Service: A lost art in the insurance industry

by David L. Danzig

Rates today continue to climb on the benefit side of the insurance industry while the service continues to decrease! The question becomes— "Why are you paying a broker to represent your company?"

Most employers forget that they are paying for representation and too often voicemail is their answer or, if by chance their broker is on the phone, an "800" number is passed out as a solution.

How to pick a broker:
When interviewing a broker to represent you, the tough questions must be asked. Instead of inquiring on what to expect during the plan year, many small business owners will steer the topic of conversation toward renewals.

Let’s put those renewals in perspective. Here are the questions you should ask yourself in regards to the potential broker:

• Is the broker representing your best interest or his?
• Is there an ulterior motive to choose a certain carrier?
• How is the broker being compensated and what is the percentage of commission being paid?
• How much business does the broker have with each carrier and why?
• Are there any changes coming down the road with this carrier, and will my company be affected by these changes?
• What if we expand to different states, can this carrier handle our future plans?
• What is the relationship between the broker and the carrier selected?

Although most do not seem to ask about the broker/carrier relationship, if there is a major issue with coverage or claims the relationship could be the reason for your exception! Every good broker will "shop" your company out to all carriers that are able to represent the interests of the client, but how will plan designs be represented?

What’s next? You’re hired!
Now that you have selected a broker, what is next? The plan is picked and everything seems to be falling into place.

The next obstacle is to decide who will handle the enrollments. The answer is easy—it is your broker, not the carrier. The carrier tends to look after his best interest, profit. The broker was hired to look after the best interests of your company and employees. The plan should be explained in group meetings so that the employees understand the benefit of the coverage. Health Insurance as well as Dental, Vision and Life (including Short and Long term Disability) are benefits. They are not entitlements, as many employees are beginning to believe and it is the broker’s job to remind them of this. Handouts should be made so each employee has a copy for their home records.

Most importantly, the phone and fax should be given to all employees and management. When there are issues that arise with the plan, claims or service, employees MUST have a place to call. If your employees are given the carrier’s 800 number, then you need a new broker!

Throughout the year:
The broker and his team are responsible for being accessible to your company and its employees for any issues. They must be responsive and follow up in a timely manner. Although answers are not always what are requested, correct answers are required.

Other services should be discussed as needed, including:

• Is there a P.O.P. (premium only plan) in place?
• Is an F.S.A (flexible spending account) needed, or wanted?
• Who will administer an FSA and does it make sense for your company?
• What is the difference between Cobra and State Continuation?
• Which does your company have, and why?
• Who is administering it, and is it compliant?

No company wants to go through a Cobra audit, nor should they have to. If this is something that the Human Resources department cannot administer, use an outside source. Does the potential broker, and his company, supply Cobra compliance for free?

Human resource support: The broker is a professional that should be available to be a source of information and act as a human resources representative. "How are I-9’s filed and when is a 5500 needed?" "When is Medi-Care primary or secondary?" "How does Cobra work?" These are only a few of the questions that are asked on a daily basis across the country. The list is never-ending, but in today’s environment, voicemail and avoidance is the answer that most company employees and executives are getting.

Finally, brokers make a good profit representing the insurance carriers, as well as different companies throughout the country. Two key questions that should be examined on a yearly basis are, "Why is my broker being paid?" and "Is my broker earning his income?" If your company has more than 100 employees and a 3-3.5% commission is being paid on health insurance, it may be too much. If your broker is providing employee meetings for new hires every two weeks, as well as enrolling throughout the country, this may not be enough.

The bottom line is that as companies grow and the premiums continue to rise, do not loose sight of the total dollar amount that you are paying. Your broker isn’t, I guarantee it!