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North Bay Business Journal

Monday, July 7, 2014, 6:15 am

Revamp, eliminate insurance broker RFPs

Move away from words, toward actions

By Kristen Allison

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    The request-for-proposals (RFP) process is often a long and arduous one for companies seeking a vendor or partner to fit their needs and for those companies vying for selection. This holds especially true when searching for a benefits broker who will both be able to deliver the right products and meet an organization’s overall needs.

    Finding a brokerage firm that can build a lasting relationship and serve a company as it grows and evolves is critical to maintaining competitive and valuable benefit packages. But is the RFP process, in its current form, necessary anymore?

    RFPs outdated?

    Traditionally, an RFP for a benefits broker consists of a lengthy list of questions about a firm’s background, capabilities and experience. Frankly, RFPs are rarely read all the way through. And if they are, there is little chance the information will be retained and not mixed up with other responses. Every RFP is different, but often the same questions are asked simply in different ways on each form, making streamlining or standardization for the brokerage nearly impossible and creating an extreme taxation on firm resources.

    While some may argue that this levels the playing field for all candidates vying for the business, the process can be highly impersonal, with each party reviewing a potential long-term partnership from behind computer screens. The process fails before it begins in a futile attempt to quantify a qualitative decision about what should be a relationship-based partnership.

    A bid process certainly makes a lot of sense for contractors or suppliers, but is not necessarily the best way to vet a future business partner and adviser. Intangibles like market leverage, carrier relationships, intellectual property, work experience and creativity don’t show well in a chart or graph in an RFP. These documents also fail to paint a clear picture of what the broker could do to meet or exceed a company’s specific needs.

    Alternatives

    Online searches: We live in an age where a wealth of information is just a few clicks away. Much of the content the traditional RFP form seeks can be found in just a few minutes by reading the broker’s website and searching social media sites such as LinkedIn or for news stories. After some research, a company can simply compile a list of questions based on the information collected. Brands can then tailor requests for information to ask for details beyond what is readily available online, developing far more specific lines of questioning.

    Personal interviews: Choosing a benefits broker is very similar to hiring a new team member. This person will be closely integrated with an organization’s workforce — needing access to human resources, finance, compliance or legal departments and individual employees — to provide competitive, valuable benefits. So a brand should “get personal” and be certain that the broker is right for the job.

    Set up an interview in the candidates’ offices or host them to ask key questions about their teams and experience, estimated costs, tools provided and additional resources or services. Those leading the interview should ensure the potential brokers are familiar with the organization’s industry. And if they are not, tell them about it, and ask for proposals with that information in mind.

    What to look for in a broker

    With two alternatives to the RFP process set, what questions should be asked when looking for a benefits broker? Consider the following:

    • Who is assigned to the team?
    • Are they passionate about their jobs?
    • Does the firm have high ethics and a good reputation? Ask for references.
    • How long has the person who will manage the account — not the salesperson — been in the industry and position?
    • With national or regional agencies, do brokers have local authority to make decisions? Are there limitations in deliverables, or is there freedom for “outside-of-the-box” thinking allowed locally?
    • What is the pricing structure? Is the firm client-centric or profit-centric?
    • What services are included (e.g., online administration, communications, wellness, compliance, filings)?
    • How is the firm growing — through acquisitions or attracting individuals to join the company?
    • Does the broker have premier or preferred status with specific carriers? What are the advantages?

    Always look for solid leadership, the firm’s client retention rate, consultant turnover, staff-to-client ratio, clients they serve similar to your size, industry or location, and profit margins. Be sure to understand what will happen to clients if the broker is currently undergoing an acquisition or merger.

    Another piece to consider is a broker’s specialty or key service areas. Is the hiring organization looking for someone who can deliver a cutting-edge wellness plan? Does it need heavy support to navigate the complicated Affordable Care Act? Does leadership require hard data and analytics from vendors and partner agencies? Benefits brokerages have wide ranges of capabilities and expertise — be sure the pool of applicants being considered can meet the specific requirements of the organization.

    It is important to recognize that a detailed RFP process requires a significant investment from a potential broker. Be respectful by requesting only what is truly needed in order to avoid wasting time and resources.

    It may be time to consider more efficient and more reliable ways of finding a broker who can be a trusted, results-driven partner for the long haul. Reform to the traditional RFP process — taking focus away from words and placing it on actions — may just help drive more positive results.

    Kristen Allison is president and CEO of Irvine-based Burnham Benefits Insurance Services, which has a Marin County office, and a 30 year veteran of the insurance industry.

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