There are approximately 120,000 businesses in the United States that fall in the "under 500 employee" segment. If you were to ask the business owners how they compete against the industry giants, they would say something like, "We KNOW all our customers." or "This is a niche business."
If you were to ask decision-makers of benefits purchasing the same question, they would have a much different answer. They would talk about attracting the right talent within their budget–a budget that is constantly being hammered by benefit costs. More than likely, they would think that half of the 120,000 businesses they represent must be brokers because of the five calls a day they receive from different benefits brokerages willing to shop their benefits.
This brings up the real question: How do these benefits brokers/consultants compete when they will probably receive the same quote as their competition? How do they differentiate themselves?
The traditional answer has been to provide a host of other services and benefit offerings from which the employer may choose. These can be: sold for a fee, paid for in commissions, as part of the employer premium, or bartered in exchange for becoming broker on the lines of coverage that offer the most commission dollars such as medical insurance.
Many brokers now offer voluntary lines of coverage: benefits statements and communications, employee assistance programs, worksite solutions (such as concierge benefits), day care or even pet insurance. Brokers will give away access to discount programs for health insurance or financial management Web sites and offer free subscriptions to research and human resources literature.
The latest movement in the industry has been toward providing Employer Benefit Service Provider (EBSP) technology, similar to programs used in the mid- to large-employer segment, at affordable prices. Some of the simpler technologies offer the ability to post documents for employee viewing and/or have some HRIS features like time-off tracking and a data repository of employee and benefit information.
Some of the more robust technologies offer employee self-service and benefits administration providing online benefit communications and enrollment capability.
In the last few years, this market has begun catching up with the Fortune 500 and 100 groups in terms of the EBSP technologies they are using to administer their employees benefits.
With these platforms, employees can log on to a secure site, view and change their personal information or even their benefits at certain times of the year. HR does not have to spend time fielding calls from employees asking about their benefits or dealing with paperwork from many different insurance vendors. Companies can post information about available benefits and these technologies will show employees only those benefits that pertain to his or her class of employment.
