Have you heard?
Sales (and the function of the sales rep) is changing rapidly. If you’re reading this, the answer to my above question is very likely “yes”. This notion is widely accepted whether one is selling for a software company, industrial manufacturer, or a financial services institution.
Is the profession of insurance sales changing as rapidly as that of other industries?
This question is where differences in opinion may occur. My opinion: yes. I’ll argue that no greater disruption has occurred (and will occur) to an industry’s selling model than in insurance, particularly employee benefits. In fact, this blog is named “the Exchange” in part to acknowledge the features of a post-healthcare reform ecosystem—and what it means for insurance distribution.
ZS has covered this topic extensively from many angles, but what about reform’s impact to another influencer in the healthcare value chain—the insurance broker?
Insurance brokers act as independent advisors to employers. Employee benefits brokers help companies assess benefit needs, design plans, “shop” for carriers, and manage benefits providers. Insurance companies typically pay commissions when brokers sell (or renew) benefits plans for employers (e.g., medical, dental, life, etc.).
I recently attended the annual Benefits Selling Expo, a conference largely attended by brokers and the insurance companies that sell to them. The agenda focused heavily on Reform’s impact on the role of the broker. Sounds like an issue that is top of mind to me!
So how are local and regional brokers responding to the changes spurred by healthcare reform?
Commissions are being cut by insurance companies, and many employer segments that they serve are predicted to drop group health insurance, prompted by national subsidies to push their employees to the public markets.
Some brokers are responding by exiting the business entirely. One insurance executive with whom I have spoken predicts that over 50% of “mom and pop” brokers who primarily serve the small group market will exit the business by 2018.
Those who remain in the business are faced with a set of choices on how to respond. Below are the four most common responses we have observed – each with their own strengths and risks.
Exhibit 1: Broker responses to the changing marketplace
One path isn’t necessarily preferred to the other. In fact, selecting only one path may not be enough for brokers with large books of business that have divergent customer needs and preferences. Those who can most efficiently access any of the above to match employer needs will stand to win mind and wallet share in the future marketplace.
In our next post, we will describe approaches insurance carriers can take to recognize broker personas that fit each of these models, and which tactics and messages they can deploy to win share.
As always, please contact us with your feedback or response on how this compares to what you are observing!