Offering large group purchasing power, lower pricing volatility and more detailed insight into claims data, captive insurance solutions appeal to employers fed up with the
As a benefit broker, your job is to help employer clients identify and choose the best possible plans and strategies for the employee populations you serve. Keep reading to learn why this process is crucial, how to identify clients that are good captive candidates and ask questions to stimulate consultative conversations with clients.
You play a
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This last point is especially true of captives, because introducing disengaged or unprepared employer members to the captive risk pool contributes to the widespread issue of adverse risk retention. That phenomenon occurs when all employers are incentivized to remain in a captive, regardless of whether their actions support the captive's sustainability.
Employers with a surface-level understanding of alternative funding solutions might only see captives' potential for cost savings. While cost savings is a very real benefit, guiding a client toward a captive solution involves helping them take more control over their partner and vendor strategy to ensure long-term viability. Therefore, before you make any recommendations, it is important to ensure the client has a long-term vision of its employee healthcare strategy beyond short-term premium reductions.
Keep in mind that just because the client has a long-term vision, doesn't mean it has the time, resources and willingness to learn what a captive commitment entails, which includes financial commitments. Before proposing a captive, make sure your client is comfortable assuming the additional fiscal responsibility associated with self-insurance and the captive risk layer. They must be prepared to contribute additional capital to fund and secure the captive's initial surplus, typically ranging from 10% to 15% of the first year's premium.
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Just as employer clients must meet certain criteria to be considered a viable candidate for a captive, there is a standard that benefit brokers should meet before adding captive insurance solutions to their suite of offerings.
In a healthy broker-client dynamic, qualifying and introducing your client to the captive are the first steps in a collaborative, multi-year undertaking. Throughout the client's time in the captive, you should be willing to have candid conversations and encourage them to communicate with employees about changing behaviors that lead to avoidable expenses. Aligning with a captive solution that offers comprehensive client support in the form of custom network navigation playbooks and access to client success personnel can make this part easier.
Ditch the pitch and ask questions
Once you've reviewed your book of business and identified a few clients that might be good fits for a captive, it's time to broach the subject with them. The best way to kick off a collaborative, multi-year relationship characterized by candid conversations is not with a traditional sales pitch, but rather a consultative conversation in which you come from a place of curiosity surrounding your client's goals and risk appetite. Here are some sample conversation starters:
- How are you proactively addressing your health benefits pain points and taking control?
- What is your identity as an employer and type of people are you hoping to attract with your employee health plan – and do you have a culture of accountability and community?
- Would it be helpful to map out what your plan could look like if it were designed like a high-performing business unit, with clear levers of control, accountability and financial upside?
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Asking these types of questions ensures you aren't pitching funding models, but instead framing business strategy so you can meet clients where they are, understand their philosophy and priorities, and recommend the appropriate solution — which may or may not be a captive.
