We have all heard a lot about change during the past four years; and that rhetoric is ramping up again. Most of the time, however, politicians fail to define what they plan to change and how they plan to change it. The insurance industry is no different. For the healthcare industry and employer provided benefits, change is not only inevitable, it is a must for these benefits to continue without a government takeover. At Advantage Benefit Solutions, we believe the free market does and can continue to provide the best healthcare system and benefit delivery system in the world. The change needed the most is transparency: transparency in how healthcare services at hospitals are provided; transparency in the cost of pharmaceuticals, and yes transparency in how the insurance brokerage system delivers the financing of these perks we receive from our employers.
2011 was a big year for Advantage Benefit Solutions and for our clients. We began migrating our business model away from a commission based brokerage agency to a fee based, fee for service benefits consulting firm. Other agencies are beginning to talk about this only because of the new Patient Protection and Affordable Care Act (PPACA) or Compliance & Legislative’s “Minimum Loss Ratio” requirement. Granted, about half the medical carriers are removing brokerage commissions from the premium and paying the broker a portion of the premium as a fee instead of a commission. But that is not why we changed to a fee based model. We changed because of the inherent conflict of interest existing between insurance companies and brokers: insurance companies pay brokers’ commissions for both new business and also bonuses for not moving business away. Consequently, the broker may be incentivized for recommending a decision not always in the client’s best interest.
This does not necessarily mean your broker is not acting impartially. But, using a fee for service model does remove any potentially questionable transactions from the scrutiny of your executives and board members. As a matter of fact, the Risk Insurance Management Society (RIMS), a professional association for corporate risk manages, said in its revised policy statement “RIMS supports a business model for the insurance industry which does not provide for, offer or make available contingent commission arrangements for the brokerage industry.” Any broker or independent agent who accepts these fees “represents an inherent conflict of interest.”
We asked you what you wanted from a benefits consultant; and with your input, we are now singularly focused on helping you manage your ‘people costs’. The starting place is protecting your fiduciary liability through conducting a compliance analysis, building an administrative process around your company’s benefits, and helping you attract and retain employees by educating them of the benefits offered. This enables you and your employees to remain focused on your core competencies.
This transparency also facilitates the change needed to control not only health plan costs; but, it creates a new level of trust between you, Advantage Benefit Solutions, and all the selected vendors. The goal: simply to provide the best benefits package for your employees.
We want to create the most competitive environment for your company through employee benefit plans.