The days of slowly and reluctantly accepting change are over for Brokers and Carriers in the Health, Life, and Voluntary Benefit Markets. Forces that are out of their control have taken over!
For decades the Health and Life (H&L) Insurance Markets - Including the Insurance Carriers, Brokers/Agents, and Service Providers - have reluctantly accepted change on an Evolutionary Basis. While competition was stiff, most parties were enjoying a stable and profitable marketplace utilizing the same basic: Plans, Programs and Services; Product Designs; and Marketing Strategies. Their Target Markets - Employers, Employees, and Individuals - were relatively complacent and satisfied with the limited information they were provided through Carrier's Media Promotions and the Brokers and Agents Knocking at their Doors.
Here is a sample of the Evolutionary changes that were reluctantly accepted by the Carriers and Brokers/Agents over the years:
- HMOs - Originally focused on promoting early detection and wellness.
- Cafeteria Plans - Employers offering Employees workplace Benefit Choices.
- Voluntary/Worksite Benefit Choices - Providing Employees the freedom of "Choice" at the own Discretion and Cost on a Payroll Deducted Basis.
- Section 125 of the IRSC - Pre-Taxing Qualified Benefits making the Plans more affordable by reducing the bite of Income and Payroll Taxes.
- Reimbursement Accounts - Medical, Dependent Care, and Transportation/Parking Plans that assist in reducing the cost of essential Plans, Products and Services for Employees. These are tax-advantaged plans.
- Consumer Driven Heath Plans (CDHPs) - Health Insurance Plans that Promote and Support Employees and Individuals in becoming better "Consumers" of Health Care.
- HRAs and HSAs - To Implement with the HDHPs providing a savings component to promote Consumerism.
- HDHPs - High Deductible Health Plans that support the HSAs and HRAs.
- Gap Plans - To assist in off-setting the Risk of High Deductible Health Plans.
- Ancillary Benefits - Non-Insurance Based Employee Benefits that provide additional Employee "Choices" and often Reduce the Costs of Goods and Services for the Employees.
- Wellness Plans - That benefit the Employers and Employees by improving Individual Health and in Reducing Health Care Costs.
For a number of reasons the days of Evolutionary Change are giving way to Revolutionary Upheaval! These include:
> Skyrocketing Costs for Health Care!
> Skyrocketing Increases in Health Insurance Plan Premiums for Employers,
Employees, and Individuals!
> Disruptive Change promoted by Entrepreneurs and a Competitive
> The Internet and Search Engines providing Employers, Employees,
and Individuals expanded access to Plans, Programs, and Services - as well as
their Providers - on a more competitive basis.
> Social/Business Media Driven by the Internet is being utilized by Brokers and
Carriers to cost-effectively reach Employers, Employees, and Individuals with
information about and access to their Plans, Programs, and Services.
> Federal and State intervention with Reform - including PPACA, MLRs, etc.
> Public Demand for Change!
What are the Revolutionary and Disruptive Changes being faced by Brokers and Carriers?
- Insurance and Benefits Industry Reform by Government - Federal and State intervention in the Insurance and Benefits Industries! Whether Obamacare or Romneycare - as they are amended - regulations are inevitable and will be extremely Disruptive!
- MLR (Medical Loss Ratios) - in one form or another - will negatively impact on the compensation package for Brokers to hypothetically reduce the Premium Costs.
- State and the Federal Exchanges - will become the access point for millions of U.S. Citizens for accessing Health Insurance Coverage.
- Health Care Coverage Navigators - Internet Portals, Individuals, and/or Organizations providing information about the Exchange based Plans - with some method of compensation (probably not commission based). Navigators will provide the guidance required by Individuals, Employers, and Employees to make their Health Plan Coverage decisions.
- Insurance Carriers, Brokers, Large Employers, and Third Parties will develop Private Exchanges including: Mandated Plans; Innovative Plan Designs; Self-Funded Plans; HDHPs; HRAs; HSAs; Gap Plans; Voluntary/Worksite Plans; Ancillary Plans; and more - all on a Defined Contribution (DC) Platform.
- Technology Companies Providing Platforms for Private Exchanges and Defined Contribution Models will become the hub for Carriers, Brokers, Employers and Employees for providing and accessing Plans, Programs, and Services.
- Companies Providing Education, Communication, Enrollment, and Data Management Capacities will integrate with the Technology Companies to better accommodate Private Exchanges and Defined Contribution.
- Insurance Carriers will "Mass Customize" Plans and Programs - that are in compliance with the Federal or State Mandated "Base Plans" that will provide additional coverage for those who desire and can afford a more robust Health Insurance Plan.
- Voluntary Benefits and Ancillary Benefits - will continue to dominate the Insurance Markets as all Benefits and Insurance Plans become Voluntary within Private Exchanges within a Defined Contribution Strategy.
- Broker Commissions - will continue to be reduced by Carriers for the Health Insurance Plans based on MLRs.
- The Internet - will become the Distribution Channel of Choice for Carriers attempting to replace Brokers as the direct contact with Clients and Potential Clients.
- Social/Business Media - will continue to grow in importance as the interface between Carriers and Brokers with potential Markets - Employers, Employees, and Individuals.
- Brokers Compensation Models Will Change - they will be forced into "Fee Based" Compensation replacing the traditional "Commission Based" Models. Employers, Employees, and Individuals who need assistance in making decisions about Insurance and Non-Insurance Based Plans, Programs, and Services will pay Fees to Brokers for their assistance.
- Employer's Participation in offering Benefits - will utilize Private Exchanges and Defined Contribution (DC) Strategies to continue to offer Employee Benefits and remain Competitive.
- Brokers Will Leave or Change Their Industry Focus - many experienced Health Insurance Brokers will not be willing to accept change or have the flexibility required to survive - they will retire or go out-of-business.
- Consolidation of Mid-Sized and Larger Brokers - as Brokers shift from Traditional Norms to delivering Benefit Packages based on Private Exchanges, Defined Contribution (DC), and a Fee Based Compensation Model, many Organizations will Partner, Acquire, or be Acquired to remain Competitive.
- Consolidation of Insurance and Benefits Carriers - as they seek to leverage their Assets, Merge Client Bases, Reduce Marketing and Advertising Costs, and Strengthen Balance Sheets they will Merge.
- Employers, Employees, and Individuals will Gain Control - they will be more demanding of Carriers and Brokers to provide Plans, Programs, and Services to meet their needs within a framework of Private Exchanges and Defined Contribution Strategies.
- Government Entities at the Federal and State Levels - will continue to increase their control of, and participation in, the Insurance and Benefits Industries.
- A Single Payor System and Nationalize Healthcare - will continue to be the ultimate goal of the Congress and Federal Agencies.
As the above outlines, Brokers and Carriers no longer can keep their heads in the sand hoping that these Revolutionary Pressures and Changes will subside and go away - That their will be a return to the Good Old Days! Surviving for Brokers and Carriers in 2013 and Beyond will be based on their willingness to abandon old Strategies and Models. It will be essential for them to Embrace Change. Brokers and Carriers must become creatively involved in building new Plans, Programs and Services - as well as Delivery systems to accommodate the above changes. 2013 Is Almost Here - Will You Be?