How to Help Make Your Health Insurance Broker a “Trusted Advisor”
Posted by David Edman in Insurance Purchasing Strategies, January 2010 on January 18th, 2010 | 1 Comment »
In your efforts to manage health benefit costs, do you wait until 2 to 3 months before your renewal and then invite one or more brokers to submit a bid? It does create competition, but we would argue the wrong kind of competition. To quote one of my clients, “There has to be a better way.”
Client Objectives
We stress to our clients the importance of developing a multi-year strategy for controlling healthcare costs. Some of the elements of that strategy are to give employees “skin in the game” (i.e., financial incentives to make good healthcare decisions), to buy less insurance and self-fund where appropriate, to build balances in personal heath savings accounts, to provide education and information to make better decisions, and to shift the balance of power away from the insurance carrier in favor of the employer. These activities require time and are the product of a well-thought-out strategy, not last-minute decision-making under the pressure of a renewal deadline.
Timing Is Important
When you “invite” other brokers to submit a bid 3 months before your renewal, you are pitting broker against broker to submit a proposal that addresses your needs only for the next 12 months. The incumbent broker’s interests are best served if you renew your current program with little or no change. There is no planning or preparation for the future, and you inevitably will go through the same dysfunctional process the following year. How is the annual health insurance renewal process currently working for you?
A better approach is to create competition between carriers, and this cannot be done if competing brokers to submit bids at the last minute to get your business. By definition, the brokers will be looking only in 1-year time frames, which does not allow for proper planning for future years beyond the next 12 months. Find your trusted advisor at least 6 months prior to renewal, and allow that advisor to develop an optimal arrangement using competition to your advantage.
Do you have a health insurance purchasing strategy that’s been successful for your company? Please share it with us!
Several years ago, after many years of escalating employee health insurance costs, I switched my Health Insurance brokerage to RMP. I currently have high deductible coverage with an HSA component. I believe this to be a long term strategy which has already helped me to contain my health insurance expenditures.