Before going into a benefits discussion, know what the low-value "gives" are and be prepared to exchange a "give" for an employer's high-value priority. (Photo: Shutterstock)
Strategies for negotiating with a carrier will differ depending on the employer's census, industry, and their working relationship with the carrier. Insurance brokers have several negotiating tactics. Similar to a game of chess, it's imperative that brokers understand the lay of the land and brainstorm various approaches before making their first move.
Brian Freeman is the Founder and CEO of Mployer Advisor, the nation's leading digital marketplace for advisor ratings and reviews that is redefining the way employers search, evaluate and select insurance advisors. To provide some guidance, here are four techniques to consider when negotiating employee benefits.
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1. Listen to employer priorities
The most important piece in chess is the queen. The most important piece of information for the broker is knowing what is and is not important to the employer client. Fortunately for brokers, this valuable information is something carriers are not privy to. To successfully execute on this approach, it's important for brokers to take time and actively listen to their employer clients and identify ways to deliver on their company's needs and priorities.
Employers generally fall into one of the four categories and/or personas:
- Offering generous medical and work-life benefits is important, no matter the cost
- Cost is the major component driving a benefits plan decision
- Providing quality benefits at a cost-effective rate is a priority
- Benefits are a recruitment tool, including work-life balance
Before reaching out to a carrier, verify you've correctly identified which persona your employer client best fits.
2. Recognize the gives
Often in chess, a player will sacrifice a pawn or another critical piece to set up a more important move later on. In the insurance business, the pawn can be referred to as "the give," or the employer client's nonessential employee benefit plan items. Before going into a benefits discussion, know what the low-value "gives" are and be prepared to exchange a "give" for an employer's high-value priority. For example, if a wellness plan is not important to an employer but price is, then negotiate removing a wellness plan from a benefits package in exchange for a price decrease.
3. Know your BATNA
Much like chess, it's important to anticipate what your opponent's next moves are and preplan your counter moves. As referenced in Herb Cohen's 1982 bestseller "You Can Negotiate Anything: The World's Best Negotiator Tells You How To Get What You Want," have a BATNA–or best alternative to a negotiated agreement–ready. Ahead of any negotiation, go into the discussion with your countermoves prepared. That might mean agreeing to a different carrier or working with a different plan design. To avoid a dissatisfied employer client or potential trust concerns later, set expectations early. Remember to proactively discuss your BATNA with the employer client in advance to avoid any negative surprises later.
4. Negotiate in good faith
Your reputation is everything–both to your employer clients and to the carriers. Don't make false statements, and don't exaggerate just to land a deal now and risk losing trust with your employer client later. Trust and respect are two non-negotiable elements when brokering a deal. The insurance space is a small world, and your character and reputation are paramount. Maintaining a level of trust and respect in the industry will enable your voice (and opinion) to carry more weight and influence in future negotiations.
For a seasoned insurance broker, negotiating deals with insurance carriers can be a fun challenge. Like chess–with experience and practice–the strategies, tips and techniques outlined above will harden into instinct. Even so, insurance brokers must continuously work at sharpening and refining their negotiating skills. After all, insurance brokers have significantly more effect on the cost and quality of an employer's benefit plan than the insurance carriers.
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