Knowing your market and adding to your value proposition are the keys to thriving in the increasingly competitive group benefits arena, advisors told a recent Canadian Group Insurance Brokers (CGIB) meeting.
There was a time, not that long ago, when group insurance brokers handled just claims. “But now we are navigators of what is a very complex system,” Tim Spark, president of Toronto-based Align Benefits told the November meeting in Vaughan, Ont.
Part of that complexity has to do with increasing competition, not just from other brokers, but from online and other sources eager to provide lower quotes – but not necessarily better service.
The only way to overcome this is for group insurance brokers to carve out their own niche and sometimes go above and beyond the traditional, said Spark.
His company, for instance, works with a number of subsidiaries of U.S. companies, which Spark said have trouble retaining good human resources experts who can deal with benefits-related questions.
Spark said Align Benefits has basically moved into that role and now deals directly with the employees, enrolling them, delivering their drug cards and explaining benefits.
“We started bumping our commission a little bit as a result of this, with full disclosure,” said Spark. “It helps these people and it saves their organization money because when [a human resources person] phones you and has never enrolled somebody you’re back to square one and it’s just easier for you to enrol them.”
Educating clients and preparing them for possible increases and/or changes to their plans may help overcome the game some clients play when they ask several brokers to quote them on the cost of potential new health and benefit plans, said Sophia Nizamuddin, an independent advisor with Svab Insurance Inc., based in Thornhill, Ont.
Ensuring clients believe in one particular broker takes time, but is worth it, said Nizamuddin. “Whether it’s a phone call or visiting clients, they have trust in us and believe in what we’re doing,” she said.
Adapting to each client’s needs is crucial to adding value, she added. Some want hand-holding, while others want to be left alone. But in each case brokers need to learn what clients want, how to adapt and how to be creative in responding to their needs, Nizamuddin said.
Peter Demangos, founder of Toronto-based PDF Financial Group, said his value proposition includes a “white glove” approach plus educational experiences such as seminars and wellness sessions as well as some administrative work. “Without value-add, I think it’s going to be very challenging [in the future].”
Unlike some advisors, Spark said he doesn’t make any cold calls and only conducts business through referrals. But he said he’s kept on his toes with the constant changes in the industry.
“There’s competition coming from everywhere [and] I think the challenge will be to stay focused on the business that you’re in and the business that you’re good at.”
Major competition facing independent group brokers right now is the ability of large insurers to provide easy online sign-up, said Jay Sharkey, owner of Kitchener-Ont.-based Sharkey Group Insurance.
While this satisfies clients who are always concerned about costs, Sharkey said he doesn’t believe this tactic is the be-all and end-all – yet it’s still something that can’t be ignored.
“There will always be somebody who is going to take a run at growing their block of business to make their quotas so they can make their bonuses. I think that whoever is doing it is going to change from year to year; it comes and goes in cycles.”
Firms that are having financial problems and need cheaper rates can get them, said Demangos, but most clients simply want to know that their broker has been fair.
“If you are cash-strapped and it’s a business decision, I can get you cheaper rates,” he said. “I don’t want to lose them to somebody else. “[But] there is an opportunity to enhance the benefits experience. We find a lot of people who are approaching us for benefits … care about knowing that they got a fair rate.”
Some believe there has been so much competition in the industry that insurance products that were once unique are now indistinguishable in the eyes of consumers and are treated as simple commodities.
Spark said it seems there’s always an outlier who comes in and tries to grab market share – a situation that will only change when compensation for selling group plans is changed so that everybody is not rewarded just when they get new business and when carriers realize they can’t keep cutting costs all the time.