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We all probably have that one industry conference or annualmeeting that we really look forward to and enjoy attending. I wasat one of those recently. Yes, there are insurance relatedconferences that are cool and fun to attend. While there, I wastrading stories with a peer. He told me about a recommendation madeto an employer group that they purchase a plan from a particularhealth insurance carrier. It was a sizable client, about 500employees. The CFO was appreciative of his time and wanted toproceed without having an “agent of record” for the group.

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You see, in insurance agent circles, the “agent of record” isthe most important designation you can have with a client, as itassigns all commissions built into the premium to that agent.Typically these commissions are a flat, per-head dollar amounts ora percentage of premium. This particular carrier pays a percentageof premium at a rate of 5 percent. On a 500-person group, we arelooking at commissions in excess of $150,000 annually.

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Of course, the agent appealed to the CFO. It is customary and,in this case, probably justified, that he be kept on as agent ofrecord. But the question lingered with me: Is it necessary to havea health insurance agent?

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If we define insurance agent based on a quick Google search, wefind: “A person employed to sell insurance policies.” Combine thiswith the fact that few buyers want to speak to a sales agent whenconsidering a purchase and the vast amount of information online,complete with customer reviews and ratings, and it causes one topause and wonder.

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This question of the necessity of an agent is not specific tohealth insurance (hello, travel agents). But, given the sensitivityof the subject of health insurance and the sheer dollar amountssurrounding it, having a health insurance agent or not warrantsclose observation. Take this 500-person company; what would ahealth insurance agent actually do after the case isimplemented?

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An employer group of this size likely has an HR staff who arewell-versed and educated on the nuances and details of many aspectsof health care and health insurance. The insurance carrier hasservice reps charged with keeping the client happy and the planfunctioning as expected. There is probably a HRIS system in place,integrated with the carrier's enrollment management system tomaintain correct enrollment and eligibility. So, given all this,beyond the initial recommendation and consultation, what exactly isthere for an agent to do that justifies compensation at thislevel?

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My answer to the question of whether companies need an insuranceagent or not, is an emphatic no!

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What do they need instead?

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Group health insurance does not exist in a vacuum. There areregulatory, communication, administration, and companyculture-based factors that determine the right program to implementfor a particular employer group. No health plan designed andoffered by a health insurance carrier that is sold by a healthinsurance agent meets all the needs of a particular company.

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So what do companies need in place of a health insurance agent?An amalgamation of a CPA, HR executive, medical billing advocate,care coordinator, micro-economist, paralegal, and general businessconsultant and, oh yeah, health insurance agent. Let's call thisperson a strategic benefits advisor.

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A strategic benefits advisor is comfortable in the board roomand on the factory floor. They can speak with hospital CFOs, CEOs,HR executives and CPAs but also relate to the single mom trying toget an insulin refill for her diabetic child.

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They are found at insurance conferences discussing the latest inpayment arrangements and industry trends, but also at trade showsand discussion groups keeping up with what matters to businesses,along with employment trends, tax law, and legislation that impactsindustry in general.

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They belong to a cohort of like-minded professionals from acrossthe country, sharing ideas virtually and in person. They are nottoo proud to admit they don't have all the answers, but areconfident in their ability to tap their network to obtain them.

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Most of all, they are focused on their communities and theirclients and how they can be useful on the subject of employeemanagement and cost control, not just how much product they cansell for their own and their agencies gain.

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Employers should be asking questions of their insurance advisorand determine if they are working with an agent or an advisor,understanding the exact difference in each and what it means totheir business.

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A health insurance agent is transactional and is not worth$150,000 per year. But a strategic benefits advisor who can helpmake a long-term and transformational impact across a variety ofareas in the overall business is a completely different story.

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Tom DiLiegro is the founder of Benefit Advisors ofCharleston, and has extensive experience in the health careindustry (insurance sales, plan administration and patientadvocacy). He developed a personal interest in small group plansafter working with his wife's family business and has since made ithis company mission to introduce other businesses to creative,cost-saving solutions.

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