Monthly Archives: May 2015

Be Careful – Your Benefits Goggles May be Blurring Your Vision

There comes a time in many industries where things begin to change. Some people welcome change and others fight it. Regardless, change is often inevitable and the market forces of change are too powerful to prevent it. I think the employee benefits industry is going through some big changes right now. This article is not really about what those changes are though I can throw out some words like Private Exchanges, Zenefits, ACA, Consumer Driven Healthcare, HSA’s, ACO’s, that are all terms that are more common today than just a few years ago. What this article is about is the ability to recognize change and then take action to meet the challenges that those changes may present. Or should I say to capitalize on the market opportunities that the changes present.

In any industry it is important to recognize change. When you look at firms like Kodak and Blockbuster Video you see two firms that missed the market change. Try to think of the biggest selling cell phones before the iPhone or Samsung. Remember the Motorola Razr? How about the health insurance business? When I entered the benefits business in 1986 UNUM was in the health insurance business. So were Travelers, Prudential, Metropolitan, and Guardian. I do recall delivering my first renewal with an employee rate of over $100. What will the benefits business look like 10 years from today? For the most part the brokerage side of the benefits business has not changed that much over the past 3 decades. However, over the past 5 years the fastest organically growing benefits brokerage firms have been a payroll company and now a technology company. Times are changing.

Recently I have been conducting many webinars for benefits brokers about some of these market changes. While I am not going to proclaim that I am the soothsayer with a clear vision of the future, I do like to try and point out some of the factual changes and provide some interpretation of what these changes may mean for the industry. Zenefits raising $500 million does have industry implications. And how about the number of hospitals entering the insurance business? What are the future implications there? What I find most interesting is the broker audience reaction to some of these webinars. Some brokers don’t want to acknowledge that changes are coming while others simply misinterpret what the actual changes are. Those that don’t see the change most likely don’t want to see it, while others are simply viewing the world from a narrow perspective. I like to say they that their “benefits goggles may be blurring their vision”.

There are many examples of different perspectives. Is Zenefits a technology company or a benefits broker? They call themselves a technology company. Others call them a broker. I refer to them as an outsourcing firm. At lunch today I had the President of a major HR Technology company tell me he believes stand-alone benefits enrollment systems will not exist in the future while earlier this morning a broker was telling me he just invested in a benefits enrollment platform. I had one broker tell me the future will all be individual health insurance. Other brokers are entirely dependent on an existing employer-based insurance model. An employer recently told me he would never allow his broker to offer voluntary products to his employees because he thought they were too expensive. At the same time voluntary product vendors are saying the way to make up for decreasing medical commission is by selling more voluntary products.

The changes you may need to make to compete effectively in a future benefits world may be dependent on some prediction as to where you think the market is going. I know brokers today are struggling to decide whether they want to make a play to compete with Zenefits. The moves you make may be very dependent on what you think their value proposition is. If they are a technology company then you may need to do one thing. If they are really an outsourcing firm you may need to do something else. Whatever it is you choose to do my advice is to take your benefits goggles off. They may be blurring your vision. Because if your vision is off you could choose the wrong path for your business which could have negative implications in the future. And if you want to buy a benefits enrollment technology company just give me a call. I know several that are for sale.

Sometimes You Just Have to Start

I was having breakfast this morning with a good friend of mine, Myles, who I meet with regularly to discuss my business. He is my business sounding board and a great advisor. Myles is a very successful business person who ran an investment fund and is very active in high-end finance. For the past year we have talked about the changing benefits business and discussed firms like Zenefits and the money being invested in various technology solutions in the benefits business. When Zenefits announced that they had raised $500 million at a $4.5 billion valuation this became even a bigger topic. What he found interesting is that he and I had been talking about the Zenefits business model before he or I ever heard of Zenefits. Our breakfast this morning ended when he gave me some “between the eyes” advice which was “Joe, sometimes you just need to start”.

