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Ebay for Employee Benefits

The emergence of new technology is continually having a disruptive impact on innumerable industries.  Consider how the movie, music & travel industry have all been impacted with the evolution of Netflix, Apple Music & Expedia…….not to mention how ebay’s “reverse auction” technology has positively impacted how a wide variety of goods & services are now purchased.

Now consider the impact technology is having on one of the top three expenses on most employer’s P&L statements……. the acquisition of employee benefits.

If you asked your employee benefit broker-consultant how they procure the highest quality benefits at the lowest possible cost, you would probably learn that their process…..

  • only pursues limited carrier markets……despite the opportunity to pursue innumerable carriers in a robust market
  • is paper driven & cumbersome to evaluate results……..despite the opportunity to leverage technology to drive greater efficiencies
  • provides limited disclosure among carriers competing for your business…….despite the opportunity to create greater competition thru transparency
  • weights carrier recommendations based on broker favoritism…..despite the opportunity for all carriers to compete on a level playing field

Bottom line, traditional employee benefit procurement processes are outdated, inconsistent and don’t deliver predictable results

Fortunately however, technology is now disrupting the employee benefit industry. Many forward thinking employee benefit advisors are now successfully leveraging “reverse auction” technology to procure select employee benefits such as life & disability insurance, dental & reinsurance……..with great success!

Consider the “new normal” technology has created in employee benefit procurement….

  • On-line posting of an RFP into an existing robust “insurance purchasing exchange” creates broader access to carrier markets
  • The process consist of two phases….the quality phase evaluates the ability of the carrier to deliver what the employer wants to purchase followed by the reverse auction pricing phase which evaluates quoted premiums by each line of coverage.
  • Carriers respond to the RFP with full disclosure of their answers & pricing to other competing carriers which creates hyper competition.
  • Reverse auction pricing disclosure only allows competing carriers to understand what place they are in (1st, 2nd, 3rd, etc.) and does not disclose actual pricing.
  • Evaluating & scoring large amounts of data in a results oriented format is simplified

In 2016, “reverse auction” technology produced on average life & disability premium savings of 19% for employers in the manufacturing industry. Employers with 100+ employees have generally achieved the greatest value.  Most importantly, emerging employee benefit procurement technology has now created a repeatable process that is certainly producing predictable results.

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