Selecting a Health
Insurance Broker
Purpose of Process:
To describe considerations in selecting an employee benefits broker/consultant. This can be a valuable resource and extension of an HR staff for dealing with health and welfare related issues.
Recommended Steps in the Process:
- Determine if the company wants to deal directly with the
various providers of health and welfare benefits or rely upon a
broker/consultant to arrange these coverages.
Note: Broker and Consultant are used interchangeably in this section although they vary somewhat in the way they receive compensation for their services. Specifically a Broker charges the company little or nothing , but receives commissions from the insurance products they sell or represent. Consultants charge for their time. They may be paid directly by the company or obtain commission off-sets from the health insurance carriers. The distinction between brokers and consultants is not always clear. Often brokers can represent a wide range of insurance providers. Therefore, before hiring a broker/consultant, clarify how they are paid and how many insurance carriers they represent. - Through networking or by searching on the Internet, obtain
names of brokers/consultants who are available.
- Interview the contacts that you obtain. Understand the lines
of insurance they represent, the manner in which they receive
compensation (broker or consultant), an estimate of charges for
the type of help you seek, the extent of the services they
perform and references from your industry group.
- Select a broker/consultant. There is no need, generally, to
sign a contract. This agreement should be made on a verbal basis
and remain solely based upon your (the Company's) discretion.
- Notify any existing insurance carriers of your
broker/consultant arrangement. If commissions are involved,
clarify to whom they should be paid.
- Meet on a regular basis (at least quarterly) with your broker/consultant. Remember the broker/consultant can be an effective partner for an HR department, so it is worthwhile to invest the necessary time to insure that this relationship is effective.
Process Tips:
Besides the cost and quality of services, the chemistry/rapport between you and your broker/consultant is the most important selection criteria.