In today’s business world being first or at least a fast follower is important. Successful firms don’t have to solve 10 problems. They can solve just one as long as that one is important or different. And on day one of a business things may not be perfect. Firms like Amazon started by selling books. Now they are a storefront. Zappos started by selling shoes. And they had distribution issues before they got it right. Apple sold computers.

Now here we are in 2015 and Zenefits is disrupting the benefits business with a model that really has been around for some time. The difference is they are actually doing it. While others are talking they are acting. And they aren’t perfect but they started. They promised to do just one thing well and that was employee onboarding. Based on what I have heard they do that pretty well. I will guarantee next year they will be better and three years from now they will be doing much more than onboarding. In fact they are already doing more things.

Over the past few weeks I have conducted some webinars about Zenefits and what to expect from them now that they raised $500 million. (You can see the webinar by clicking here: ) The last slide of the presentation quotes Steven Covey and his first habit of highly effective people which says, “Act, or Be Acted Upon”. I use this because Zenefits has been “acting upon” other benefits brokers by having written $20 million in new business over the past few years. They took that business from someone.

While I understand the apprehension some people have with trying something new, sometimes you just need to start. You don’t have to do everything. You don’t have to be perfect. And there are risks. But there are risks from not taking action too. Zenefits has had bumps, so did Zappos, and Apple, and Amazon. However, even if you aren’t prefect people will be thankful for your product or service if you are solving a big problem. I know when I need to solve a problem I often don’t need perfection. Sometimes I need “Now” and other times I may need “Cheap” and I don’t expect perfection when I need fast and/or cheap.

I think there is a way to significantly change the benefits business. Zenefits thinks so too and they are moving forward, fast. I have shared some of my ideas in other articles on this blog. But writing about it and doing it are two different things. So you know what, I am starting. I am hitting the GO button. The GO will include taking action as I said in my article “What Would Steve Jobs Do if He Were a Benefits Broker Today”. So as my friend Myles said, “START”. And for those brokers wanting to compete with Zenefits, you may need to start too. There may be bumps and it won’t be perfect, but I am willing to bet it will be a lot of fun and probably very rewarding.

Benefits Brokers – Part of the Problem or Part of the Solution?

If you read some of my articles and look at the tag line of my blog, “Challenging Everyday Thought”, you will realize that I like to “think outside the box”. I like the idea of challenging everyday thought. I have always done that even when I was in the insurance business. As one who writes such articles I am always getting those that challenge my ideas. I really don’t mind that because I believe in healthy debate, but what happens most often is that I have people arguing for the status quo. In my opinion it is the defenders of the status quo that are fighting innovation and change in an industry, healthcare and health insurance, that is in dire need of new ideas.

Such a discussion took place this past Friday afternoon with a benefits broker after I gave my webinar titled “Zenefits raises $500 Million – What is means for benefits brokers.” You can still see this by registering here ( This broker was giving me all the reasons why employers won’t want a broker that does not provide local service. Keep in mind this is after I talked about how Zenefits sold $20 million in new business with no local service. This broker wanted to believe that the current broker model was too valuable and would never change. I was just reporting the facts and the facts were saying otherwise.

I always believed that the industry protecting the status quo invited the government in. Since Hillary threatened the industry in the early 90’s up until Obama came into power the industry had 18 years to make changes. Yet there was very little change. Brokers, carriers, and the providers, had it pretty good. This reminds me of a quote I read just this morning that said,

“Institutions will try to preserve the problem to which they are the solution.”  – Clay Shirky

Is this what we have going on in the health insurance industry? Will benefits brokers contribute to the solution or is the desire to protect the status quo too strong? I think there are some “fake” changes going on. Private Exchanges don’t save anyone ten cents in real health care dollars yet the some sell this as a big change. Private Exchanges are a reincarnation of Cafeteria Plans from 1988. Did Zenefits create anything real new? No. They have a nice little technology that many other vendors have but there really is nothing new. Corporate Synergies was doing what Zenefits is doing in 2002. Corporate wellness programs are failing and won’t solve the problem. Disease management programs, claims analysis tools, it seems like everyone is still squeezing the balloon of health care costs with no real answers.

