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The Changing Insurance Climate For Brokers

By: Jeff Kolesar, Vice President, Sales and Market Development

In the changing landscape of insurance, more and more brokers are finding it harder to make the kind of living they’re accustomed to. In fact, it’s safe to say their entire world has changed since the inception of the Affordable Care Act (ACA).

In the changing landscape of insurance, more and more brokers are finding it harder to make the kind of living they’re accustomed to. In fact, it’s safe to say their entire world has changed since the inception of the Affordable Care Act (ACA).

The root of the problem for brokers right now is a lack time. Brokers don’t have the time they need to focus on changes to policies for groups that are all seemingly set to renew at the end of the year. Commissions are down, stress is up, and as many as one-third of brokers have said they’re considering finding a new line of work. But before brokers jump ship, they should consider consultative selling as a way to make up lost revenue.

The growth of voluntary benefits

The changes in the insurance market mean voluntary benefits have grown increasingly popular among employer groups as a means to alleviate the rising costs of healthcare. Groups are more likely to include a voluntary benefit because they know dollars are being squeezed from medical. Employers know that if they can at least offer the option to give you something else, it will look as if they’re putting forth a healthy benefits package that will help to retain and attract employees.

In some ways, groups are creating their own marketplaces for employees. They’re also making insurance easier to deal with for employees since the cost of plans comes out of the employee’s paycheck. Voluntary coverage also gives the employee a choice when it comes to their coverage, which has value. Employees feel like the options have been vetted by the company and they’re able to make an easier choice than if they were surfing the Internet for an option. Employees don’t wake up one morning planning to buy ancillary coverage, but when they’re in the mindset of open enrollment and they’re making benefit decisions, those are the times when they’re really thinking about the coverage they need for the year. On the surface, the shift to voluntary benefits may look like more work for the broker, but it can actually serve as an opportunity to replace lost revenue if you make the change to consultative selling.

Hope for the struggling broker: Consultative selling

Consultative selling and a stronger focus on ancillaries could be the path to success for many brokers who have been squeezed by the medical insurance market. One reason consultative selling has become more popular is the expansion of health and wellness initiatives among employer groups. That trend has created much more demand for various ancillary benefit offerings. Employees increasingly want a range of benefit options that meet their needs, and, out of necessity, they’re willing to share the costs.

Consultative selling requires brokers to show that they have a high level of knowledge about the product. They’re also expected to know how to find a plan specific to the needs of their customers. It’s that relationship-building that creates a bond between the buyer and seller. Once that bond is formed, brokers have the opportunity to recommend ancillary options after the big medical decision has been made.

The ACA

When the ACA was first introduced, many medical carriers were hopeful it wouldn’t last. The hope for some was that after the 2012 election things would go back to the way they used to be. In fact, many carriers moved their effective dates to right after the election with the hope that a new president would be in office and the ACA would be a thing of the past. That didn’t happen, and after the most recent Supreme Court ruling, the ACA is here to stay.

This also means brokers are dealing with the fact that almost all of their plans are set to renew in December. As a result brokers are now forced to try to stay on top of changes to plans while working with groups who are almost all renewing at the same time. Dealing with ever-changing plans, along with clusters of renewals, means brokers are almost certainly going to leave money on the table.

The struggle for brokers right now is to find ways to earn the level of income they had pre-ACA. Commissions for brokers are down for a couple reasons. Thanks to the ACA, brokers have a limit to the amount of revenue they’re allowed to spend on “administrative overhead,” which includes commissions.

Finding the right carrier to partner with

The ACA focuses on 10 essential health benefits; nine of those are medical-related. The only one that isn’t is standalone dental and vision coverage. That’s why I believe it is in a broker’s best interests to partner with a company that is set up to help sell ancillary. I suggest finding a company with plans designed to give brokers the time they need to provide the best service possible for their clients. That means finding a carrier with flexible plans that is willing to do whatever it can to make what has become a bulky process run more smoothly.

You’ll even be able to find carriers willing to help brokers succeed by holding enrollment meetings, even for the smallest groups. At Renaissance, we go as far as to offer our account managers as resources to go to enrollment meetings to help explain our plans. We know that these are things a broker would traditionally handle on their own, but we also understand that they likely don’t have the time now. With our help, brokers will likely see their enrollment numbers go up and more money will go in their pockets.

For brokers in today’s world, it’s all about time management. Each year, brokers deal with massive changes on the medical side when it comes to what plans can be sold and the tax levels for each plan. The ACA has accelerated this timeline even more by shifting the majority of open enrollments from January to December. That means each year, brokers find themselves spending hour upon hour learning what has changed since the previous year. Carriers are changing their plans based on feedback and what they can or cannot do anymore. Those changes mean brokers are constantly working to learn the nuances of plans that continue to evolve. They’re putting in time and effort to make sure they’re picking the plan that is right for their client; the more time they have to spend on a single client, the less money they can make selling to someone else.

