In terms of market disruption, the Affordable Care Act was barely a ripple in an otherwise calm lake surface. The much bigger disruptor has been adoption of cloud-based software programs that are allowing agents to provide single source billing, online enrollment, access to HR information and more. Every month, I hear from agents who have lost long-time clients by broker of record letters to competitors who are providing these tools.
While agents providing these value-added services have disrupted the market and changed the nature of the benefit sales game, they were but a precursor to the far bigger disruptor taking over huge chunks of the benefits marketplace. If you are not already aware of a new company by the name Zenefits I strongly encourage you to visit their website today. In their first 12 months in the marketplace they added 2,000 clients and now provide health insurance to more than 50,000 employees. And if they are not already in your city you can be assured that they or a copycat will be soon.
How is their model different?
The approach of most agents today is, If you become my health insurance client I will also provide a host of additional value-added services by providing new technology.
Zenefits has recognized the transactional nature of health insurance and turned the approach upside down. They go after the market by saying, We will give you all of these HR, compliance and payroll services for free. Once you see how great our service is we hope that you will see the value of making us your agent of record.
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They do not even make believe that their value is in shopping the market for health insurance.
The good news is that as an employee benefit professional you can actually not only win but you can dominate in your market and do it without promising a lot of stuff. But it is important to recognize that you must change your model. Failure to change your model will result in your extinction within five years.
Assuming that do not want to become an HR expert, here are two strategies that you can use to win and win big in 2015 and beyond:
Strategy No. 1: Move away from spreadsheets and toward a benefit budget model. I have talked about this in the past and believe that this approach has significantly more value than the current approach that most agents use. This approach demonstrates your real value as an insurance professional and can make a major difference for a business.
Strategy No. 2: Find a new and unique niche product that has synergy with medical insurance and leverage your current clients. This is my personal favorite strategy. Your first step is to take this new product into your existing clients. Once you have enrolled two or three current clients, you can leverage LinkedIn to generate high quality referrals based on this new product. By avoiding any discussion of group medical you avoid the renewal date trap or the Im happy with my current agent objection.
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Your market has already changed and whether you like it or not group medical is now seen as little more than a commodity. Not only are commission levels being reduced but the cost of doing business is also getting more expensive. Your choice is simple: Become an early adopter of the Ill give you all this stuff and hope to get your group medical approach, adopt an entirely new and different model from what you are currently doing or become extinct.
Schlesinger is an independent consultant focused on helping benefit professionals double their income. Reach him at (336) 777-3938 or through getmoregroupclients.com.
