One year into the brave new world of health care reform, there’s good news and there’s bad news, says industry insider Eric Johnson. The good news is that brokers and advisers are more optimistic about how PPACA will affect their future. The bad news is that the threat to brokers’ businesses remains real, especially in the form of the medical loss ratio rules and the state exchanges now under development around the country.
Despite the generally shared perception that some brokers are exiting the industry, Johnson says he has found “no substantial change” in acquisition activity among the M&A practitioners he speaks with regularly.
Johnson’s role at First Horizon Msaver takes him on the road a lot, speaking to insurance industry and employer groups. Among employers, he sees “a lot of ignorance in the marketplace. Many employers are either hoping for repeal, or have decided to just deal with it in 2014,” Johnson told a group of brokers and advisers at last week’s Benefits Selling Expo in Nashville.
Among brokers, Johnson sees a continuing move toward striking partnership deals, especially with the intent of boosting scale and adopting new technologies. Looking forward, Johnson envisions that “fewer people will be in the business. Success will be about scale, efficiencies, and process.” Atlanta-based Digital Insurance, says Johnson, is one example of a firm that has achieved significant growth by partnering and introducing efficiencies of scale.
Brokers who “get it” are acting now, and Johnson urges others to do the same. “Don’t wait until 2014,” he says. One big reason: technology-based solutions help with retention. “It’s tough for someone who’s used to all the bells and whistles to move somewhere else.”
Broker Will Heavin, of Heavin & Associates in Corpus Christi, Texas, can attest to the effectiveness of reaching out to educate employers about the impact of PPACA. “Employer and business groups are always on the lookout for topic ideas and speakers,” he says.
Heavin recently organized a luncheon event that featured Johnson as a speaker on PPACA’s impact on businesses, partnering with SCORE (the nationwide organization of retired executives who provide business advice) and a local university. The attendees were a mixture of clients and prospects. The end result: the event generated 445 leads, at an average cost of $11.93 each.
The key to taking advantage of the opportunities that PPACA will create as its many pieces are implemented is a simple one, says Reid Rasmussen of Benefit Brainstorm: be open to new ideas. Rasmussen, who was born and raised in Canada and began his sales career there, recalls the opportunities that arose as Canada’s government-run system matured.
The Canadian system started out with a generous package of benefits. As time went on, however, costs continued to escalate. The government reacted by eliminating certain benefits to constrain cost increases. In response, insurers began bundling supplementary coverages to fill the void through the employer marketplace. Some of these bundled products “looked a little strange at the time,” Rasmussen recalls, since they tended to be comprised of elements that don’t necessarily go together intuitively.
Nonetheless, “there was good profit” in selling these bundled products. As PPACA’s implementation moves forward, brokers should “watch out for these products, and keep an open mind about them,” Rasmussen advises.
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