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It's a difficult time to be a broker or consultant focusing on employee benefits. The consulting and employee benefits operations of the large brokers are seeing revenue decline and profits squeezed. That's putting huge pressures on brokers to keep their own costs down.

Nor is it easy to be a risk manager, human resource director or benefits manager confronted with escalating benefits costs, particularly healthcare costs, in the midst of a recession.

What, for example, will be the implications of a possible national healthcare program on corporate healthcare benefits?

In the course of our research for the 2009 Benefits Power Broker^TM awards, HR directors and risk managers reported that there are other factors at play besides higher costs to plan sponsors. For example, HR directors face employees who may have seen their 401(k) investment retirement accounts decline by as much as 40 percent during the past six months. In that situation, HR directors say that it's important that employees understand their plans, the options that each plan offers and what opportunities exist without providing specific investment advice.

"Consultants and brokers can help us shape the message we give our employees" on these kind of retirement plans, one HR director explained. "It's a matter of accurate communication," he added.

The second issue, especially with healthcare benefits, is how can an employer reduce ongoing group healthcare claims, especially as cost pressures increase? One HR manager pointed to the situation in workers' comp from a decade ago when both claims cost and claims frequency were increasing.

"With workers' comp, we realized that a bigger investment in safety and prevention would give us far better results, both in lowering medical costs and reducing frequency." In the group healthcare market, that has been translated into an increasing emphasis on corporate wellness programs and disease management to contain rising medical costs.

"That's where a broker can offer us strategic advice," the HR director said, "rather than just focus on the particular benefits policy transaction costs."

Obviously, it goes without saying that in a recession risk managers and HR directors are focused on getting the best price on any policy and look to the broker for aggressive efforts to keep premium costs as low as possible.

But there are further complications. "We're under pressure to make sure that any benefit provider can show a strong balance to ensure that the benefits can be delivered, which is an increasingly important issue with retirement plans and annuity investments," said another reference.

That means, consultants say, that creative problem-solving and strategic thinking are even more important in this market.

(Read here all of the profiles for the 2009 Benefits Power Broker^TM awards.)

June 1, 2009

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