Welcome to Part 2 of our Employee Benefits Marketing series – Checklist Items for doing it properly and the myths associated with each step.
The 10 Point Employee Benefits Marketing Checklist was created to equip advisors and employers with effective tools and information that go beyond marketing simply based on price. Our checklist is now available in the CloudAdvisors Solution Library, just search for “CloudAdvisors” or contact an employee benefit specialist who is #poweredbyCloudAdvisors to share with you.
Checklist #2 - Disclosure of Participants and Responses
List all providers invited to quote, quotes received, rejections, and rationale.
In Part 1 we discussed how a list of providers can be invited to quote in open and closed marketings. For transparency, and to protect the employer from repeatedly marketing to the same providers without a stated objective (Marketing Myth #1), it is important to disclose the marketing participants and their responses. When details of each participant’s response are released, providers can offer insight on where they are competitive with objectives even without releasing a quote themselves.
Here are some common responses from a provider:
- Quoted with a Proposal
- Not Releasing a Quote – Unable to Match Requested Plan Design
- Not Releasing a Quote – Unable to meet Stated Objective / RTQ requirements
- Not Releasing a Quote – Uncompetitive
- Unable to Release a Quote / Already Quoted with Another Broker (we’ll come back to this one in Marketing Myth #2)
The provider could withhold a quote based on not meeting the stated objective (Checklist Item 1), or knowing their rates may not reflect favorably in the marketplace, or to avoid the internal process that would be likely unsuccessful. Disclosing all participants will help the employer document the participants decision to quote or not, and they can then choose to conduct annual plan audits or benchmarking to avoid an unnecessary marketing to the same providers year over year.
Releasing the full list of providers helps determine if a reasonable sample of providers were invited to quote, or if the closed marketing limited options from the broker. Most brokers have preferred providers, and even preferred arrangements or pricing. By disclosing this information, it provides documentation as to why certain providers were approached and others were not.
A broker may present one or two options that involve a common scenario where multiple brokers are invited to conduct a marketing, this scenario however can be easily mishandled, leading us to Marketing Myth #2.
Marketing Myth #2 - Multiple Brokers Should Compete for Better Quotes in the Market
False. There is generally no difference between the quote released to one broker or another. An important fact is that even with preferred pricing, any given provider will only release a quote to the first broker who requested it. A provider will not release a second quote to a different broker as it would result in them competing against themselves. Brokers are aware of this rule, however employers commonly aren’t aware. The original broker invited to quote can effectively “block” the market by submitting an RTQ to all providers. This is a confusing and often frustrating step in a marketing exercise for most employers and one myth that we hope to dispel here. Largely speaking, brokers have access to similar data from employers (with the exception of the current advisor) and would receive identical quotes. Ideally, Brokers and advisors would be invited to quote based on advice and total value proposition; not based on the speed at which they can request generic quotes.
So what is the best method to invite multiple brokers to compete on a single benefit plan? An employer should be comfortable submitting two requests to the industry, a request to quote and a request for proposals. If brokers were required to disclose the providers they were approaching for a quote, the employers could authorize the quotes to certain brokers who are also submitting a proposal to become their appointed advisor. An employer could even revoke or replace authorization for getting quotes from brokers who aren’t following the guidelines set out in the marketing.
At the end of the day the employer remains in control and must make two important decisions, which provider will ensure their benefits, and which broker or advisor will provide ongoing advice and support.