One of the goals of the Affordable Care Act (ACA) is to make shopping for and comparing health plans a more transparent and less complicated process. The online health exchanges, which opened for enrollment on October 1, 2013, attempt to make buying insurance as simple as buying a plane ticket. Enter some personal information, and the plans will be listed out for side-by-side comparison.
With all of these efforts to make buying health insurance an easier process, the need for health insurance agents, brokers, advisors is going to disappear, right?
In fact, the need is going to increase, especially in the next few years, according to a recent study by LIMRA.
94% of Small Businesses Say They Need an Advisor
According to LIMRA, many small businesses plan to use advisors to help manage their employee health benefits. When surveyed, 94% of small business respondents said they believe the need for an outside advisor will increase or stay the same in the next two years. This was especially true for companies with 10 to 25 employees, companies still establishing themselves, and those that are actively looking to expand. And, most said they are "almost definitely" going to be seeking advisors in the next two years.
Opportunity for Health Insurance Brokers in Advisory Roles
For many health insurance brokers their main revenue generator has been group policy sales, which is very much threatened by health reform. Additionally, costs for employer-sponsored group health insurance are at an all-time high for employers and employees. However, with all the changes surrounding health reform, employers need advisors - and brokers - now more than ever to help understand health reform and navigate new health insurance options.
As we wrote about recently, small and medium size businesses have formidable buying power with health insurance. Small businesses account for ~35% of the U.S. workforce (~40 million workers). Yet only half of these companies use an advisor for business or personal needs regardless of whether they offer benefits to employees. This presents a huge opportunity for advisors who are able to demonstrate their value.
For these reasons, many health insurance agents and brokers are adding additional services and products to their offerings, such as advisory services and defined contribution solutions. While the ACA may remove (or reduce) some of the traditional roles of agents and brokers, there is still a great demand for health insurance advisors and innovative health insurance solutions in the rapidly changing world of health benefits.
What do Small Businesses Want from Advisors?
The LIMRA survey found that employers look to use advisors for a variety of employee benefits services. At the top of the list is reviewing plans to make sure the rates and services are competitive and current. But other services range from choosing a carrier to designing the benefit plan. Here's what the survey found:
Source: LIMRA (Click to read the full report findings).
Have you shifted your services to fill an advisory role, in addition to policy sales? Do you agree that small businesses are looking for employee benefits advisors? Share your perspective by leaving a comment below.