Brokers perform a valuable service for employers - they weed through the myriad of options available for a particular product and present benefit managers with one (or just a few) of the best on the market. This has long been a key part of the value proposition in the delivery of employer-provided benefits such as medical, term life, etc. and it is (or should be) just as important for voluntary benefits.
Brokers can help employers provide the best options for employee-paid benefits as well. But what does "best of breed" mean for voluntary products?
For too many brokers, best of breed means lowest cost. However, price or premium rate is really only one piece that must be considered. In finding a best of breed voluntary product, brokers should look at a wide variety of factors in addition to price. After all, what good is an inexpensive product if it doesn't address the real needs of the employee?
The first step is to vet the carrier and look at factors not directly related to the product itself. For example:
- What is the carrier's history of claims payments? Do they pay claims quickly? Do they try to find ways to pay legitimate losses?
- How are the company's administrative processes? Do they have processes that make it easy for an employer to manage the payroll deduction and remittance process?
- Is the carrier stable? Ratings are important, but also is the carrier's commitment to the voluntary market.
- What benefits are offered? What are the specific benefit provisions including any exclusions and limitations? Are there any innovative benefits or features that should be given weight in the decision?
- Is the price competitive? The price doesn't have to be the lowest but should be comparable to other products on the market. Also look at the carriers' history regarding rate increases. Do they start low and then raise rates to "catch up" or is the plan guaranteed renewable (where rate increases have to be filed with the insurance department on all like policies)?
- What type of underwriting is the carrier offering? Is it guaranteed issue? What are the eligibility requirements? What are the participation requirements?
- Are there continuation options for employees should they leave the employer? Is the plan portable? At what cost and under what circumstances?
With smaller benefits and HR staff these days, employers are depending on their brokers more than ever to do their homework and bring them the right solution from the right carrier. Make sure you are looking beyond price when bringing best of breed voluntary products to the table.
Gil Lowerre can be reached at (860) 676-9633 or glowerre@eastbridge.com. Bonnie Brazzell can be reached at (803) 738-1236 or bbrazzell@eastbridge.com.
