Johnny Agent calls on an employer asking permission to quote on their self-funded health insurance plan. “Sure, here’s our census data, claims information, benefits summary, and current premium” says the CFO.
So Johnny sends the data to market. He waits, and waits, and waits for results. So do all the other agents who are competing for the business. Sound familiar?
Billy Bob calls on the same prospect. “Let me look at your health insurance program. I’ll underwrite your risk and give you an estimate of what to expect before you go to market. I’m accurate within a 5 % margin every time.”
Billy Bob doesn’t need to spend time approaching markets because he knows how to underwrite risk. He knows what TPAs will charge for claims administration. He’s been around the block a few times.
The next day Billy Bob calls the plan sponsor “Here’s what your risk is based on current benefits. Here’s what your risk is on various benefit models” says Billy Bob.
“Great” says the plan sponsor. “Can you place the risk?”
This scenario displays the difference between status quo brokerage and new era brokerage.