I believe that the health care industry is about to go through some big changes. I wrote about this in another article titled “The Coming End to the Health Insurance Business as We Know It – And What Brokers Can Do About It” (see it here: Boy did I get ripped by the status quo people on that one. The way I see it is that the industry is going to change but most brokers and insurance companies will either stand on the sidelines or fight the change. The people or companies that are going to change the industry don’t have an interest in keeping it as is. And with the amount of money spent on health care there are a real lot of them trying to capitalize on changing health care delivery. Brokers and insurance companies may be casualties of this change if they don’t become part of the solution.

I use a quote in my presentations from Mark Cuban that says, “Every day some stranger somewhere in the world is trying to come up with a way to put you out of business.” In this environment with Zenefits raising $500 million; more and more hospitals getting into the health insurance business; new technologies; more and more government intervention; it is not the time to fight to protect the status quo. There are many people here trying to put insurance companies and brokers out of business. When Hillary was asked what the insurance people should do if she succeeded with her health care plan she said they could get another job.

One needs to ask one-self ‘What will the benefits business look like in 10 years?” I guess if you are 55 and plan to retire it may not matter. Fighting for the status quo for a few years may be the plan. However if you plan to have a thriving business in ten years then it is time to change your mindset. It is time to be part of the solution and I am talking real solutions, not fake solutions that protect the status quo. It is time to join me in challenging everyday thought. OK status quo guardians, start tossing your darts. I am ready.

Webinar Announcement – Zenefits Raises $500 Million – What does this mean for benefits brokers?

I write on this blog periodically about Zenefits. Just this week Zenefits announced that they have raised $500 million in additional venture capital. ( read more here ) In my opinion the rules of the benefits game have now changed. $500 million is a lot of money. If you have not heard of or competed with Zenefits they will show up fast, real fast, in your market. It is NOW time to take action – not a month from now or 2 months from now. By then most brokers will lose a case or two to Zenefits. According to Zenefits,  “The new round of funding will enable Zenefits to build up its sales and marketing teams to help the company reach the approximately 5 million American businesses with between 2 and 1,000 employees and to scale its account staff so that it can support these new customers.” And yes, they are going up market.

I am conducting a webinar on this topic over the next few weeks. Any benefits broker that wants to attend this webinar can register by going to my website at Go to the webinars section.

While I have done other webinars on this topic this webinar will be different. It will get more into where the market is going versus where it is. I think those who attend will find the time well spent. Click on the link to register. Thanks.

Turning the Benefits Service Business Upside Down

A few weeks ago I was speaking at the Silicon Valley Association of Health Underwriters Conference where Zenefits CEO Parker Conrad was also present and took questions from the audience. He had an interesting response to a question that reminded me of an article I had written back in 2009 titled “Xbox – The Future of Employee Benefits Customer Service”. (You can see the article here: ) He was asked if he provided any face-to-face service. He responded somewhat tongue in cheek by saying that he did as long as they could walk to the meeting. Of course that got a chuckle from the audience. I don’t remember his next comment word for word but he followed that by saying that most brokers assume that providing service via the phone and/or web conferencing does not yield the same result as an onsite visit. He totally disagrees with that premise. He believes that centralized services using the latest technology can actually provide a better result. To most brokers this is turning the benefits business on its head.

Many benefits brokers live by the idea that face-to-face onsite service is the only way to provide quality service. Certainly that is one of the advantages a local broker has, being local. But times change. Web conferencing and even high definition web conferencing is now readily available to even a small business. Consumer behavior has changed too. Some CEO’s and others find it acceptable to meet via the web. Some may even find the company that can do this to be more forward thinking or technologically advanced. Others will see web conferencing as being more cost conscious. Millennials have no problem speaking to others via the web, smart phone, text messaging or chat. It is becoming more commonplace.

