The Importance of Using a Broker for Your Employee Benefits!

The Importance of Using a Broker for Your Employee Benefits!

When it comes to employee benefits like extended healthcare, unless you are an HR professional, it can be very confusing. So, by hiring a broker to look after your needs is the best way to go. It doesn’t cost you anything out of pocket because the broker gets paid by the benefits provider (insurance company). Some businesses think by going directly to an insurance company and cut out the broker they will be further head. Guess what? You won’t and if anything you can be further behind. And at the same time, not all brokers are the same.

This article will discuss how you will be further ahead by using the “right” broker.

What Does a Broker Do?

A broker is a consultant that is educated and specializes in a specific profession. In this case, employee benefits. They have relations with various insurance companies and know the different products that each one offers. Not only that, they must be able to design a personalized benefits plan for each business they work with.

Once this is put together, the broker will market it (get quotes), we find that 5 or 6 quotes is sufficient to get a good look at what the market has to offer. It’s also incredible how the range of the cost varies among insurance companies, especially when they are quoting apples to apples.  There are reasons for that but I won’t get into it now.

Upon receiving the different quotes, the broker will analyze each one, and make a suggestion on which plan they feel meets the needs of their client. Price isn’t the only factor.

Once the client decides as to which quote to go with, the broker provides them with all the paperwork and helps them to onboard.

Ongoing Service

If you have a good broker, they will be there throughout your relationship ensuring that your experience with the chosen insurance company is great, and removing any possible stress. They will be available to answer questions and resolve issues. Even better, a good broker will take over an issue that their client may have with the insurance company and spend the time ensuring that the issue is resolved.

It’s not about getting paid and disappearing, it’s about being their for your client.

I couldn’t tell you how many business owners have told me that their broker disappears until renewal time. Hopefully, your broker knows how to negotiate especially an renewal time.

Should I Deal Directly with a Broker or Go Direct to the Insurance Company

In my humble opinion, I would say it’s better to deal with a broker instead of directly with an insurance provider. You are not further ahead dealing with the insurance company directly, and here’s why.

Brokers have specialized knowledge of the different employee benefits available, the different products and industry trends. Which means they can help you select the most suitable package for your business.

When you directly deal with an insurance company, you are subject to the products only that they offer, and their price. You close yourself out from the different products that other companies provide, which may suite you better. Not only that, that price you get can’t be compared to the many other prices you can get from other insurance companies.

Furthermore, you become just a number – try dealing with an insurance company should a problem come up! Having the right broker means that they will look after any issues that may arise, saving you time and stress.

A broker should look after you because if they don’t give you the best service ever, they will lose you and therefore loose their livelihood.

Are All Brokers Cut the Same?

No, not all brokers are the same.

Having a good broker means that they have the expertise and knowledge of various benefit options, industry trends and regulations. They stay on top of any changes in healthcare and provide insightful guidance. Unlike a bad broker that lacks the expertise, which means that they may not match you with the best plan.

A good broker will access the needs of the company and its employees, ensuring that the plan is personalized to fit those needs and is affordable to the company. They will not push a one size fit all solution or products that aren’t suitable.

Having open communication and being transparent about cost, benefits or any conflicts of interest is a must.  Some brokers may withhold information, use confusing information and hide fees. They may even prioritize their commissions over the best insterest of their client.

A good broker will help you manage costs by negotiating the best possible rates with the insurance companies and identify cost-saving strategies.

A good broker will be available to help their clients and the clients’ employees deal with any issues that may arise.  Furthermore a good broker with be ethical and have integrity, they will look after the best interest of their clients even if they have to recommend products that pay less commissions.

A good broker will help their client mitigate the rising cost of benefits. A good broker will be 100% loyal to their clients.

Who Does the Broker Work For?

Very simple. The broker works and represents you the business owner, CEO, etc. Not the insurance companies.

A broker should be 100% loyal to you. They should have great relations with the various insurance providers, but they represent you.

How Many Brokers Should You Use?

There are only a number of insurance companies (benefit providers) in Canada. Which means if you work with more than one broker, most likely each broker will request quotes from the same insurance companies. The insurance companies will only provide the quotes to the first broker that request it or the broker that has a letter from their client making them the “broker of record”. Being the broker of record supersedes any other broker.

The insurance companies do not like it when they are asked to quote by various brokers for the same client, even to the point that they may even decline to quote.  A broker will invite numerous insurance companies to quote for their clients, resulting in numerous pricing. The quote will be the same regardless as to which broker requests the quote. What affects the quotes is the design of the plan, for example: Is the quote based on a dental allowance of $ 500 per person, $ 1000 or $ 1500.00? or, prescription drugs, do you have an allowance of $5000 or unlimited, etc. What’s important has to do with the broker you choose – are able to design a plan that will provide for the needs of your employees.

So my advice would be to choose the right broker and I would suggest using the criteria I’ve written about in this article.

In Summary

Employee benefits and group plans, like extended healthcare, can be complex for those outside of HR. Hiring a broker is a wise choice, as they’re paid by benefits providers and offer specialized knowledge. Brokers analyze quotes from various insurance companies, personalize plans, and provide ongoing support. Dealing directly with insurance companies limits options and personalized service. Not all brokers are equal; good ones prioritize client needs, transparency, and cost management. Brokers work for the client, not the insurance company. Using multiple brokers for the same client can lead to issues with insurance providers. It’s crucial to choose the right broker based on expertise, ethics, and loyalty to the client’s best interests.

If you would like to have a chat about any of the above, or see if we maybe able to help you with your businesses employee benefits, then please reach out to me. Thank you Ira Wolfe

 647-703-9313    info@employeebenefitsplan.ca

 

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