The independent agent is faced with threats on several different fronts. Carrier consolidation means there are fewer choices in a given geographical market. Everyone is proposing the same products and touting the same level of service. The evolution of the health insurance delivery industry and the entr?e of financial services giants into the mix, as well as the notion that carriers will attempt to move closer to the end user of their goods and services does not bode well. How does the independent agent survive?
A thorough analysis of the market within which a producer operates may be time well spent. At the very least, a look at the marketplace, or even a look at one's commission statement, will demonstrate that creativity and new opportunities are necessary to sustain one's book of business. Spend some time examining your own strengths and weaknesses as well as market opportunities and competitive threats. A market analysis will reveal segments and industries that are under serviced and ripe for penetration. To hit these segments, however, a paradigm shift in the agent's product mix and thought process might be required. Industries prone to employee volatility and low wages can be highly lucrative and competitively unfettered. This is an area open for new expertise producers probably will be forced to address anyway.
One example is the food service industry, historically burdened with high employee turnover and lower wages. Management traditionally enjoys employer-sponsored major medical health plan while line staff usually have no coverage or cannot afford the employee portion of the fully insured plan. A simple solution can help solve the employee turnover issue as well as provide benefits to hourly workers: the implementation of a group limited health plan. Most importantly, it allows the agent to differentiate himself from his peers and operate in a much less constrained and competitive market space.
The implementation of a limited medical plan, however, is unlike implementation of a major medical plan. Targeting and reaching the eligible employee class brings with it many distinct challenges. Multi-modal communication methods must be utilized, such as employee meetings, payroll stuffers, email campaigns, posters and flyers. The agent must understand the employee class with whom he is dealing. Many of these employees work irregular hours, many have never had health insurance before and many do not see the value and dignity that a limited plan can provide. Most important in a successful enrollment however, is the advocacy and emphasis of company management. Ultimately employers will realize significant savings in employee acquisition and training costs that could warrant a substantial employer contribution to the plan.
Fortunately, there is not a significant amount of extra work that a producer will experience if he chooses to work with a proven, quality, limited medical focused administrator. It is possible for a broker to put a piece of business in place and then spend his efforts selling versus servicing current business.
Group limited health insurance has not yet reached a mature market status. Annual growth in the double-digit range is expected over the next several years as carriers attempt to position and align themselves in this emerging space. Opportunities abound for agents and general agents as carriers compete for their business. Proper market segmentation will allow agents to penetrate specific high yield industries that have application for group limited health plans, such as retail stores, grocery stores, restaurants, nursing homes/assisted living centers, call centers or any industry where average hourly earnings range from $7 to $15. Aggressive pursuit of this line of business can result in a broadened revenue base and a core business that can weather the perfect storm that the independent agent and general agent may be headed for.
Through niche product specialization, a detailed analysis and thorough understanding of the market within which they operate, a focus on specific high-yield industries that have need and application for the niche product offerings, the local broker armed with competitive products can carve out a space where he can survive and even thrive.
Top questions to ask when evaluating limited medical products
Am I working with the same Goliaths that compete against me already?
There are quality carriers and strong administrators who are broker-focused in the limited medical space. A good partner is easy to find.
Is a re-priced hospital and physician network included? The utilization of a network is essential for stretching the member's dollars. The network should have a true claim re-pricing mechanism and not just a point of service discount. Ideally claims will be paid directly to providers unless the member specifically requests direct reimbursement.
Can the administrator customize plans to address the needs of specific employer groups? One size does not fit all situations given the variance in employee wages between industries and even companies inside the same industry. The administrator must be agile in plan design given that different employers have different needs. Quotes should be employer specific, customized, and reflect the economic reality that both employer and employees face.
Is the administrator capable of scaling all employer groups and working within various industries? Ask for references. Talk to individuals already working in the limited medical market space. This should provide a great deal of insight into the capabilities and track record of the administrator.
What help can the administrator provide during implementation? Does the administrator have a proven enrollment strategy? This becomes extremely important when faced with an employer group that has multiple locations and employees that work varying hours. The administrator must be able to assist with marketing materials including employee brochures, handouts, payroll stuffers, posters, whatever it takes to make the implementation successful.
Also ensure the administrator has multiple enrollment methods. A small group may be well served with a simple paper application while a group with 1,000 plus eligibles may require a sophisticated call center operation. Make sure the administrator can accommodate the enrollment regardless of the size and scale of the group.
Request a copy of fulfillment materials.
This will reflect the seriousness and care the administrator has for their members. Remember, in many cases this will be the first health insurance plan an employee has ever had. The member should receive a professionally crafted, hard plastic ID card as well as a certificate book describing benefits in detail.
*For further information or to contact this author, please use the forum below.
