HR Technology Advisors - HR & Benefits Technology Solutions > About Us > HRT Central > Company Literature > Bringing the Solution vs. Being the Solution

By Joe Markland
Current Principal of HRT
Former EVP of StarNex
Originaly published in 1998

Nobody asked me, but if I were to design a logo for employee benefit brokers, I’d devise something that looked like a bull’s eye.

This would represent brokers facing the many forces whose mission seems to be to put them out of business, cut their profit margins or otherwise diminish their role in the insurance process. This antipathy toward brokers is not always logical, but it is an undeniable reality in today’s insurance environment.

The combined impact of these varied forces was very much at the front of our minds when we founded StarNex. Looking at the conflicts and inefficiencies in the group insurance market, we saw an opportunity to create a new marketplace in which independent brokers, insurance carriers and many vendors who do business in the insurance industry could conduct all manner of commerce in a mutually beneficial way.

We call this marketplace BrokersPortal, and it provides a win-win-win environment for its main participants: brokers, carriers and vendors- as well as their customers. We learned a lot in the course of building this marketplace, and would like to share a few observations that we feel will help brokers understand our thinking and what we do, and explain how they might benefit from participation in our marketplace.

But first, here’s our take on the forces that would prefer to see the broker go way. They include:
• Elements within the insurance carrier world that are frustrated by the inefficiencies of dealing with brokers. Even though most insurance is sold by brokers, the carrier-broker relationship is so rife with inefficiencies that a significant number of carrier representatives would welcome a world without brokers. We see too many “throw the baby out with the bath water” implications of this for carriers, but this argument has many advocates. While carriers love the business that brokers bring to them, they hate the costs associated with processing RFPs, delivering quotes and paying commissions. Brokers need to be keenly aware that carriers may be quite receptive to exploring new distributions systems that purport to improve efficiency and do NOT include brokers.
• A variety of technological forces, mostly Internet developments that enable carriers to create their own direct channels to consumers. These forces also consist of non-carriers who seek, in Internet terms, to “disintermediate” the broker from the insurance process, that is, to remove or replace the broker’s role as the “middle man” between carriers and insurance buyers. We see this view as quite myopic because it fails to place sufficient value on the advisory role that brokers play. They are much more than mere middlemen.
• The New Economy, in which leverage has dramatically shifted away from sellers and toward buyers. In this new paradigm, buyers of insurance are empowered by access to more information, more geographic range, and ultimately greater ability to pit sellers of insurance against one another. In short, buyers have considerably more tools to help them act as their own brokers.
• The insurance industry’s wasteful paper processing and redundant systems. Technology is gradually reducing these inefficiencies, and that is a good thing. However, this trend is putting pressure on brokers to become more technologically proficient if they wish to survive. For some technophobic brokers, this is a very serious problem.

More than a few industry analysts have predicted that these forces will combine to dramatically reduce the number of men and women who will be able to make a living as brokers. These predictions vary in regard to how long this will take. Some say a few years, others say 10 years or more, but the consensus is clear that the total number of brokers in the market will decrease, and considerably so, over time.

So, what’s a broker to do if he or she wants to remain in the business?

The good news is that the combined weight of the forces working against brokers is matched by that of other forces working on their behalf. While the market has become saturated with “sell-direct” disintermediators, there has been an equal and opposite reaction in the establishment of numerous vendors who want to make a living by helping brokers remain viable.

This is ultimately a good thing for brokers, but it has also created a situation of “techno-chaos,” a confusing collection of actual and alleged solutions that can be impossible for all but the most techno- savvy brokers to sift through.

BrokersPortal was created to help brokers come to terms with this new environment. Rather than walk you through its many features, here is a sample of the reasoning that directed its design.

Technology is most effective when it causes the least disruption to established process.

Take, for example, the word processor and, later, the desktop computer, which eliminated the typewriter from offices and the home. The computer keyboard was exactly the same as that of the typewriter it replaced. The user could be trained in a matter of hours. Very little changed, except that life became more efficient and people became more self-sufficient.

So what does that mean, in the context for technology, for the employee benefit broker? The broker’s competitive environment is not simply a matter of “the player with the best technology toys wins.” In the end, the brokers who best understand how technology can enhance, not totally re-engineer, the insurance distribution process will be the big winners.

