As we talk to brokers across the country, many are reporting carriers are beginning to make moves to reduce commissions. It appears the modifications are starting with smaller groups as a field test before carriers extend the same changes to larger clients. Some are disguising the move by saying if brokers write MORE with them, commissions could stay the same. This is a difficult proposition for a broker who needs to represent a nonbiased opinion and not be swayed by incentives. In addition, brokers will face further challenges if the decision to place with a certain carrier could result in a revenue swing of 30 percent or more.

These changes are coming, yet brokers continue to pursue commissions. Some of them might simply have a lack of familiarity with how to chase fee-for-service dollars. However, if brokers excel at commanding fee-for-service dollars, the rewards can even be more lucrative than commissions and reduce their reliance on insurance carriers for compensation.

The great part of my job is having the opportunity to work with thousands of brokers and seeing firsthand what efforts are working. By the way, this blog is inspired by the adjustments that benefit brokers are making to proactively address changes in the market yet it directly applies to P&C as well. Some brokers, or perhaps I should say consultants, are making changes very effectively. They start right at the beginning. The initial meeting has nothing to do with the broker’s history, people or services. This point is so important, it bears repeating. The first meeting is all about discovering how your firm can assist the prospect. It is not about spewing forth why your firm is better than the incumbent or every other insurance firm in town. Let’s walk through some of the steps to take for that initial encounter.

Determine how to help the prospect by setting up a meeting with everyone involved. Brokers executing this gathering say it is a key step of a successful process. When arranging this meeting, it’s essential that everyone involved with the health insurance be part of the meeting. (Yes, the president might be involved at a high level and might not make the meeting, but minimally you should request a 10-minute interview by phone, after the fact.) Sample people at the meeting would be (but not limited to) CEO, president, CFO, controller, VP of HR, HR director, HR assistant, etc. It may very well be the first time this group has been assembled simply for the purpose of talking about their program.

Be armed with questions – a lot of questions. You should have at least 60-100 questions in a file, ready to go. This is a discovery session and you are performing an exhaustive review of their benefit plan. Your file should also have a directory with each person’s title and a list of questions under every one. Those of you familiar with our Broker Briefcase tool can look at our library of questions to get an idea. (Due to brokers’ successes in this area, we are developing a questionnaire for this purpose.) In addition to all of the questions you will be asking, you will also be requesting all of the plan documents and other human resources information from the HR administrator. Pitching a few loaded questions should get the meeting rolling. Ask the VP of HR the following question: “Can I see the annual summary stewardship report your broker provides you?” (Oh, your broker doesn’t provide you with a summary of what was accomplished for you throughout the year? Hmmm….) How about asking the CFO about commission info, renewals, etc.? A few sample loaded questions to the CFO could be, “What is the carrier’s acceptable loss ratio that they are looking for? What about the year before? Did they change it and were you made aware of it?”

Collect as much information as you can at this first meeting. Say very little about your firm and let your questions score the points. The follow-up meeting will be the time to share what you have discovered on a very high-level basis and discuss with your prospect how you will deliver results. Of course, your expertise and ability to deliver solutions comes at a price – a very good price. Your proposal will lay out fees that can be the same or even higher than if you were making standard commissions. By the way, make the fee a three-year deal. If the client wants it shorter – your fees go up. There is a tremendous amount of work that will need to be done upfront, so you are spreading your costs. Be creative. Most brokers are very good salespeople, this is just one more step to sell your value.

At the end of the day, brokers are vital and critical components to the delivery of health care. The ability and knowledge that exists in the broker industry is staggering. Legislation will not take that away, but it will force us to move in different directions that might be a little difficult at first. It is said that when one door closes, another will open…but the hallway is hell. The good news is I’ve already seen brokers cross that threshold and they are getting results. It is fueling organic growth and they are becoming less dependent on carriers. The door is open, you just need to cross the hallway.