Onsite service also has a capacity problem. Imagine I am a national brokerage firm that has a highly skilled actuary or underwriter on staff. If that actuary were to drive one hour out to meet a client, meet for an hour, and then drive back that one meeting would take 3 hours. During those same three hours that same actuary could attend 3 web meetings. In this example onsite service is 3 times more expensive than a web meeting. Imagine if the client were getting billed for that time. In my 2009 article I used selling voluntary benefits sales as another example. Insurance buying events such as getting married, having a baby, buying a house, happen every day. It is simply not possible to be face-to-face for everyone when they have a need. Setting up an automated sales/service center can result in more sales.

The benefits business is seeing commissions being cut in many markets. I have a feeling this trend is far from over. Imagine if you had to build a business for a future benefits world where revenues were lower or you had to compete with other brokers on a fee for service basis. You would need to build a business that leveraged the latest technologies to improve operational efficiency. You may want to help your clients leverage technology so they too could be efficient in managing their HR and Benefits reducing manual service demand. Employees in this new world would have ready access to such needed information via the web and mobile. They would be able to speak with a benefits broker face-to face via mobile or web. In this new world you would be able to deliver state of the art technology and high-quality services to more customers at a lower cost. If you were to do this you would be building a business model like, well I guess, Zenefits.

While onsite meetings may not go away it is naïve to think that another company could not deliver a similar level of service and advice via the web and mobile using technology. Brokers fixed on old beliefs will be surprised when they get a BOR where the other broker has no local representation. It is happening today and will become more common in the future.

XBOX – The Future of Employee Benefits Customer Service – Reposted from 2009

This article was first published in 2009. It is even more relevant today so I am reposting this along with a follow-up article on the same topic.

A few weeks ago my son asked me if he could use my laptop for his regular Tuesday night drum lesson. I could not imagine why he needed my laptop for a drum lesson. It turned out that his drum teacher was on the road and he was going to be giving his lesson via the internet using Google video chat. So, he took my laptop into our basement and set it on a chair in front of the drum set. Using the built in camera, speaker, and microphone, along with a wireless high-speed internet connection, my son played the drums while his teacher watched, listened, and instructed, from his hotel room 700 miles away.

A few days later I was talking to an insurance company sales representative about the use of web-based benefits enrollment technologies. He commented that one of the drawbacks of web-based, self-service enrollment systems was that participation in voluntary plans was significantly lower when compared to face-to-face enrollment meetings with a professional enroller.

It occurred to me that there were some interesting similarities between the two situations—and some profound differences. While my son’s drum teacher leveraged technology to create a “face-to-face” drum lesson and generate revenue, the sales rep considered the technology an obstacle which reduced revenue. It has been my experience that those in the benefits business, though not afraid to invest in technology, often struggle with applying the right technology to the right situation. Let’s address how brokers can leverage technology to improve customer service and generate more business.

For benefits brokers, leveraging technology is moving away from a “ nice-to-have” strategy and more towards a “have -to-have’. With insurance products becoming more commoditized, and some form of healthcare reform on the horizon, benefits advisors will have to adapt to a changing market. This new market is likely to result in both flat or reduced commissionable revenue and a shift towards fee for service revenue. If that is the case, brokers will need to become more efficient, managing more customers with the same or fewer employees, while improving and expanding customer service. One way to do this and remain competitive is by investing in technology.

So how does XBOX get into this discussion? Well, be patient, I will get there.

There are dozens of processes in a benefits brokerage operation that can become more efficient with technology, I will focus on just a few. Let’s start with a common process for most brokerage firms, the customer service call. When it comes to customer service most brokers are very responsive. In fact, when one asks brokers how they are different, the average broker’s response is that they provide superior service. This presents two problems to the brokerage firm that is truly trying to differentiate itself. First, I have yet to meet a broker that didn’t say they provide superior service. Second, most brokers are not able to quantify the service they provide. The typical service call is documented with paper notes or simply by typing notes into some database type system. Most cannot produce a report on the types of calls, response times by their staff, or which insurance companies are having the most versus least number of issues.

