In this world of information overload, choosing the right broker for your company can feel like a daunting task. The sheer number of choices. The little decisions that could make a big difference. All the nuances that go into constructing a well-rounded benefits plan. It’s … significant.
When you’re ready to sift through all the facts – and some of the not so factual – we’re sure you’ll find this article helpful. Here, we aim to separate some of the myths from the truths when it comes to broker selection. You’ll also learn what makes Innovo Benefits Group a unique partner dedicated to your needs.
Let’s take a look at some common misconceptions …
Myth: Brokers have no financial incentive to recommend one carrier versus another to a client. (Right?)
Wrong. Carriers pay brokers bonuses based on premium volume, and nearly all brokers accept carrier bonuses. This can create an incentive to steer business toward a particular carrier. However: Innovo receives, then donates, 100% of carrier bonuses to charity. Maintaining our independence is one of our core values and further ensures we’re working solely in your interest. This leads to stronger positioning with the carriers and thus better, lower renewals for you.
Myth: Brokers will work with all the carriers that may be a good fit for the client.
Not always. Some brokers have limited “carrier panels” where certain carriers pay to become members and, in exchange for exclusivity, may provide preferred pricing and contract provisions. While Innovo does have access to preferred pricing and contract provisions through NFP Benefit Partners, we also have the flexibility to solicit business from carriers outside of the panel. We have no financial incentive to steer business to a particular panel.
Myth: Brokers know a lot about insurance policies but don’t really understand the challenges of running a benefits program within an HR department.
Not entirely true. Indeed, most brokers come from insurance carrier backgrounds and know the ins and outs of policies intimately. However, at Innovo, most of our staff has years of experience both on the broker side as well as the client side of the business, running a benefits program within HR. This experience, part of what we call Total HR, gives us a unique, well-rounded perspective in understanding your needs.
Myth: Only large brokers have access to benchmarking tools, compliance resources and other advanced capabilities needed to service larger clients.
False. Despite our size, Innovo has a solid history working for and with Fortune 500 companies. We have vast experience with self-insured plans. Yes, we are independently owned. But our partnership with NFP gives us access to extensive resources and tools. We also invest heavily in technology and training to help our clients.
Myth: Carriers will provide better rates to larger brokers than to smaller brokers.
False. Carriers are required to provide the same rates to each broker. Rates are based on the clients’ demographics, business code, claims experience, pooling, and other factors.
Innovo helped us achieve significant bundling discounts. They also helped us develop a broader benefits strategy by introducing choice to our employees and refining our contribution structure.
Myth: Utilizing multiple brokers at the same time to market plans will result in lower rates.
Not really. Utilizing multiple brokers results in confusion and ultimately works against the clients’ interests as the carriers are not in a good position to negotiate with multiple parties. Think of it like a home construction project; you’re better served with a contractor coordinating all the work needed by the plumber, the electrician, the carpenter, the painter … It’s the same when constructing a benefits plan. Coordination and simplification for the client is key.
Myth: Larger brokers have more leverage to negotiate on a clients’ behalf.
That’s simply not true. First, let’s remember the lesson about carrier bonuses. Larger brokers, on the whole, are most concerned with their own bottom line. At Innovo, we have the experience and independence to not only negotiate in your best interests, but also to secure better renewals – renewals below medical inflation – through quantifiable data. In fact, we even publish our renewal rates for full transparency and to prove we can do better than the larger firms. Few, if any, of the larger firms will show those renewal rates – and with good reason.
See our data-driven process and some case studies related to healthcare renewal rates.
Myth: Broker commissions do not impact a client’s rates; therefore, it doesn’t matter if one broker gets paid a higher commission than another.
Not true. Commissions generally DO impact rates, which is why Innovo always requests “standard” commissions. Non-standard commissions are a whole different story; those commissions might align to broker inducements, residuals, and other such incentives. Other brokers may negotiate these types of inflated commissions, and that cost can absolutely impact a client’s rates.
Myth: All brokers are equally focused on sales and service, and they provide similarly experienced account management.
Not exactly. Most brokers, notably the larger ones, are overwhelmingly focused on sales and generally will delegate account management to the least experienced and least expensive personnel. Further, their account managers are typically discouraged from utilizing expensive resources.
On the other hand, Innovo has enjoyed double-digit growth every year because our primary focus is on service, which organically leads to more sales. At Innovo, there is no “junior team.” Our account managers have an average of 20 years of experience to help provide the appropriate perspective and solutions that make a difference for clients.
Perhaps the biggest misconception of all? It’s less risky to partner with a larger broker. As we’ve outlined above, it’s just the opposite – it can actually be riskier to go that route. At Innovo, our experience and service-first approach have us well positioned to meet your needs. Through our partnership with NFP, we have access to the tools of the largest firms while maintaining our independence and ability to work nimbly with zero red tape.