Red Flags: Can You Trust Your Broker?

The University of Louisville won the 2013 NCAA championship, but it turns out — they actually didn’t. The title was vacated, leaving Louisville fans, coaches, students and players with nothing more than a memory of the victory.

The players and coaches on the Louisville team worked together to win the championship, they played a great game, each person contributing their expertise equally. However, behind the scenes some teammates exhibited dishonest behavior, which ultimately led to their loss of title.

Success is a delicate balance

When a team works together to achieve the same goal, great outcomes can be achieved. However, knowing whether your teammates remain truthful, honest and ethical can be difficult. The way in which you manage your employee benefits and your relationship with your broker is similar. There should be transparency in the relationship at all times, otherwise, just like the University of Louisville, you could think you’re winning, when in fact you’ve already lost.

You need to know if you can trust your broker. This is especially true now, with benefit renewals approaching.

We have been talking to a CFO who is facing this challenge. His broker has recommended questionable benefit options and has been dishonest. The CFO is attempting to mend the relationship, but without a trusted advisor, he has taken on the majority of the workload alone. This is now causing complications and new friction in the renewal process, because this is unspecialized territory for the CFO.

We are left to wonder

If you trust your broker too much and they aren’t providing you with the best options, you could be placed in a disadvantageous position. However, if you don’t trust any broker at all, you are left to navigate the process alone. And because there is so much on the line when it comes to employee benefits and healthcare insurance, you need to have a trusting relationship with your broker and know they are doing what’s right for your business.

But how can you assess that?

The ultimate goal is to get to know your potential broker, to build a solid relationship with them. You need to set expectations, ask questions, initiate conversations and consider answers carefully. Learn how they solve issues, address problems and build strategy because this information will help you decide if your broker is right for your business.

Some employers use a request for proposal (RFP) to help examine prospective insurance brokers. However, this tool doesn’t give you enough insight about how those brokers operate and if you don’t ask the right questions, you may not receive the information you need to make the best decision for your workforce.

If you do choose to write an RFP, it should be only one step in your plan, because if you rely on this process alone, you could be placed in the same position as the University of Louisville — you think you won the national championship, only to find out it was a front the whole time.

Some key considerations and questions that you should focus on when assessing the relationship between you and your broker are:

• Consider your business’s process and what you expect from your broker. How do they impact the bottomline? How do they build a strategy?
• Talk about where you're uncomfortable or where you are confused in your plan. A good broker can propose new, bold and exciting options, so be sure you fully understand the mechanics, not just the salesmanship.
• Ask for clarity on both sides. Where do they contradict? Where are they similar? Don't immediately agree with what the salesperson promises in a single meeting.
• Accountability and transparency should be tied to everyone involved, including your broker. How are they compensated? How are they held accountable for their promises? How is their performance measured? What happens when they succeed? What if they fail?
• Start this process, and examine these matters a year or more ahead if you can.

When your broker has all of the answers, that could be a red flag. A good broker should have specialists that are outside of their area of expertise, and they should be open about these reliances. Continually providing all of the answers to your questions could mean they are stretching truths, which means you may not be receiving the best benefits for your business.

In the last eighteen months, everything has changed. So if a broker has all the answers today, that is concerning.

A good broker is learning new things every day. They need to sift through new regulations and trends and decide which topic is urgent for their client. Their decisions need to be made through a lens of how they support you, their clients, in the general healthcare market.

New regulations will help

Now, brokers have to openly disclose any compensation they may receive when recommending options to you. This will help prevent you from making choices for your people that aren’t ideal, because they were presented to you for the wrong reasons.

The new regulations also come with additional rules for employers, emphasizing the need for a trusting relationship with your broker. Learn more about these regulations here.

University of Louisville may have won the 2013 NCAA, but the success was short lived. The team has been left with only a memory of a tremendous title due to dishonesty and poor decisions. You need to have a trusting relationship with your broker or you could be left with benefits that don’t represent your business culture.

You deserve to have a broker that is open and honest with you. Ask the right questions and don’t settle for all the right answers.