SURVIVAL – How Will Health and Life Insurance Brokers and Carriers Survive

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Brokers and Carriers in Voluntary Benefit Markets have ceased to accept change slowly and unwillingly. They are now being overthrown by forces that are beyond their control!

The Evolutionary Basis has been accepted by the H&L Insurance Markets, which includes the Brokers/Agents, Insurance Carriers, and Service Providers. This has been true for decades. Although there was fierce competition, the majority of parties enjoyed a stable, profitable market that used the same basic plans, programs, and services; product designs; and marketing strategies. Their Target Markets, which were Employers, Employees and Individuals, were content with the information provided by Carrier Media Promotions, and the Agents and Brokers Knocking on their Doors.

Below is a selection of Evolutionary changes that the Carriers and Brokers/Agents have reluctantly accepted over the years.

  • HMOs Originally focused on early detection and wellness.
  • Cafeteria Plan – Employers offer Employees a variety of workplace benefits.
  • Worksite/Voluntary Benefit Options – Allowing employees the freedom to choose at their own discretion and cost on a Payroll Deducted basis.
  • Section125 of the IRSC Pre-Taxing Qualified benefits make the Plans more affordable by reducing income and payroll taxes.
  • Reimbursement Accounts – Medical, Dependent Care, and Transportation/Parking Plans that assist in reducing the cost of essential Plans, Products and Services for Employees. These plans are tax-advantaged.
  • Health Insurance Plans That Support Individuals and Employees to Be Better “Consumers” Of Health Care.
  • HSAs and HRAs To be implemented with the HDHPs that provide a savings component to encourage Consumerism.
  • HDHPs High Deductible Plans That Support the HSAs & HRAs
  • Gap Plans To offset the risk of high-deductible health plans.
  • Ancillary benefits are non-insurance-based employee benefits that offer additional “choices” for employees and reduce the cost of goods and services for them.
  • Wellness Programs – These programs benefit both the employer and employee by improving individual health and reducing healthcare costs.
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There are many reasons Evolutionary change is ending. These are:

> Health Care Costs in Skyrocketing Mode

> Increasing Health Insurance Plan Premiums for Employees, Employers, and Individuals

> Disruptive changepromoted and promoted by entrepreneurs and a competitive marketplace!

> Provides Employers, Employees and Individuals with more access to Programs, Services, and Plans on a more affordable basis.

> Business/Social Media The Internet allows Carriers and Brokers to reach Employees, Employers, and Individuals to provide information and access to their Programs, Services, and Plans at a cost-effective price.

> Federal intervention with Reform – including PPACA and MLRs

> The Public Demand for Change!

What are the Disruptive and Revolutionary Changes facing Brokers and Carriers

  1. Insurance and Benefits Industry Reform By Government Federal and State Intervention in the Insurance and Benefits Industries! Regulations, no matter whether Obamacare or Romneycare are as amended, are unavoidable and will cause disruption!
  2. MLR (Medical Loss Ratios). will have a negative impact on the compensation package of Brokers in order to reduce the Premium Costs.
  3. State, Federal Exchanges will be the main access point for millions U.S citizens to access Health Insurance Coverage.
  4. Healthcare Coverage – Internet Portals, Individuals and/or Organizations that provide information about Exchange-based Plans – with some form of compensation (probably no commission based). Individuals, Employers, Employees and others will need to consult Navigators in order to make the right decisions about their Health Plan Coverage.
  5. Insurance Brokers, Large Employers and Third Parties will create Private Exchanges , including: Mandatory Plans; Innovative Plans; Self-Funded Plans, HDHPs, HRAs, HSAs; Gap Plans, Voluntary/Worksite Plans, Ancillary Plans, and many more – all on a Definable Contribution (DC), Platform.
  6. Technology Companies Providing Platforms to Private Exchanges and Defined Particiption Models will be the hub for Carriers, Brokers, Employers, and Employees for accessing and providing Plans, Programs, or Services.
  7. Companies Providing Education, Communication, Registration, and Data Management Capacities will be integrated with Technology Companies to better accommodate private Exchanges, and Defined Contribution.
  8. Insurance Carriers will “Mass-Customize” plans and programs that comply with the Federal and State Mandated ” Basis Plans“. This will allow for additional coverage for those who wish and can afford it.
  9. Ancillary Benefits will continue to dominate Insurance Markets, as all Benefits and Insurance Plans within Private Exchanges in a Defined Contribution Strategy become Voluntary.
  10. Broker Commissions– Carriers will continue to reduce the commissions for the Health Insurance Plans that are based on MLRs.
  11. The Internet will be the Distribution Channel of Choice for Carriers who are trying to replace brokers as direct contacts with potential clients and clients.
  12. Social/Business media will continue to be important as an interface between Carriers and Brokers and potential Markets – Employers and Employees.
  13. Brokers Compensation Models will Change – They will be forced to accept ” Fee Based ” Compensation, replacing the ” Commission Based ” Models. Individuals, Employers, and Employees will pay fees to brokers for assistance with decisions regarding Insurance and Non-Insurance Based Plans and Programs.
  14. Participation of Employers in Offering Benefits will use Private Exchanges and Defined contribution (DC) Strategies to continue offering Employee Benefits and remain competitive.
  15. Brokers Will Retire or Change Their Industry Focus Many experienced Health Insurance Brokers won’t be open to change or have the flexibility to survive. They will either retire or leave the industry.
  16. Consolidation Mid-Sized Brokers – As Brokers move from traditional Norms to delivering Benefit packages based on private exchanges, defined contribution (DC) and a fee-based compensation model, many organizations will partner, acquire, or be acquired to remain competitive.
  17. Consolidation Insurance and Benefits Carriers (as they want to leverage their assets, merge client bases, reduce marketing and advertising costs, and strengthen balance sheets they will merge.
  18. Employees, Employers, and Individuals will gain control. They will be more demanding of Carriers and Brokers to offer Plans, Programs and Services to meet them within a framework that includes Private Exchanges and Defined Contribution Strategy.
  19. Government Entities at both the Federal and State Levels will continue to increase their participation in the Insurance and Benefits Industries.
  20. A Single-Payor System and Nationalize Healthcare will remain the ultimate goals of Congress and Federal Agencies.
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Brokers and Carriers can no longer keep their heads in sand hoping these Revolutionary Pressures will subside. There will be a return of the Good Old Days ! Brokers’ and Carriers’ survival in 2013 and beyond will depend on their willingness and ability to let go of old Strategies and Models. They must embrace change. Brokers and Carriers need to be creative in developing new Programs, Services, and Plans – and Delivery systems to accommodate these changes.