If innovation is as Jay Abraham says, “making obsolete that which you did before,” then the small motley band of benefits professionals determined to revolutionize their business certainly qualifies.
I sit down with four of them at some pretty plush surroundings at the top of the Mandarin Hotel in Las Vegas, near the southern end of the Strip. It's quiet by Vegas standards, probably because it's still light outside and this is a place built for night.
At any rate, you’d never know to look at them that this is little more than the masterminds behind an insurgent group, ready to overthrow the status quo, whether it's at a trade association annual meeting or in the conference rooms on the front lines of the business.
I start with a round of drinks and a single question: What are you doing?
It started with the National Association of Health Underwriters’ Young Agent Committee — one of a dozen or so leadership committees charged with various tasks within the larger organization.
It started with Rebecca Purdy, a former broker who's now Humana's small group commercial sales rep for Nevada. A former NAHU president approached Purdy about taking over the committee in a bid to jump-start its sagging — if not stagnant — membership.
“The need for [the] Vanguard Council stems back to a place where people who have their whole careers in front of them (or a good portion left anyway) and are looking for something to plug into,” Purdy says. “Something they want to be a part of.”
She immediately enlisted Chad Schneider, broker market director, broker sales at Aflac. And they both agreed they wanted more than just the same old committee in the same old organization.
“Basically we wanted to really revamp and reinvent the entire Young Agent Committee,” Schneider explains. “And get rid of the stigma that ‘it's gotta be under 40, it's gotta be first five years in the industry and’ … really, for lack of a better term, making insurance sexy."
Purdy drew inspiration from her own backyard: Las Vegas.
“There's a big need to do things differently than they’re being done,” Purdy insists. “There's an opportunity to change the whole scope of the industry. What's it gonna take to separate today's broker from tomorrow's broker? And it didn't look the same. It wasn't the guy with the business suit and the briefcase going into a meeting with a PowerPoint presentation. It needed to be more dynamic. It needed to be more ‘now.’ And what is ‘now?’ In my opinion, Vegas is a great example of what is ‘now.’ It's current. It's trendy. Maybe that's a little hard for people in other parts of the country to see.”
The pair soon turned to BenefitVault's Scott Mardis, who's long lamented what he sees as a largely stagnant broker base sitting still in the face of unprecedented change in the industry.
“It's not a knock on brokers,” Mardis quickly points out, “but they’re doing things the same way they’ve done them 10, 15, 20 years ago: spreadsheeting carriers, throwing down broker record letters and grasping onto group coverage because it's the way they’ve always done things.
“So we went about trying to put together a council of thought leaders that brought into play new voluntary ancillary solutions, health solutions and new payment solutions,” Mardis adds. “We tried to create a community [where] we could bring those best practices in to play and be able to show not only what people are doing in the industry that's innovative but show that next generation of broker what they’re gonna need to accomplish in order to succeed in this industry. And that's a lot of what the Vanguard Council represents to me.”
For Sean Loving, vice president of customer engagement at Careington International, it went beyond serving young or rookie broker needs and extended to consumer outreach, as well.
“A lot of things are moving to the individual market and the big population of uninsured people is the younger generation,” Loving says. “And just think they need someone to relate to. And I think we can be that connectivity to get that uninsured population reduced so they have somebody who understands them and understands what's going on.”
That being said, the group wanted the Vanguard Council to represent more than just young agents — in both reality and perception — and that was a driving force behind the rebrand. It was important for the group to both embrace a new way of doing business, while offering a more inclusive environment.
“I don't want to lose some of the amazingness of some of these members who will retire in the next couple of years. This is not about age. It's not about how long you’ve been in the business. We want to capture all the greatness and be an incubator for innovation. All the great ideas,” Schneider explains.
“It's a forum, right? This is not a place to complain about PPACA. There's plenty of forums for that. It's not a forum for ‘the sky is falling’ or ‘membership is doing this’ or ‘this local chapter is doing that.’ If you aren't thinking about positive, forward-thinking, game-changing, innovative ideas, we’re gonna boot you from the group.”
“It's solutions,” Purdy emphasizes.
“We’re gonna run past you,” Mardis adds. “We’re solutions providers now.”
Solutions, not support groups
It's that lack of patience with both traditional ways of doing business and nihilistic attitudes about the market that drives this group forward. And their ambition certainly doesn't end at their own doorstop. They’ve transformed their committee in less than a year. And they make no bones about wanting that transformation to spread like a virus throughout all of NAHU.
