A new company founded by two former Munich Re Stop Loss executives is selling stop-loss insurance directly to self-insured employers, eliminating brokers from the equation altogether.
Employers that self-fund their medical plans purchase stop-loss coverage – typically through brokers – to protect themselves against catastrophic claims. “The No. 1 consideration in writing business is price and it’s always been price,” says Paul Fallisi, CEO, Reinsurance Direct. “If price is such a significant factor, it’s necessary to come up with a better model that excludes broker commissions, fees and overrides and passes those savings on to the customer.”
Sam Fleet, president of AmWINS Group Benefits, a division of AmWINS Group, Inc., a wholesale broker of group insurance and administrative services, disagrees.
“Reducing employers’ health care spend has never been more important than it is right now. But cutting out the so-called ‘middleman’ – who has been a trusted advisor for years and understands what is important to the employer – is potentially problematic, especially when you are talking about medical stop-loss,” he says. “Seasoned brokers help their clients avoid a myriad of potential issues when placing this critical coverage by marketing the stop-loss to multiple markets in search of a competitive quote.”
Fallisi, meanwhile, acknowledges that “there are brokers out there that offer tremendous value and the ones that are really helping their clients don’t have anything to worry about. But stop-loss has really become commoditized over the last 20, 25 years and the reason it has become commoditized is that brokers have presented quotes on a spreadsheet. And the way they present a spreadsheet to employers is to basically put one variable on the spreadsheet and that’s price. They’ve gotten away from selling the quality of the product.”
Reinsurance Direct will quote for brokers but won’t pay commissions or fees to the broker, says Fallisi. The company will sell stop-loss insurance to self-funded employers with at least 100 employees. The stop-loss insurance policies offered by Reinsurance Direct are underwritten by Transamerica Premier Life Insurance Company.
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