefits offerings (26 percent)
No surprise here: The benefits industry is changing. And that includes what employees want, and what they’re offering. And that means brokers have a lot to keep up with.
“The health care industry has certainly changed over the last several years, but with these changes also comes opportunities,” says Tye Elliott, vice president of core broker sales at Aflac.
“The findings indicate that brokers now have an opportunity to redefine their role in designing a benefits strategy that is aligned with employers’ business goals. In response, brokers have expanded their product offerings and services by creating consulting practices and taking full advantage of the evolving health care landscape,” he says. “Brokers are achieving growth and will continue to find innovative ways to position themselves as vital to shaping employers’ benefits programs.”
Voluntary benefits continue to increase in popularity. In the next year, Aflac found, 38 percent of brokers say they’ll increase the number of voluntary benefits they’ll sell, and 53 percent say they plan to increase their firm’s revenue from voluntary insurance benefits.
3. Remaining relevant (29 percent)
This is one issue certainly taking its toll on the business. Aflac found that nearly 50 percent of brokers say they’re considering leaving altogether, while 67 percent say they’ve seen many of their peers exit the industry in the past year.
Many brokers have cited PPACA for the reason they feel they aren’t remaining relevant, citing shrinking revenues, lost clients and government obstacles.
“Previously, up to health reform, the agent would work with a decision maker, whether the owner of the business or vice president of human resources, some C-suite individual who would make a decision on actually purchasing health insurance,” Daniel Steenerson, president of Disability Insurance Services, in San Diego, told BenefitsPro last fall.
“The exchanges are going to mandate now that not only is the agent going to have to deal with that gatekeeper, but … that they are going to have to sit down with each and every plan participant. Their income is dropping by 30 percent and they’re working harder, or longer, or exerting more energy in order to make that 70 percent of what they were making before,” Steenerson said.
However, many brokers also are taking advantage of completely “new revenue opportunities” created by PPACA, Aflac’s report found. In addition to increasing voluntary product offerings, more brokers are creating consulting practices, acting as navigators and helping clients purchase plans through both private and public exchanges.
Nearly 80 percent of brokers said they’ve expanded their consulting services or created a consulting practice, while 35 percent said they’re now functioning as a navigator for insurance products handled through an exchange, according to Aflac.
2. Understanding the impact of health care reform (38 percent)
While employers and consumers are having a hard time understanding how PPACA works, brokers also are having a hard time with it — namely, understanding how much it will affect them, and the industry as a whole.
“Brokers have found themselves at a crossroads of either redefining their role in the industry or exiting it entirely,” Aflac said.
1. Rising health care costs affecting client decisions (47 percent)
Forget PPACA for a minute: Brokers are most concerned about rising health care costs — and how it’s affecting client decisions on benefits. Aflac says that 90 percent of brokers say costs are making it difficult for their clients to offer adequate benefits, and 49 percent of employers say controlling costs is a top business objective.
Specifically, results “showed rising health care costs are influencing workers’ financial well-being, driving a growing demand for voluntary benefits and emphasizing the correlation between good benefits and business success,” Aflac said.