Adding ancillary means adding revenue

As a stand-alone ancillary carrier, Renaissance can help alleviate the learning curve that comes with consultative selling. We offer bundled services that help to eliminate time spent trying to shop multiple ancillaries. At Renaissance, we’re always looking to partner with brokers to find out what their goals are and how we can help them with their business. We want to form that relationship in an effort to be a company that is working with brokers as opposed to a company that is trying to sell them something.

Adding ancillary insurance to the mix means added revenue for brokers who have seen commission numbers diminish in recent years. Brokers who sell consultatively will have the chance to stand out in front of their customers as someone willing to do whatever it takes to find the right plan. The change to the consultative approach will be an adjustment for brokers used to selling insurance using the features-and-benefits method. But, for the brokers who make the change, the financial gains will be worth any initial headaches.

Here is the good news about cross-selling ancillary benefits like dental and vision: They’re not the headache that medical is. When brokers sell ancillary, they not only increase their compensation; they improve the overall stickiness with customers benefitting from a superior level of service. The traditional dental and vision plan Renaissance sells today are virtually unchanged from what they were pre-ACA. The reason for that, from a technical perspective, is that as a dental and vision carrier, we have to have a full-blown plan that meets the actuarial value. Medical carriers often have very skinny ancillary coverage options that simply check the necessary boxes needed to comply with the ACA. What that means for the broker is that there is no new learning curve when it comes to selling ancillary. It’s something they know and it’s something they’re comfortable with. The same goes for life and disability, which has been completely unchanged by the ACA.

For brokers looking to boost enrollment, I recommend leveraging your carrier expertise where possible. If brokers are strapped for time, they should partner with a carrier like Renaissance that is equipped to step in and answer questions or provide seminars to help employees understand how their benefits will meet their needs. Another way to add clients is to look for carriers like Renaissance that offer a bundled suite of ancillary offerings. The bundled approach simplifies the decision-making process. It also allows you to provide a combined bill that eliminates the headaches of dealing with multiple carriers. All of these factors equate to time saved. Bundled packages can also provide discounted pricing, which can keep ancillary costs down while healthcare costs continue to rise. Ancillary used to be an afterthought for some brokers. Now, it should be considered a weapon in your arsenal of sales strategies.

The root of the problem for brokers right now is a lack time. Brokers don’t have the time they need to focus on changes to policies for groups that are all seemingly set to renew at the end of the year. Commissions are down, stress is up, and as many as one-third of brokers have said they’re considering finding a new line of work. But before brokers jump ship, they should consider consultative selling as a way to make up lost revenue.

The growth of voluntary benefits

The changes in the insurance market mean voluntary benefits have grown increasingly popular among employer groups as a means to alleviate the rising costs of healthcare. Groups are more likely to include a voluntary benefit because they know dollars are being squeezed from medical. Employers know that if they can at least offer the option to give you something else, it will look as if they’re putting forth a healthy benefits package that will help to retain and attract employees.

In some ways, groups are creating their own marketplaces for employees. They’re also making insurance easier to deal with for employees since the cost of plans comes out of the employee’s paycheck. Voluntary coverage also gives the employee a choice when it comes to their coverage, which has value. Employees feel like the options have been vetted by the company and they’re able to make an easier choice than if they were surfing the Internet for an option. Employees don’t wake up one morning planning to buy ancillary coverage, but when they’re in the mindset of open enrollment and they’re making benefit decisions, those are the times when they’re really thinking about the coverage they need for the year. On the surface, the shift to voluntary benefits may look like more work for the broker, but it can actually serve as an opportunity to replace lost revenue if you make the change to consultative selling.

Hope for the struggling broker: Consultative selling

Consultative selling and a stronger focus on ancillaries could be the path to success for many brokers who have been squeezed by the medical insurance market. One reason consultative selling has become more popular is the expansion of health and wellness initiatives among employer groups. That trend has created much more demand for various ancillary benefit offerings. Employees increasingly want a range of benefit options that meet their needs, and, out of necessity, they’re willing to share the costs.

Consultative selling requires brokers to show that they have a high level of knowledge about the product. They’re also expected to know how to find a plan specific to the needs of their customers. It’s that relationship-building that creates a bond between the buyer and seller. Once that bond is formed, brokers have the opportunity to recommend ancillary options after the big medical decision has been made.

