David, Goliath and the Unknown Contender
This is a story of a battle that currently has no winners. In last week’s blog, I addressed the dominant thought that came to my mind after reading a recently published article in Leader’s Edge. My premise was that small businesses may really get short shrift with health care reform. At a time when these employers need more benefits counsel than any other business sector, shrinking advisor compensation from carriers may lead to reduced service. In addition, as more firms convert to direct compensation, small companies are least able to afford it. Yet I believe opportunity exists to meet two seemingly opposing needs: more service, less compensation.
The solution is greater efficiency. Many small employee benefits firms – the “Davids” in this tale -- are falling behind in this regard. They cannot keep pace with the ongoing changes relative to health care reform -- or the related customer communication requirements. On the other hand, bigger is not necessarily better. Many huge benefits firms (the Goliaths of our world) actually lack efficiency when it comes to servicing small groups. They have invested in systems to deal with companies that have HR departments and built-in methods to distribute information to policy holders. The nation’s smallest businesses often lack these essentials, placing greater burdens on their advisors. Then, add this twist: come 2014, we will need to inform small clients about state-operated exchanges, penalties and new compliance mandates. Service demands will increase exponentially for this business segment. Frankly, as I scan the horizon, I just don’t see any giants preparing for battle on this front.
So exactly what is required to attain the efficiencies needed to achieve victory? Systems, technology, processes and personnel equipped to address a large quantity of small businesses. National scope with individual market expertise. Knowledgeable personnel who can advise clients about options, exchanges, subsidies and compliance issues in the states where they operate. Call centers to address employees’ questions. The ability to quickly disseminate information directly to individual policy holders.
These are not impossible requirements. Yet large benefits firms are shying away from this sector and small ones don’t have the scale, capital and capabilities to ramp up without relying on outside sources.
I assert that the winner in this crusade is an unknown contender. An opportunity exists for someone to triumph. Will it be your firm? To read the article that inspired these thoughts, visit http://www.leadersedgemagazine.com/benefactor.htm.