Technology will never be as important as the strong relationships established through quality service, effective marketing, intelligent networking and a sophisticated understanding of how insurance really gets sold. However, any technology that can improve any or all of the component parts of customer relationship management (CRM) will be of great value. BrokersPortal possesses a vast array of CRM tools that brokers can use to offer solutions and generally provide better service to their clients.

The broker is in the driver’s seat. In some 95 percent of all cases, employee benefits packages are sold by brokers. This market dominance was not handed to brokers; they earned it. And they earned it largely because they have the best understanding of the insurance business process.

This does not mean that the process can’t be improved by technology. The trap here is that some brokers may overreact and say, “I’m at risk because I don’t understand technology. I have to change the way I do business.” The healthier observation is, “I’m in charge because of the relationship I have with the customer and I understand the process. How can technology fit into the way I work and make me more efficient without radically altering a process that serves me and my clients as well?”

Thoreau once said, “Beware of the enterprises that require new clothes.” In our context, let’s interpret that to mean: Look for technology that reduces the time spent on administration and creates more time to develop the type of strong customer relationships that sustain a broker’s practice. BrokersPortal provides access to technology solutions that streamline activities such as RFP’s, quoting and post sale administration so brokers can spend more time on the value-added activities that have earned them their position in the driver’s seat of employee benefits.

Know what your employee benefits
Know what your employee benefits customers want AND don’t want from technology. The “want” list extends beyond the obvious: online enrollment, benefit statements, links to 401K vendors, etc. brokers can gain real value by offering their clients the ability to better interface with their payroll system, improve their tracking of vacation and sick days, and helping them provide an online employee handbook, disability and compensation claim tracking, and other services. BrokersPortals allows brokers to offer guidance on all these services, and more.

It’s equally important to understand what clients DON’T want from technology. This is a long list, but the most important principle to remember is that proprietary solutions can come back to haunt you. The best thing a broker can offer a client is flexibility. Any systems that limit choice should be avoided. For empirical evidence of the downside of getting locked into proprietary technology solutions, we refer you to eight-track stereo players and BETA videocassette recorders.

Stay independent- be a broker. This sounds painfully obvious, but the concept of independence for brokers is not as simple as it may first appear. The most successful brokers are the ones who exude independence in every sense. They avoid entangling alliances, shun proprietary solutions and reject rigid approaches.

Brokers intuitively know that a 10 person employee group does not by the same medical solution that a 500 employee, multi-state group does. Logically, these two cases will require different technology solutions. However, a broker who is committed to a proprietary technology solution or a broker who has lost some independence may have a hard time servicing both cases.

If brokers desire to represent a wide range of clients, they need to represent a wide range of solutions, including technology solutions. “Stay independent” means brokers can’t be seen as representing a single solution. One size simply does not fit all. BrokersPortal provides brokers access to a wide range of solutions so brokers can remain independent and truly be “brokers”.

Why Brokers Will Survive
The forces aligned against brokers are the same forces that threaten to commoditize the insurance industry. The brokers who do best are those who play valuable advisory roles for their clients. They do not simply sell products; they add value by bringing solutions to their clients.

For all the talk of the potential for technology to eliminate the broker from the group insurance market, it’s important to remember who makes the choice to include the broker in the process in the first place: the customer.

Think about it. Employers have always had the choice to either buy coverage’s direct from carriers or use a broker. In more than 95 percent of cases, they choose to involve a broker and take advantage of the broker’s experience and knowledge.

BrokersPortal is designed to provide brokers with the tools they need to do their jobs. It exists to make the broker smarter, faster and ultimately richer. But more important than any individual tool or tactic that BrokersPortal provides is its overriding mission to support the independence of employee benefit brokers- the independence that come from the potent combination of information AND technology.

The BrokersPortal philosophy may be best summarized by our advice that brokers should BRING solutions not BE the solution. Technology can be a trap when one becomes wedded to one solution. On the other hand, technology can be liberating and provide independence to brokers who use it to support their value- added role in the insurance process.

At the time of this publishing,Joe Markland was executive vice president of StarNex, a Massachusetts-based provider of insurance technology solutions. Its combination of products and services creates and insurance marketplace that enabled independent brokers, carriers and industry vendors to increase revenues, expand distribution, reduce costs and improve customer service in virtually all segments of the insurance industry. Through www.BrokersPortal.com, StarNex was forging an electronic connection between insurance providers, brokers and third-party vendors in a business-to business, e-commerce, buying, selling and information-sharing environment.