ACA Forcing Changes for Brokers
Brokers are increasingly being asked to act as consultants in addition to negotiating price and insurance policy packages.
The Affordable Care Act has increased that trend.
Kelly Hagan, director of operations, employee benefits at Assured Neace Lukens in Louisville, Ky., said her firm’s clients are increasingly asking for more consultative services, especially after the passage of health care reform.
Before the ACA passed, employers cared more about price negotiations, she said, but now the brokerage hears more requests related to guidance and advice about ACA compliance, as well as compliance with other regulatory acts such as the Employment Retirement Income Security Act.
Hagan said that clients shouldn’t have to ask for certain services; consultation should be a part of a broker’s service package.
To meet that demand, Assured Neace Lukens has two wellness managers on staff to help clients develop customized wellness programs, and has hired a corporate compliance officer to provide guidance to clients.
In addition to one-on-one conversations with clients on priorities, coverages and services, the firm sends out quarterly newsletters and email alerts on compliance issues and presents monthly webinars on topics, such as how to track variable hour employees to determine whether they should be offered health care coverage under the ACA.
The broker “transaction” is becoming less important in terms of the way clients actually see the value provided by their agent or broker. — Tom Fitzgerald, CEO, Aon Risk Solutions’ U.S. retail operations
Tom Fitzgerald, CEO of Aon Risk Solutions’ U.S. retail operations in Chicago, said that the broker “transaction” is becoming less important in terms of the way clients actually see the value provided by their agent or broker.
As such, brokers need to help clients “understand what is possible” — from benefit plan construction, to engaging communications with employees, to risk financing alternatives such as self-funding or using private exchanges for employee health care.
“We engage our clients through our account executives or account managers, but we have over 500 products and services, so it gets pretty complicated and can be difficult for them to always have a clear understanding of everything we have to offer,” Fitzgerald said.
“It then becomes the responsibility of leadership to educate, inform and train our client-facing colleagues,” he said.
Denise Ashford, vice president at Sweet & Baker Insurance Brokers in San Francisco, said a recent survey of select clients that asked for their top priorities, “really brought to light the disconnect between what I thought they wanted, and what they said they needed, and now with this knowledge I can better service them.”
Sweet & Baker caters mainly to midsized companies, as well as Silicon Valley tech startups, and most have thinly staffed human resource departments that need the broker’s consulting services.
These days, clients routinely ask Ashford and others on her team to interpret the ACA’s regulations, such as changes in the probationary period for employee eligibility for health care insurance.
Many smaller brokerages don’t have enough revenue to provide a lot of the additional services that larger firms can, as the additional services come out of commissions paid by carriers, she said, noting that her firm provides a number of additional services to clients “for little to no cost.”
Laymon Group Benefit Consulting LLC in Wilmington, N.C., a small agency with five employees, is able to compete with some of its larger competitors by outsourcing some services to vendors that specialize in different fields, said CEO Chad Laymon.
“This allows us to bring a multitude of different services to the table under one umbrella,” Laymon said. “At the same time, on the service end, we are steering a much smaller boat. This allows us to be more flexible with our client’s needs.”
Laymon has had to increase its value-added services due to “tremendous changes” within the industry because of health care reform, he said.
“Most small brokerage firms were started years ago, and today, the principal is getting older and doesn’t want to involve themselves with all of the changes going on, and even if they do, the technology curve can be a steep hill to climb,” Laymon said.
“As a result, many brokers are selling their book of business to the larger consulting firms. Times have changed. Smaller brokers must adjust to show their strength or they will be left behind.”