Switching Brokers? Six tips for Making Sure Your Broker is the One.

Administering employee benefits is not easy — and it’s only getting harder.

Evolving employee expectations, changing regulations, and mounting competitive pressures make it difficult for HR teams to choose benefits correctly and manage them efficiently. 

For example, “This year, more than ever before, employers see investments in health and well-being as an essential part of workforce strategy, increasing from 36% in 2019 to 45% in 2020,” according to the 2021 Employee Benefits State of the Marketplace from Brown & Brown Insurance. “This is spurred in part by the COVID-19 pandemic, shining a light on the connection between employee health and well-being and overall business performance.”

Intense competition for talent in a tight labor market also requires employers to invest in improving their benefits. And, as if the pressures to bolster benefits were not enough, any changes that employers make must be done in compliance with shifting regulations. 

With so much happening and so much at stake, many businesses turn to employee benefits brokers for help. “An employer should use an employee benefits broker to help navigate the complexities of an ever-changing market,” says Kathleen Kam Larsen, vice president and employee benefits consultant for Brown & Brown Insurance.

But not just any employee benefits broker will do. Make sure you have the right broker for your organization.


1) Understand the role of an employee benefits broker. 

Identifying the best benefits broker for your business begins with understanding what they could do. Larsen explains that employee benefits brokers are licensed individuals who are responsible for:

  • Understanding your company’s unique situation and culture

  • Designing a benefits portfolio to help attract and retain talent

  • Preserving the well-being of your employees

  • Providing access to new competitive markets

  • Obtaining plan data for making informed decisions

  • Streamlining benefit administration

  • Serving as an extension of the HR team for day-to-day service issues

  • Protecting you from costly penalties associated with compliance


2) Determine your needs.

HR Daily Advisor offers the following examples of what an employee benefits broker can do, and suggests confirming that your broker can assist you with your specific concerns.

  • Helping you choose insurance

  • Ensuring you stay compliant with relevant regulations

  • Suggesting ways to minimize benefits costs

  • Assisting with employee communications related to benefits

  • Reviewing and negotiating contracts with benefit providers

  • Resolving problems with claims or administration of benefits

  • Analyzing existing benefits and claims for potential cost savings

  • Advising you on changes to benefit packages 

  • Supporting employees who have benefit, coverage, or claims questions or need help with claims

  • Educating employees about their options during open enrollment


3) Evaluate your existing situation.

If you do not have an employee benefits broker now or have not had one before, then you can do a fresh search. However, if you have a broker, you should consider whether you are happy with what you are getting from them or if you would like to get more from them or another broker.

For example, you may be dissatisfied with slow response times or infrequent communication from your broker, Larsen says. Other signs that a broker may not be right for you, she says, may include a lack of:

  • Knowledge about your industry

  • Understanding of your needs for insurance or benefits

  • Resources to support you, like in compliance, technology, data analytics, or benchmarking

  • Tangible value


Regarding value, today’s benefits brokers should do more than just procure insurance like they may have done in the past, Larsen says. “Ultimately, the word ‘broker’ is outdated. Many employers are looking for consultants who become part of the business and they’re an extension of the business for more than insurance placement,” she says.


4) Prepare your selection process.

Your employee benefits broker is an essential hire and you should treat them as such, according to a guide to hiring a benefits broker from the Society for Human Resource Management. “Optimizing benefits isn’t just about shopping for coverage from carriers. It involves a holistic approach to your overall company strategy, budgets, benefit plan design, HR strategy and even IT concerns. If you are hiring a broker only to shop your plans, you probably aren’t maximizing the broad spectrum of results top brokers deliver to employers,” SHRM wrote.

Planning your selection process will help you choose the right broker by ensuring that you thoroughly review the proper candidates. However, many companies do not search for a broker properly, even though they may help the employer manage a budget of 25-40% of payroll and can affect the well-being of employees through the benefits an organization offers, SHRM notes.

Though SHRM suggests five steps for selecting the right employee benefits broker, the organization says that only 10% of employers implement all of its recommendations. Meanwhile, 90% of companies use practices similar to those five steps when hiring internal employees, SHRM says.

SHRM’s five steps for optimal broker selection are:

  1. Build a strong candidate pool.

  2. Develop a Request for Proposal (RFP) for candidates.

  3. Score candidates’ responses.

  4. Interview finalists.

  5. Archive materials from your selection process as well as any broker agreements.


5) Consider your candidates. 

When selecting a benefits broker, employers should consider the following, Larsen says.

  • Does the broker understand your organization’s unique needs and culture?

  • Are they familiar with your industry?

  • What services, knowledge, and experience do they provide?

  • Does the broker work alone? Or do they have team members that back them up?

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

  • Can they provide compliance advice regarding relevant federal and state laws; and also market disruptors such as COVID19?

  • Does the broker have references they can share?

  • What are the costs of the broker’s services?

In terms of the costs for brokers’ services, Larsen says that market standards are 5% of medical insurance premiums, 10% of dental and vision premiums, and 15% of life, disability, and supplemental insurance premiums. She also notes that as of Dec. 27, health insurance brokers must disclose commissions to clients and prospects, per a new federal law. “You will have full transparency on what the broker is making and can evaluate what they are doing for that cost,” Larsen says.


6) Work with the right broker for you.

Many businesses worry that switching benefits brokers is difficult but it is not, Larsen says. Concerns like changes in insurance plans and rates are often unwarranted, she adds.

 “If you’re dissatisfied, it’s always best to evaluate brokers when you are not in a renewal cycle,” Larsen says. Then, once you choose a new broker, switching over is as simple as signing a letter changing the servicer on your plans. 

“The key is to allow adequate time to make sure that you’re not rushed,” Larsen says. “Typically, at least six months prior to renewal would be the ideal time to make that change if you’re dissatisfied.”

Moving forward, the best way to work with your employee benefits broker is to form a collaborative partnership, Larsen says. “Frequent meetings and communication ensure that employers and brokers are on the same page and that a broker is working hard for your organization.”

Having a benefits broker that works hard for you is important because administering benefits is hard work. Ensuring that you have the right benefits broker will help you choose benefits correctly and manage them efficiently.


Providence Technology Solutions helps organizations design their path to HR success by creating the best strategy and strategic plan for their business now and for the future. Contact us today to learn more about our HR Advisory Services for Strategy. You can reach us online, by email at info@theptsteam.com, or by calling 904.719.8264.
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