Health Insurance Brokerage: Lowest Pricing Drives Sales in Fully Insured Market


By Homer G. Farnsworth

Does it matter how good you service a fully-insured account, or how long you have had it? Under the PPACA the answer is “probably no.” Low price has become the determining factor between success or failure in retention of business in today’s fully-insured market.

Most brokers remaining in the fully-insured market live or die on rates alone.

Benefits under the PPACA are essentially the same from carrier to carrier; Bronze, Silver, Gold, Platinum Plans. Just like Medicare supplemental insurance, with Plans A through J, all carriers are mandated to offer the exact same benefits.

So what is the determining factor in the eyes of the buyer? If benefits are the same, what is the differentiator?  Must be pricing.

But how about service? Isn’t that important too? Not when everyone provides good service. So what is the differentiator then? Must be pricing.

In the fully-insured market, it’s all about price and little else these days.

But what about self-funded business? Does any of the above hold true? Is pricing the determining factor in acquisition and retention of new business? The answer is no.

A plan sponsor who self-funds understands that pricing (cost) is dependent upon careful risk management through innovative techniques. Self funding requires management of health care costs, not health care premium dollars. Therefore a premium is placed on the expertise and experience of the broker, not on the cost of “insurance.”