Do you have the right insurance broker? You can boost coverage, lower costs
Insurance brokers can be a key resource for hospitals, but risk managers often end up working with a broker for all the wrong reasons. Sometimes the broker has been with the organization for years with no one questioning the relationship, for example.
The right broker can help a hospital obtain the best coverage for a wide range of employee benefit and liability concerns, and for the lowest cost. A lazy broker or one who is not well-connected and up to date on current trends could end up costing the hospital millions. Considering how important it is to work with the right broker, the relationship should not be left to chance or based on how such relationships have been handled in the past.
Brokers can be found online or in the phone book, but risk managers should ensure that their organizations put great care into selecting one, says Renee Guariglia, executive vice president of Falcone Associates in Syracuse, NY, which provides brokerage services. For starters, the broker should be affiliated with industry organizations such as the National Association of Health Underwriters.
Certification also can be important, suggests Brad Greenbaum, president and benefits consultant with Altigro Benefits in Fairfield, NJ. Look for chartered life underwriters, chartered financial consultants, registered health underwriters, or brokers with other degrees from the American College of Financial Services. “These are recognized designations, meaning it’s not a course you go to one afternoon and get a few letters after your name,” Greenbaum says. “It’s a course of study to get the credential and then usually ongoing study to keep it.”
The best contacts often are made through referrals by other healthcare providers, so when looking for a broker, inquire with your affiliated organizations — physicians’ groups and laboratories, for example — about which broker they use, Guariglia suggests.
When you ask about their brokers, Guariglia says to ask about their contact with him or her. Ask, “How often do you meet with your broker? Does he meet with you once a year or often throughout the year to ask questions and offer advice? Does your broker provide you with timely information?”
However, Guariglia cautions that it can be a waste of time to ask a broker for references or contact information for clients. No one is going to provide a bad reference, and the clients will be cherry-picked for their satisfaction with the broker, she says. Coming from the other direction, by asking those in your industry what brokers they have worked with and recommend, achieves much better results, she says. (See the story below.) “When you work with someone who is in the same industry as yours, you get a feel for who has the same needs for insurance and benefits for their employees as you do,” Guariglia says. “When you talk to a risk manager at another hospital or a group practice, you both are on common ground in terms of what you need from a broker.”
Another quality to look for is dedicated account management, says Michael Grant, executive managing director of employee benefits services at Crystal & Company in New York City, which provides strategic risk and insurance advice. This dedicated account management is the service aspect of a broker. Look for a broker who is going to take some work off your desk, he suggests. “That could be anything from the transactional pieces like COBRA administration to utilization review, and advising them about new products that are coming on the market,” Grant says. “It’s very common for administrators to be approached about a new product and think it sounds good for the hospital, but they need a broker they can trust and ask about what it really means.”
A good broker also should be able to pull in other resources to benefit you, Grant says. An example would be an underwriter or financial analyst. Brokers also should take a proactive, offensive position in renewing coverage before waiting for the insurance company to provide terms, he says.
It is easy to become complacent with the broker your organization has used for a while, Grant says. He offers these warning signs that you might need to look for a new broker:
• You are surprised by premium increases when it’s time to renew a policy. At a minimum, a good broker will warn you about the coming increase. A better broker will present a plan to the insurer before the renewal date that avoids or minimizes the premium increase.
• The broker does not seem to have a deep bench of resources to call on directly or to refer you to, especially regarding the changing healthcare scene. Brokers should have ready access to experts who address healthcare reform, compliance challenges, and the impact on your benefits and coverage. One person cannot be an expert in all of these areas, so the broker should have ample resources.
• The broker does not respond promptly to your inquiries. You should receive a response, or at least an acknowledgment of your inquiry, within 24 hours.
• You don’t hear much from your broker about new technologies and options available to reduce costs or improve benefits.
A broker’s willingness to help with day-to-day issues such as claims disputes should be a significant factor, suggests Dave Oscar, president of Xanthus Benefits in Fairfield NJ. Many brokers show up once a year for renewal and then leave again.
“They need to be more interactive than that,” Oscar says. “You’re paying for more than someone to just come in annually and do the paperwork, then say ‘bye’ and they’ll see you next year. Expect a lot more than that.”
• Michael Grant, Executive Managing Director, Employee Benefits Services, Crystal & Company, New York City. Telephone: (212) 344-2444. Email: firstname.lastname@example.org.
• Brad Greenbaum, President and Benefits Consultant, Altigro Benefits, Fairfield, NJ. Telephone: (973) 439-0200. Email: email@example.com.
• Renee Guariglia, Executive Vice President, Falcone Associates, Syracuse, NY. Telephone: (315) 422-6128 Ext. 239. E-mail: firstname.lastname@example.org.
• Dave Oscar, President of Xanthus Benefits, Fairfield, NJ. Telephone: (973) 439-0200.
Interview brokers, and ask how they can meet your needs
Don’t go easy on brokers who want your business, says Renee Guariglia, executive vice president of Falcone Associates in Syracuse, NY, which provides brokerage services. Make them prove that they are a good match for your needs.
Once you have a list of candidates, Guariglia recommends a formal interview process with the top three to five brokers. The goal is find out about broker individually but also the agency in which the broker works.
“Don’t discount the personal impression. When you meet that broker, do you feel a connection to him or her?” Guariglia says. “There’s something to be said for first impressions. Be careful about putting too much faith in what you see on somebody’s website. It might be a nice website, but it’s the person you’re going to be dealing with on some very important matters.”
Don’t be afraid to ask about similar clients and how the broker has helped them. Also, be sure to explain your needs and ask what the broker can do to meet them.
“That’s different from letting the broker go through a presentation of all the great things they can do for you and letting you try to match that to your needs,” she says. “Tell them what you need, and make them show you they can address each of those in a specific way.”
Before settling on a broker, check your state insurance commissioner’s website to see if the broker has been cited or fined for any infractions, or had a license suspended or revoked.