We all have the one conference or annual meeting that we really look forward to and enjoy attending. I was at one of those recently. Yes, there are insurance related conferences that are cool and fun to attend. I met an insurance advisor while there. While trading stories, they were telling me about a recommendation made to an employer group that they purchase a plan from a plan from a particular health insurance carrier. It was a sizable client with about 500 employees. The CFO was appreciative of their time and wanted to proceed without having an “agent of record” for the group.
In insurance agent circles, the “agent of record” is the most important designation you can have, as it assigns all commissions built into the premium to that agent. Typically these commissions are a flat, per-head dollar amounts or a percentage of premium. This particular carrier pays a percentage of premium at a rate of 5%. On a 500 person group, we are looking at commissions in excess of $150,000 annually.
Of course, the agent appealed to the CFO. It is customary and, in this case, probably justified, that he be kept on as agent of record. But the question lingered with me: is it necessary to have a health insurance agent?
This question of the necessity of an “agent” is not specific to health insurance (hello travel agent). But, given the sensitivity of the subject of health insurance and the sheer dollar amounts surrounding it, having a health insurance agent or not warrants close observation. Take this 500 person company, what would a health insurance agent actually do after the case is implemented?
An employer group of this size likely has a staff of HR personnel who are well-versed and educated on the nuances and details what a deductible, copay, and coinsurance is. The insurance carrier has service reps charged with keeping the client happy and the plan functioning as expected. There is probably a HRIS system in place, integrated with the carrier’s enrollment management system to maintain correct enrollment and eligibility. So, given all this, beyond the initial recommendation and consultation, what exactly is there for an agent to do to justify compensation at this level?
One could argue that the agent is more relevant on the smaller groups who might not have an HR staff or resources for an HRIS system.
So, my answer to the question of whether companies need an insurance agent or not, is an emphatic NO!
What do they need instead?
Group health insurance does not exist in a vacuum. There are regulatory, communication, administration, and company culture-based factors that determine what is the right program to implement at a particular employer group. NO health plan designed and offered by a health insurance carrier that is sold by a health insurance agent meets all the needs of a particular company.
So what do companies need in place of a health insurance agent? An combination of a CPA, HR executive, medical billing advocate, care coordinator, micro-economist, paralegal, and general business consultant and, oh yeah, health insurance agent. Let’s call this person a Strategic Benefits Advisor.
A Strategic Benefits Advisor is comfortable in the board room and on the factory floor. They can speak with hospital CFOs, CEOs, HR executives and CPAs but also relate to the single mom trying to get insulin refill for her diabetic child. They are found at insurance conferences discussing the latest in payment arrangements and industry trends, but also at trade shows and discussion groups keeping up with what matters to businesses, along with employment trends, tax law, and legislation that impacts industry in general.
They belong to a cohort of like minded professionals from across the country, sharing ideas virtually and in person. They are not too proud to admit they don’t have all the answers, but are confident in their ability to tap their network to obtain them.
Most of all they are focused on their communities, their clients, and how they can be useful on the subject of employee management and cost control, not just how much product they can sell for their own and their agency’s gain.
Employers should be asking questions of their insurance advisor and determine if they are working with an agent or an advisor, knowing the exact difference in each and what it means to their business.
A health insurance agent is transactional and is not worth $150,000 per year, but a Strategic Benefits Advisor who can help make a long term impact transformational impact across a variety of areas in your overall business is.