And the rest of the benefits business is next. And make no mistake, that ambition is driven by simple survival instinct, stirred up by a business in turmoil, which — in their words — “is gonna make this simple group broker and this industry disappear.”
So, as always, it seems as if half the problem is still awareness.
“Some people still think it will all shake out and it will be just fine,” Purdy says, shaking her head. “Some people really haven't really understood the gravity of what has happened.”
And while uncertainty from the both the federal and state levels haven't helped matters over the last few years, this is a group of people who are adamant brokers haven't been proactive enough.
“We’ve witnessed three years of ‘wait and see,’” Mardis complains, agitated now. “If you listened to a lot of brokers three years ago, they simply said to all of their groups once PPACA passed, ‘Everybody, don't move. [It] will never survive the Supreme Court.’ And so they simply told the groups not make any changes. They waited for the Supreme Court ruling to come out, it was approved, said it could be a tax, and they ‘All right, but nobody move because Obama will never get reelected.’ And so they made sure that there were no new changes. They didn't implement voluntary, they didn't do ancillary lines or anything else. They didn't even change the group policy. Obama gets reelected and they say ‘Wait, don't move because it's actually not gonna work. I’ll tell you what, we’re gonna renew you [Dec. 1] and kick this can down the road for another year in hopes this can do it.” And now there's a threat out there that says that federally-based exchange subsidies aren't legal and, believe me, there are enough brokers out there who will go out to their accounts right now and say ‘Nobody move because the subsidies could disappear.’ And the problem is they’re simply worried about losing their group commissions.
“But the fact is nothing has changed,” he concludes. “It's been law for more than three years and there are brokers out there right now driving significant revenue by doing things differently.”
A broker degree?
Another thing that has changed is the increased expectation of education and training. As Purdy points out, the days of the accidental broker are numbered.
“You’ve never had to have a degree for this,” Purdy admits. “Everyone falls into it. You ask any broker right now: ‘How did you get into insurance?’
“‘Well I certainly didn't aspire to be an insurance agent.’ They sort of fell into it. It's one story after another how people landed in this industry. I really see in the future the things brokers especially are being asked to do for their clients now — they’re tax people. They’re compliance people. You’re gonna need a degree in the future to be this,” Purdy concludes.
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But that level of expertise extends beyond accounting, tax laws or issues of compliance. Tomorrow's brokers need to be better versed in products — and solutions — than ever before. And all of it — even health insurance — circles back to financial management.
“If you think about it, you have 401(k)s, which are financial management tools, for example,” Mardis says. “Health insurance and all the ancillary lines are financial wellness tools. But they still carry the same potential price tag a lot of the other investment vehicles do. I agree completely with Rebecca from an education standpoint.
“Health insurance is turning into the new voluntary,” Mardis adds. “I’m turning into an individual financial advisor for your clients and your clients are no longer the CEOs; they’re the individual employees.”
So, what's next?
Few would argue against the fact that this an industry still in the throes of rampant consolidation, a tech transformation and an increasingly litigious workforce. But these factors, along with a slightly more savvy — and certainly more costs-conscious — clientele, have conspired to demand much more from today's brokers.
Or, as Purdy put it, we’ll no longer be seeing “the firefighter doubling as an insurance agent. I think those days are numbered and if they’re not, they should be. Just because of the support and everything else you need.”
In short, while PPACA might create more part-time workers in this economy, brokers won't be a vocation hit with that bug.
But brokers definitely need to rethink their strategy, and expand beyond the traditional group chassis.
“Maybe the brokers need to find a way to be able to engage the individual consumer,” Mardis suggests. “If you think about what brokers have been doing over the last 20 years, they’ve been providing a product 90 percent of end-users don't understand. They’ve been selling it to CEOs and CFOs who are focused on the bottom line and their renewals. They’re putting together a monolithic group product for a large group that doesn't necessarily fit the individual needs of the employee or the employee's family. So they’re gonna have to find ways to step out of that group model — which will be very difficult for a lot of these brokers — and find ways to become individual benefits consultants for their employees.
“Now that might mean most brokers are probably not in a place where they have the capacity or even the ability to do that. But there are others who do,” Mardis adds. “And that's all about engaging those who can sit down one-on-one with employees and discuss their benefit options, because this is no longer a simple one-size-fits-all group policy. There's enough choice in the market these days (as Sean referred to) outside of your traditional medical plans. Brokers need to find a way to gauge those individual employees and I think that's where they’re gonna end up ultimately servicing their end-user, the client. And that who aren't able to — as Rebecca mentioned — are not gonna survive long in this world.”