The ACA

When the ACA was first introduced, many medical carriers were hopeful it wouldn’t last. The hope for some was that after the 2012 election things would go back to the way they used to be. In fact, many carriers moved their effective dates to right after the election with the hope that a new president would be in office and the ACA would be a thing of the past. That didn’t happen, and after the most recent Supreme Court ruling, the ACA is here to stay.

This also means brokers are dealing with the fact that almost all of their plans are set to renew in December. As a result brokers are now forced to try to stay on top of changes to plans while working with groups who are almost all renewing at the same time. Dealing with ever-changing plans, along with clusters of renewals, means brokers are almost certainly going to leave money on the table.

The struggle for brokers right now is to find ways to earn the level of income they had pre-ACA. Commissions for brokers are down for a couple reasons. Thanks to the ACA, brokers have a limit to the amount of revenue they’re allowed to spend on “administrative overhead,” which includes commissions.

Finding the right carrier to partner with

The ACA focuses on 10 essential health benefits; nine of those are medical-related. The only one that isn’t is standalone dental and vision coverage. That’s why I believe it is in a broker’s best interests to partner with a company that is set up to help sell ancillary. I suggest finding a company with plans designed to give brokers the time they need to provide the best service possible for their clients. That means finding a carrier with flexible plans that is willing to do whatever it can to make what has become a bulky process run more smoothly.

You’ll even be able to find carriers willing to help brokers succeed by holding enrollment meetings, even for the smallest groups. At Renaissance, we go as far as to offer our account managers as resources to go to enrollment meetings to help explain our plans. We know that these are things a broker would traditionally handle on their own, but we also understand that they likely don’t have the time now. With our help, brokers will likely see their enrollment numbers go up and more money will go in their pockets.

For brokers in today’s world, it’s all about time management. Each year, brokers deal with massive changes on the medical side when it comes to what plans can be sold and the tax levels for each plan. That means each year, brokers find themselves spending hour upon hour learning what has changed since the previous year. Carriers are changing their plans based on feedback and what they can or cannot do anymore. Those changes mean brokers are constantly working to learn the nuances of plans that continue to evolve. They’re putting in time and effort to make sure they’re picking the plan that is right for their client; the more time they have to spend on a single client, the less money they can make selling to someone else.

The reason medical carriers are continuing to make these changes to their plans is because they’re trying to hit an actuarial value. That means you’ll see medical carriers include a visit or two to the eye doctor and dentist and call it a day. But there is much more brokers can do today with ancillary coverage that will allow them to fill the gap on lost income, like consultative selling.

Adding ancillary means adding revenue

As a stand-alone ancillary carrier, Renaissance can help alleviate the learning curve that comes with consultative selling. We offer bundled services that help to eliminate time spent trying to shop multiple ancillaries. At Renaissance, we’re always looking to partner with brokers to find out what their goals are and how we can help them with their business. We want to form that relationship in an effort to be a company that is working with brokers as opposed to a company that is trying to sell them something.

Adding ancillary insurance to the mix means added revenue for brokers who have seen commission numbers diminish in recent years. Brokers who sell consultatively will have the chance to stand out in front of their customers as someone willing to do whatever it takes to find the right plan. The change to the consultative approach will be an adjustment for brokers used to selling insurance using the features-and-benefits method. But, for the brokers who make the change, the financial gains will be worth any initial headaches.

Here is the good news about cross-selling ancillary benefits like dental and vision: They’re not the headache that medical is. When brokers sell ancillary, they not only increase their compensation; they improve the overall stickiness with customers benefitting from a superior level of service. The traditional dental and vision plan Renaissance sells today are virtually unchanged from what they were pre-ACA. The reason for that, from a technical perspective, is that as a dental and vision carrier, we have to have a full-blown plan that meets the actuarial value. Medical carriers often have very skinny ancillary coverage options that simply check the necessary boxes needed to comply with the ACA. What that means for the broker is that there is no new learning curve when it comes to selling ancillary. It’s something they know and it’s something they’re comfortable with. The same goes for life and disability, which has been completely unchanged by the ACA.

For brokers looking to boost enrollment, I recommend leveraging your carrier expertise where possible. If brokers are strapped for time, they should partner with a carrier like Renaissance that is equipped to step in and answer questions or provide seminars to help employees understand how their benefits will meet their needs. Another way to add clients is to look for carriers like Renaissance that offer a bundled suite of ancillary offerings. The bundled approach simplifies the decision-making process. It also allows you to provide a combined bill that eliminates the headaches of dealing with multiple carriers. All of these factors equate to time saved. Bundled packages can also provide discounted pricing, which can keep ancillary costs down while healthcare costs continue to rise.