Selling Group Health In This Market

[thebig_j]

So I have a few questions. How does one go about "consulting" with a business owner for fee. My company consults on HR first and I am the healthcare consultant in our firm. I still work 100% on comish. For a few that get the message confused no one I have talked to would consider paying to talk health insurance, because "Someone does that for me for free already."

Are you expecting to make a consulting fee from them employer and a commission for each individual policy sold? I wouldn't go for that as a business owner. I would feel ripped off.

At least for this year I would advise against dropping the group as it is a giant pain in the ass to get enrolled as an individual. If my employer made me deal with that I see major backlash from an employee satisfaction standpoint.

Also I have still not found a legal way for an employer to pay for individual premiums. So would you advise an employer to drop coverage and if anyone is out of subsidy range they're SOL? what about if you thought an employee should get a subsidy but HC.gov says no?

What about when you figure the tax credits into it. Sure enrolling in the SHOP is a pain, and it in no way brings "more options and easier shopping." and no one will get a 50% credit. But if your going to get 25-35% it is still a good help.

Sorry for all the questions.I am new to health insurance. About to hit my 1 year mark. With our business model I will be working in the group market. I would like to think I am creating a career for the future here. But I don't know. The more I try to get answers on group stuff... from anywhere, no one seems to know anything. Is the world (carriers included) just waiting for the market to die? I see a HUGE need for small employers to be properly advised on healthcare. But for someone who is truly informed and truly wants to help small businesses is it impossible to break into the business and make a living? Will supplemental be all that's left in a group in the end?

 

[leevena]

No, group is not dead. But from the perspective of your market it may appear to be so.

As for your question about how does one go about "consulting"with a business owner, from what you have posted about your role/market, it would be very, very difficult to earna living consulting. The small groupmarket is generally characterized as a transactional sale, meaning the clientis usually looking for a price and an access to a product. As a sales person you either have it or don't. In theworld of a consultant, the buyer is acting not on price/access to product, butis purchasing the consultant. Theconsultant presented themselves as the product, meaning they can provide somevalue (solution to a problem) that is worthwhile to the buyer.

So think about it from the perspective of thebuyer (employer) in the small group market. For the most part your product is a commodity, price and featureinelastic, readily available from a variety of sources (broker, SHOP, etc), whocan all provide the basic information needed to make a decision, and costs theemployer no additional monies. So tell me, what can you offer? If there is something than go after

 

[njinsuranceguy]

I agree the group market is not dead but I see it taking a huge hit. As a broker/consultant, you will need to move with the punches. If your value is tied to "shopping" for group rates than you won't have much to offer to your clients who are looking for an expert to guide them on all available options. I know there are a lot of brokers in the business that will continue to only push group business regardless if its the best option for their clients. I like this because it will bring real opportunities for those who can think outside the box.

Regarding charging a fee, I see no problem asking for or collecting a fee as I already do. In fact, I like this model for several reasons. 1. My income isn't tied to the insurance carrier. 2. I don't have to wait for the insurance carrier to get paid before I do. 3. I am now paid by the client and that puts me on a very close level with the client.

How do you propose to the client that you collect a fee? It all comes down to value. If you are valuable to the client, they will have no issue paying you for advice. They do it all the time with other vendors. And in my opinion, very few have the level of importance as their insurance consultant does. How well we do our job affects many areas of our clients business. Here are a couple:

1. We directly affect the employers bottom line: Employee benefits are a top 3 line item expense for most companies. Usually just after payroll and cost of goods.
2. We directly affect the employees bottom line: How well we do our job can mean a pay decrease or a pay increase for the employees of our clients.
3. Because we affect the bottom line of the employees, we affect an employers ability to attract and retain quality employees.
4. Benefits affect an employees morale which affects production. If they provide quality benefits and as consultants we can control the cost, then employees value that. Conversely, if an employee's benefits get reduced and their paychecks shrink due to higher costs, then they value their jobs less. Basically, they are doing the same job for less money. That improves no ones morale!

I have clients who haven't received increases in costs or reductions in benefits in 3 years, which is when I went out on my own. I saved one client with 10 employees over $178,000 in this 3 year period and their benefits have remained roughly the same or have increased. Their previous broker was making $12k a year and providing horrible advice. The employees hated their insurance and their broker was costing this company in both premium and employee moral. Because of my advice, their cost has plummeted but so have my commissions. I had ZERO problem presenting my savings and turning in a bill for $5k which they gratefully pay. The owner told me it was the best $5k he ever spent.

I have another client with 6 employees who questioned my $500 consulting fee last year and didn't pay it. I told him last year that he hadn't received an increase in 3 years. When we spoke this year for our pre-renewal meeting, I asked him how much my advice saved him this year alone and it came out to just over $10k. Again with no reduction in benefits. In fact, they increased. I told him I would help him this year but my fee was now $2k payable in advance of working with me. He cut me a check on the spot. I would have gladly walked away because the commissions weren't worth the time. I would rather focus on clients and prospects who value my advice.

So, you need to decide... are you an "insurance" agent who "shops" for rates or are you going to be a consultant to your clients providing valuable advice that affects both their bottom line and the production and morale of their employees. If your value is in running quotes, then your commissions are at the right level. Just something to think about.

Good luck!

 

[thebig_j]

WOW Nj Extremely insightful! Thank you. I agerr in the 5-50 market my clients are very price driven. However I also brought an employer a self funded option earlier this year saving her 35k up front with a possible refund of 45k for a group of 20. I can see how in there is makes since to collect a fee due to the large drop in commissions.

I greatly pride myself od doing things alot of other agents don't do. And we consult on HR, Safety, employee engagement, and all kinds of stuff on an hourly rate. The healthcare is the only thing we don't charge a fee for. I could see that fitting in the biz model at some point. But for now I'm trying to A.) make enough to pay the bills, and B.) learn all of the solutions I need to really be the best consultant possible. I'm well on the way, but I know there's always more to learn.

I've already found better deals from most of the biz I have quoted. Making them pull the trigger has for some reason been a problem. Not that I have a huge sample size. I know I am bringing strategies the biz owners haven't been told before. So I know in the long run I will be the guy. I just have to eat pine cones and twigs until the future gets here.