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Not long ago, health insurance brokers feared losing their jobs to the "disintermediating" force of the Internet. With so many Web sites sprouting up to enable the entire business cycle of group health insurance, why would employers purchase coverage through a broker?
It seemed an attractive proposition: Cut out the middleman and save on his commissions. Although this scenario actually works for some small companies because of the state-mandated underwriting formulas for firms with 50 or fewer employees, larger firms must navigate a sea of options for high-quality, cost-effective health benefits. In some instances, analysts say, brokers continue to play a vital role in helping employers make these choices.
"Because of the cost of benefits in the United States, there is a major shift occurring," says Craig Davidson, e-business leader for Willis Inc.'s national benefit practice. "That shift is going from relationship-based selling to performance-based selling."
Health insurance brokers can adapt to the new economy, Davidson believes, by guiding employers to online solutions that increase productivity, reduce costs and boost employee satisfaction with benefit plans. And indeed, dot-coms for health insurance commerce are rapidly signing up brokers to sell and mange their products and services. But for a first-hand sense of what's available, the Surfer this month looks at five companies that appear to be out front in the competition for online health insurance trade.
BenefitPoint
www.benefitpoint.com
"There's a big disconnect out there," observes the BenefitPoint's co-founder Brian Bair, about the relationships between insurance companies, brokers, employers and employees.
"Carriers are operating in silos with proprietary technology. Brokers and consultants are operating in a paper world. Employers have their own systems, either an HRIS or a home-grown system. And the employee is the recipient of paper communication materials and enrollment forms."
BenefitPoint's Web-based services attempt to help knit together the major players in the benefits life cycle. Since its formation in 1998, the company has signed on more than 75 brokerage and consulting firms and 100 carriers representing 1,300 plan designs nationwide.
Brokers registered with BenefitPoint sell insurance to mid-market employers with 150 to 5,000 employees. The company provides brokers a core back-office application for free, and charges a fee for online enrollment, benefits administration, reporting and analytic services. Carriers pay commissions for products sold on the system.
BenefitPoint is preparing to roll out Section 125 services, COBRA administration, consolidated insurance billing and employer portals where employees may purchase products such as home owner's insurance, group auto, legal resources and annuities.
*** Reprinted from Employee Benefit News, June 2000
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