Tech Brokers: Caveats

Of course, technology is a great thing to introduce to benefits programs, but it must be done so in a way that core brokerage competencies, services, and industry knowledge are not sacrificed. This article, here, illustrates how one of the largest tech brokerages is moving in a direction to even further bolster their technology position by hiring a CEO that has little to no risk management background. It may be worrisome to consider the 2nd highest employe-related expense item is being entrusted to a 'brokerage' that focuses first on technology and then insurance as an afterthought. For small business owners that have put so much into growing their companies, this should be a very important item to consider before hiring a technology firm as the Broker of Record.

Prosperity Benefits is primarily a Health and Welfare Consulting Firm, but we also have an intense focus on technology that enriches our client's programs. What's more, we are absolutely transparent about our operating costs in providing the software. Our partner, Maxwell Health, recognized that small and medium-sized employers require a level of hands-on benefits expertise that they simply cannot get in working with a technology firm, so they partner with insurance professionals directly to reach the employer market. This approach, of course, allows companies to have the benefit of technology only after the insurance programs are properly set up, managed, and kept in compliance.  A great question to ask a technology broker would be, "how will you manage my costs long-term without just promising to quote every year?". It would not be a surprise if they were not able to answer this question.

One can argue that the biggest issue with technology brokers is that they are focused more on making their technology work, and making it visually appealing, versus spending time learning basic tenets of insurance and benefits risk management principals. For example, if a technology broker cannot figure out how to integrate an FSA within their portal, they may not even have that conversation with their prospects or clients. If there is a carrier that has extremely competitive rates, but doesn't integrate with their platform, would it come as a surprise that they wouldn't recommend that carrier? If the technology broker has a carrier relationship that works, but a better vendor is out there for the client, how can the client know there is another solution? Working with an independent benefits brokerage continues to be the industry standard. There is a measurable cost, an opportunity cost, that comes in working with a technology broker that also happens to sell insurance.