“I’d take that a step further and ask what it would take to service that population?” Purdy asks. “It's going to take technology, No. 1. Technology is expensive and, quite frankly, it's not quite there yet. So I foresee a lot of the innovations coming forward on the technology side … being able to manage all of these moving parts. Gone are the days of just HR ‘ben admin’ systems. Now we need something that allows you to capture things at an individual level with multiple carriers. And not just one carrier piece, too, because that's where they are right now. What's needed in the marketplace right now is so far ahead of what's currently available. So small brokerages aren't going to be able to afford it, which is where I think market consolidation is going to come into play. You’re gonna see a lot of people joining with other larger firms. So I think mid-size to large agencies will be the new norm.”
HIPPA and hysteria
I stop the conversation there, because I get frustrated every time technology comes up. For a decade, I’ve heard about every great new tech breakthrough under the sun that was certain to revolutionize the benefits business. Nothing lives us to the hype. Hell, it wasn't that long ago we were still using fax machines.
Why is it so hard for benefits to get tech right? Do we need Elon Musk to buy Aflac? Or Jeff Bezos to take over BenefitFocus?
Either way, it hasn't stopped every wannabe Bill Gates from trying. Exhibit hall floors have steadily ceded more booth space to tech vendors with each passing year.
“It's not just about file police. It's HIPPA. It's communication, the age of avatars,” Schneider says. “It's a million different things on the admin side. I think it was kind of a perfect storm of everything coming together. Now more than half of the vendors [on the show floor] have technology platforms coming out of the woodwork so it's not just the Blues and Cigna and Humana, anymore.”
“And all the big carriers are investing millions of dollars in enrollment software …” Purdy interjects.
But it's more than that. The threat isn't some big carrier will crack the tech code—it's that someone else will.
“I’ve seen brokers in my market — especially on the West Coast — who go to the San Francisco area, Silicon Valley,” Schneider mentions. “Engineers are now getting into insurance because they see the opportunity vs. insurance getting into the technology, right? That's the type of stuff that's gonna happen at some point. God forbid we have an Amazon.com for insurance, because then we’re all screwed.”
Schneider's convinced it's a scenario that's only three to five years away.
“So what does that mean?” Mardis wonders. “I think there is a need to understand how to engage that individual employee, individual consumer. And I agree with you that if Google or Amazon figures out health insurance the traditional relationship with the employer is gone. The broker record letter is gone.
“There's no more engaging the employer,” Mardis continues. “So there's no engaging the frat brother, the brother-in-law — relationship-based selling is gone. And at that point how does an employer not decide to drop group insurance based on their size. Because if health insurance is gonna be the new voluntary benefit out there…employers are gonna leave the group market in droves, especially after this round of renewals.”
But it's a future that's already here.
“I think it's all happening now,” Loving points out. “Employers are dropping group insurance. It's not that they’re going to, it's happening. They’re already offloading their retirees into exchanges. We’ve had this for years. All people did was rebrand it. Took what they had … added a little payment consolidation…rebranded it and called it an exchange and all of a sudden they’re the new hottest thing.”
Communication and confusion
“The consumers have no idea what the hell's going on,” Mardis insists. “We have brokers in the industry who don't know what the hell's going on, let alone the average consumer. Sitting there saying ‘What's going on? How does this work?’ So what do they do? Employee looks to employer. (It's always been that kind of materialistic/paternalistic relationship.) Employer says, ‘I don't have a clue. I’m gonna go with broker. Broker, what do you got?’”
So what do brokers do? Do they take the latest tech enrollment software for a spin? Try an avatar on for size? Or do they go through the same paces as always, showing up for that annual enrollment meeting and sprinkle a few emails throughout the rest of the year?
“I delivered a presentation about a-year-and-a-half ago to [nearly 200] brokers in Philadelphia and I stood up and said, ‘All right I’m anointing you the best educators in the industry. You are the best and greatest communicators ever. And you sit in front of 100 employees and describe their benefits plan, so I want you tell me how many of those individuals understand what you’re talking about,’” Mardis recalls. “Believe it or not, almost everyone came back and said, ‘I don't know, maybe 10 people out of a 100 understand what we’re talking about in a group presentation.’”
And who's fault is that?