Invasion Of The Health-Insurance Brokers

invasion body       If Matt Stover is right, it won’t be long before your workplace is crawling with health insurers and brokers trying to recoup revenues they lost because of the Affordable Care Act.

The bottom line is that the carriers and intermediaries “are looking to sell your employees more stuff,” Stover, the global head of risk management at The Boston Consulting Group, said at last week’s annual Risk and Insurance Management Society conference in Los Angeles. Companies likely will welcome the trend, especially those that want to soften the blow of benefit cutbacks.

Speaking at a session on the impact of health care reform on employers, the insurance industry and employees, he said that in the wake of Obamacare, the workplace will become the “nexus for services targeting employees.” In addition to insurance carriers and brokers, the commercial players looking to pick up business directly from workers will include worksite marketers, benefit consultants, retirement-plan representatives and payroll-services providers, according to Stover.

The products on offer likely will include such “voluntary benefits” as hospital-cost, supplemental health, disability, dental and cancer insurance, sold at the worksite and wholly bought by employees at cheaper rates than they could get on their own. Stover listed these companies as examples of providers of such benefits: MetLife, SunLife Financial, Aflac, Unum, Cigna, ING, Colonial Supplemental Insurance and Prudential.

Insurance brokers in particular will be on the lookout for new sales to make up for the effect of health-care reform, according to Stover. Employers will curb their reliance on brokers from 47 percent of lives covered in 2011 to 29 percent in 2019, according to a 2011 BCG study based on a survey of 120 payer executives. (The payers surveyed provided health benefits to more than 160 million individuals, or about 65 percent of the total lives then covered in the United States.)

In sharp contrast, the portion of smaller employers buying insurance directly from carriers will jump from 18 percent to 27 percent over the same period. Coming on the heels of health reform, the employees of small and mid-sized businesses will be buying benefits from health-insurance exchanges at a 10 percent clip by 20019, the consulting firm predicts.

Besides the growing disintermediation of employee-benefits distribution, changes in the structure of employer plans will lure insurance middlemen and women into small and medium-sized workplaces to sell voluntary benefits directly to workers, according to Stover.


Indeed, the trend of employers shifting risk to employees is more pronounced among smaller businesses than big corporations, he said. “Small companies have historically offered less benefits,” noted Stover, and are now “shifting even more burden to employees.”

According to a BCG study based on data from 1,015 employers, the percentage of workers at small firms (three to 199 employees) with a medical-insurance deductible of more than $1,000 rose from about 15 percent in 2006 to 46 percent in 2010. Over the same period, the portion of employees working at bigger firms (more than 200 employees) increased from about 10 percent to about 20 percent.

Because they increasingly lack employer-provided coverage, the reasoning goes, such employees will be more in the market for benefits that they themselves can buy cheaply. On the other hand, “shifting purchasing decisions to employees requires carriers to engage with employees,” Stover noted.

Largely dealt out of benefit distribution by Obamacare, intermediaries are looking to work directly with your employees.

That will require insurance carriers to depart from their traditional strength of making a “first sale” to employers and intermediaries, who then “sell” the benefit plan to employees, according to the consultant. Now it will be become important to target, reach and serve employees directly in a “second sale,” he added.

David M. Katz
Human Capital & Careers