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Increasingly, employee benefits brokers and consultants are embracing the Internet because of its ability to significantly increase operating efficiencies and boost both revenue and margins. A well-designed Internet solution can, for the first time, lower distribution costs, provide a higher level of customer service, and offer additional products by electronically connecting all the players in the employee benefits life cycle: brokers and consultants, carriers, employers and employees.
The challenge today for brokers is to choose the right Internet solution that addresses all of the data management and communications issues along the employee benefits distribution channel and throughout the employee benefit products' life cycle. Because of the complexity of both the products themselves and the distribution system, a comprehensive solution has, until now, been available.
We all know the industry problems: an inefficient, disconnected, paper-based distribution system. From paper forms, the data is entered manually many times, leading to high acquisition costs and low customer satisfaction. Brokers, carriers, and employer clients communicate inefficiently. The proverbial wheel is reinvented with every renewal. And on, and on. This has led to eroding profits, customers' lowered perception of brokers' value, and the inability of brokers to influence carriers and legislation.
One of the most exciting solutions to these industry-wide problems is the arrival of Internet-based application systems that enable brokers to manage and distribute employee benefit products and services. Virtually every broker and consultant recognizes that they need to move to an electronic data management system, but making the right choice can be intimidating? broker's expertise is in employee benefits and consulting, not technology.
Evaluating and selecting your brokerage's Internet solution isn't a simple project. It takes an analyst of your brokerages' specific needs, along with an understanding of what each vendors' system offers. In the interest of "starting somewhere," here's a list of criteria to help you begin the evaluation of an Internet-based solution for your brokerage.
The First Question.
Some Internet-based solutions are designed to cut out the broker. It may be appealing to some entrepreneurs and small business owners to try to save money by circumventing brokers, but you have to wonder why more than 95% of employee benefit products sold to middle-market companies today use brokers. The reality is that brokers provide valuable, irreplaceable consulting and guidance to business owners and human resource professionals who are trying to run a business and can't (and don't want to) focus on the complexities and nuances of employee benefits. While brokers are crucial players, their role is clearly changing to providing higher value services and developing new revenue streams rather than being administrative middle men.
So the first thing to evaluate in an Internet-based employee benefits solution is where the broker fits in. If the broker isn't central to the system, stop right there and choose another system.
The Next Questions.
Here are eight additional criteria. For each system you consider, ask if it:
- Connects All the Players.
The first question is whether the system connects all the players along the distribution channel. The solution you are looking for enables everyone to communicate efficiently and smoothly. A "solution" isn't a solution if it allows only one of the players to organize and communicate data. Your solution must enable you to connect "downstream" with your clients and their employees. It also must enable you to push "upstream" and connect with carriers.
- Minimizes Paper.
The beauty of a web-based system is that it's electronic. All the data is captured and managed electronically. Everyone who is authorized has access to the data 24 hours a day, seven days a week. Think of it as having one repository of the "truth" all client data and subsequent changes are entered in one place, so there never is a question of whose notes are the most current version of the "truth."
- Speeds Up Procurement.
One of the key ways to save money is to speed up the procurement process for both new business and renewals. To do this, your new system must be able to create RFQs quickly and easily. It must enable you to use existing data and tailor it for a renewal in real-time. It must communicate efficiently with your carriers and clients. And it must automatically create an electronic "paper trail" so you and your account management team know the status and history of the account. With all these features, the sales cycle is significantly shortened.
- Improves Customer Service.
The primary element of customer service is communications communicating quickly, thoroughly and accurately. Your electronic system must enable you to communicate with your clients and their employees by providing you with instant access to account information, by automatically tracking customer service issues and their resolution and by enabling you to communicate with them clearly and quickly.
- Aggregates Your Negotiating Power.
Carriers listen to strong brokers that represent large blocks of business. The Internet represents a new means for brokers to aggregate their power and have more influence with carriers. Make sure that your Internet-based solution views you as an important partner, not just as a customer. By selecting a solution that actively create a "community" of brokers to influence underwriting, pricing, and legislation, you will make yourself a stronger professional.
- Strengthens Business Relationships.
The insurance business is a relationship business. Business owners put their trust in their brokers. Carriers put their trust in brokers. A solution must further your relationships with your clients, carriers and employees. If you invest in and use a well-conceived, easy-to-use system that enables everyone to work smarter, faster, and more cost efficiently, you will strengthen these relationships, leading to higher retention of clients and employees.
- Interfaces With Other Systems.
While it would be nice if the system you select turns out to be the perfect solution for all of your clients and carriers, chances are it will need to interface with other software. Therefore, you need to look beyond the marketing literature and promises to determine how easily your Internet solution will interface with other vendors' benefits administration software, TPAs' applications, carriers' underwriting engines and so forth. As a broker, it's unlikely that you will know what question to ask in this area. You will need your IT professionals to ask the tough questions, and interpret them.
- Measures Sales Efficiency.
You can run your brokerage more profitably when you have hard data. Make sure your solution can easily provide you with management reports, close ratios, bench marking, competitive feedback and analysis. Without this ability, you will be missing one of the most valuable assets of any electronic data management system.
A Better Bottom Line.
Ultimately, the best criterion for an Internet-based employee benefits system is how it impacts your bottom line. Does it lower costs, increase revenues and margins and create new sources of revenue? To accomplish this, your solution must decrease the time spent on data management and communications, and provide useful efficiency tools and reporting. The distribution efficiencies also should enable you to offer new products and services to your clients and their employees. This translates into significant new sources of revenue for you and added value to your clients and their employees.
Because the employee benefits industry involves so many players over the life cycle of complex products, the solution needs to come from industry experts.
As a broker, I know the needs for first hand and so, with my co-founder, Brian Bair we developed BenefitPoint, the first Internet-based employee benefits infrastructure for the distribution and management of group insurance and financial products. BenefitPoint provides a complete set of business-to-business services enabling brokers and consultants to manage the entire group health insurance and benefits life cycle. Building on the existing industry relationship among brokers, carriers, and employers, the BenefitPoint solution combines the efficiency of the Internet with the established distribution model of the insurance industry to lower costs, improve customer service, and increase sales.
Kurt de Grosz, co-founder of BenefitPoint, brings extensive industry expertise to the company where he is responsible for operations and sales. Mr. de Grosz co-founded BenefitPoint in 1998 after building a successful career at ABD Insurance & Financial Services, where he provided risk management sales and consulting to Silicon Valley companies on a variety of insurance lines, including directors' and officers', professional, multimedia, and intellectual property liability and workers' compensation. At ABD, Mr. de Grosz co-designed and implemented CyberSure, ABD's interactive client website. Prior to ABD, Mr. de Grosz worked with Transamerica Corporation in the Commercial Mass Marketing operation.
Based in downtown San Francisco, he can be reached at 415.277.5603 or
kurt@benefitpoint.com.
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