To insure your success as a benefits broker in 2016 and beyond, you’ll need to diversify business. And that means adding to your core medical insurance other, non-medical products and services that can provide additional sources of income.
So said Freshbenies Co-founder and President Reid Rasmussen during an April 18 afternoon workshop of the 2016 Benefits Selling Expo, being held in Ft. Lauderdale. The session, “Shifting Sands, Navigating Today’s Coverage Gaps,” explored non-traditional benefits solutions that will be key differentiators for brokers over the next decade.
One factor driving the market’s evolution, said Rasmussen, is the Patient Protection and Affordable Care Act (PPACA). President’s Obama’s signature health care legislation includes a medical loss ratio (MLR) provision mandating that 80 or 85 percent of health premium dollars pay for claims. The requirement forced providers cut marketing and administrative costs, and to reduce brokers’ commissions.
Market forces, said Rasmussen, also are forcing advisors to revamp their practices. Because of intense and growing competition among providers, brokers need to expand their portfolio offerings to distinguish themselves from competitors.
These value-added solutions, he said, range from health care and advocacy services to third-party benefits administration and voluntary insurance products.
Often overlooked by brokers, the voluntary benefits space encompasses products that employers are increasingly adopting to offer a competitive benefits package. Among the offerings: critical illness, disability income and long-term care insurance.
Rasmussen said that many brokers have until now avoided non-health-care-related products. That’s often because (viewed individually) they pay less in compensation than do commissions on sales of traditional medical plans. Collectively, however, they can add up to a significant cash flow.
This income stream can rise still further if, as Rasmussen predicted, more brokers transition their revenue model from commissions to fees, a shift that many brokers have been loathed to undertake because it requires that payouts be evenly distributed over the life a policy or client engagement.
But a fee-based revenue model, said Rasmussen, is more in tune with consultative selling, which calls on the broker to be an end-to-end solutions provider, rather than just a product distributor.
A fee-based model, Rasmussen added, also aligns with other non-insurance services that brokers should fold into their portfolio to gain a competitive edge. These include tele-health solutions like physician assistance, wellness programs, benefits compliance and related consulting services. The offerings might extend, too, to identity theft and legal services, pet care and retail savings, and lifestyle programs.
Rasmussen added that brokers may find overhauling their practices to accommodate such an expanded portfolio challenging, in part because of the effort required to evaluate, price and package these products. To that end, he counseled partnering with a company that has already done the vetting work. Among them: solutions providers exhibiting at Benefits Selling Expo–including Freshbenies.
The McKinney, Texas-based carrier aggregates onto a single card a host of non-insurance services, including telehealth, health care advocacy and and a doctors online. Also to offer: discounted prescription drugs that many employers have removed from medical plans to accommodate other essential products or services.
As brokers add non-health insurance solutions to their toolkit, said Rassmussen, brokers will become less dependent on the medical component for revenue. Result: a more diversified, profitable and, ultimately, successful practice.
“If you roll 10 of the solutions we’ve discussed into your business over the next 10 years, you will have a more well-rounded business,” he said. “It’s about finding a lot of streams of income beyond medical insurance. Your future lay in becoming a smarter, savvier and scrappier broker.”
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