What should my company consider when selecting a benefits broker?

When selecting a benefits broker, employers should consider the following:

• What services, knowledge and experience does the broker provide? Depending on whether employers operate locally, multistate, nationally or globally, does the broker have the necessary and relevant knowledge and experience?

• Does the broker handle all types of benefits insurance, or does he or she specialize? It makes sense for many employers, particularly those with small HR staffs, to work with benefits brokers who are familiar with carriers for all lines of coverage: health, wellness, dental, life, disability, long-term care and voluntary benefits.

• Is the broker working alone, or does he or she have a team with members who serve as backup when necessary?

• Will the broker evaluate the costs and plan designs of several major insurance carriers in the employer’s region?

• Is the broker able to provide compliance advice regarding relevant federal and state laws? How familiar is the broker with the Patient Protection and Affordable Care Act (PPACA)  and the Employee Retirement Income Security Act (ERISA) requirements? 
  

• Will the broker assist with evaluating health-related risks and offer suggestions how to reduce the company’s claims experience and premiums?
  

• Will the broker assist with open enrollment communications?

• Will the broker assist with claim resolution and problems?

• What certifications and licenses has the broker obtained, and are they current?

• What are the costs of the broker’s services? Is he or she paid commissions by the insurance companies, or does he or she operate on a flat fee structure? If the broker is paid on commission by insurance companies, the commissions may be reflected in premiums. More brokers are now moving to a flat fee structure, such as a payment based on the number of employees and months covered.

• Is the broker familiar with the company’s industry?

• Did the broker willingly provide references from existing and former clients? What was the result of checking these references?

• Are there disciplinary actions that might be on file with the state insurance commissioner?

• Does the broker have a good understanding of the employer’s needs? Did he or she ask relevant questions about benefits preferences and likes/dislikes about current benefits plans? Did he or she ask about the company culture? Did he or she address organizational needs or summarize the overall needs or wants appropriately?

• How will the broker determine what benefits recommendations will be made to the employer?

• What is the broker’s communication method (e.g., mostly by phone or e-mail), frequency (e.g., weekly, monthly, bimonthly) and response time?

In addition to obtaining answers to these questions, employers should consider at a minimum at least two or three brokers and use the same process to evaluate and compare them. See SHRM's BrokerFinder tool to help you find and assess appropriate brokers. 

Although employers and brokers generally dislike a formal request for proposal (RFP) process, a growing number of organizations use this method to pick a broker. The traditional RFP process outlines specific rules, deadlines and broker qualifications. It also includes a list of detailed questions about a broker’s capabilities. RFPs typically instruct brokers to submit all questions in writing, and clients refrain from talking with them until they have submitted a proposal. An employer should also conduct interviews of all prospective brokers and provide them with the opportunity to make a formal presentation. 

Finding the right benefits broker can be a challenge. However, by reviewing the questions and resource above, and taking time to thoroughly evaluate the information they receive, employers can increase their chances of success.