We are a relatively new employee benefit consultancy set up to primarily support smaller employers who are poorly serviced or not wanted by the larger consultancies. We are independent and help employers with all their benefits. I am writing this article to provide an insight into what we believe is a very confused market and to help others better understand what needs to change.
Firstly, setting up agencies with the major providers has been a challenge. One provider wanted to charge us a fee for setting up an agency. Another provider – which we believe may have the largest market share –refused our application as we didn’t have enough business to warrant an agency.
In this particular example we managed to secure an agency after escalating the problem, but only for an initial three months. As our business grows we take on clients with existing arrangements and we need to be able to transact business with all providers for a reasonable period that is longer than three months.
Secondly, employers find it difficult to understand that appointing an adviser for an existing PMI scheme does not increase the cost of their scheme to them.
We have recently come across two examples of interactions with corporate healthcare providers where we had very different results, and where the employer experience was markedly different. The first example is where a client appointed us as adviser to a direct scheme with a provider. We carried out a market review for the client at no cost and negotiated a reduced premium with the provider for them to retain the scheme.
As we confirmed renewal we received the commission payment which covered our market review costs and the cost of setting up a new benefits platform. Thankfully the client identified the value in our role and ended up paying a lower premium for their renewal and benefited with an extra service.
The second example is where a client was dealing directly with a provider and didn’t understand how we could help them without increasing their costs. They were also happy to deal directly with the provider but again didn’t understand that by appointing us as advisers they could still deal directly with the provider. Needless to say they accepted theincreased renewal cost offered by the provider and we provide no support for this scheme.
A few things therefore need to change. Providers need to recognise that emplo y ee bene fit consultancies – and I am not talking about PMI specialists – are not looking to move schemes to generate extra commission. They are looking more generally to support employers with all their benefits and want the employer to have a good scheme that offers value to the employer and members.
They generally focus less on sales and focus more on employee engagement. This should make small employee benefit consultancies a welcome channel of business to group private medical insurers.
There are also lessons to be learnt from the other types of financial product that employee benefit consultants deal with. With transparency being a hot topic in the pensions world, shouldn’t providers disclose the commission they retain and add this to the cost of the premium the employer pays. This would help employers better understand the costs of their schemes and help to better understand the value of appointing an adviser to their scheme.
Tim Gillingham is a director of Benefiz