Not having reportable information may not be a problem with clients where a strong relationship exists. But, what happens when your contact leaves the firm and a new HR person takes over? It is at that time a brokers value may come into question. It is also a time at which the broker has a tremendous opportunity to demonstrate their true value.

For a new HR person the information you have can be leveraged to make that persons transition into a new job easier. However, according to John McKean in his book, “Information Masters: Secrets of the Customer Race”, only 5% of the body of knowledge about a client is available digitally and indeed only 20% of the knowledge is recorded at all.” For many brokers this is often the case. Therefore, though they may have provided great service, they can’t prove it to a new HR person. Thus they lose a competitive advantage over a broker who may be prospecting the same employer.

Another risk point for brokers is when a key employee leaves the firm. In organizations where information is not tracked all knowledge walks out the door with that person when they leave. This not only puts you at risk of losing your asset, but may result in a lapse of service to a customer. Information existing only in the minds of your staff is not a reliable service model.

A major problem for many firms is they don’t have an adequate system for simplifying the tracking of information. I once asked a service rep at a brokers office what her number one technology need was. Her response was very telling. She said her primary method of communication with clients on service issues was e-mail. She said it took her 11 mouse clicks to save an e-mail to her system, and she saved 60 e-mails a day. That’s 660 clicks! She spent an average of 45 minutes a day saving e-mails. While this person saved all her e-mails, another service person at the same firm said she didn’t save her e-mail correspondence because it took too long. The owner of this large regional firm thought they were all set with technology. The problem for his staff was the technology was the wrong technology. In a business environment with ever increasing demands for both greater productivity and quality, this may not be tolerable.

So, how does one make it easier to manage data and improve service? This brings us back to my son and his XBOX. , On most nights, XBOX is the primary tool my son uses to communicate with his friends. For those of you who aren’t familiar with XBOX, it is an internet based video game console that runs through a TV. It allows friends, each in their own home, to gather in chat rooms (up to 8 fiends at a time) and talk via a headset. If they want to play a video game they can play the same game. Two friends can also connect via video and see each other on each other’s TV screen.

Now move this technology into the business world. Imagine a broker’s client being on their “buddy” list. All clients should be on the buddy list. If a client needs to reach you they wouldn’t call and leave a message or send an e-mail. They could see if you are “present” simply by looking at your name in their Outlook. A green light by your name would signal you are available. Better yet, they could see the names of your service team and click on the name of any available person. Once clicked, a message would appear on the available service person’s screen asking to talk. If accepted, the service person would be instantly talking to your customer via the internet. This instant access eliminates any phone tag, saving substantial time. You could bring another person such as an insurance company claims office rep into the conversation if you would like. Viewing your client’s computer screen or even seeing the caller would be possible as well, further personalizing the experience. You could record the conversation and save it to a client file in your computer. Once the service issue is resolved, an e-mail could automatically be generated and sent by the system to the client thanking them for their business with no manual intervention.

Although this technology exists today, I have yet to run into a broker that provides this type of service. The combination of Microsoft Products called Office Communicator and Microsoft Office live is what I call XBOX for business. Other software firms have similar technologies.

Now let’s go back to the issue of voluntary benefits enrollment. You can be a broker in New York helping an employee in Texas through the open enrollment process. The employee can sit at a kiosk computer at work, put on a headset and click on the green dot on the screen to talk to and see a sales person in your office. If you want to show them where to click to enroll you can share their screen and even click for them. You can jointly go through their insurance needs calculator on the screen too. From 1200 miles away you can do a personal face-to-face voluntary enrollment, answer questions for the employee, and have the data transmitted into the insurance companies system automatically. This use of XBOX like technology will improve voluntary enrollment results while significantly reducing the costs associated with in person face-to-face enrollments.

It didn’t take long for a group of teenagers to leverage technology to conduct nightly conference calls without picking up a phone and paying an extra fee. In just a few years Microsoft has changed their behavior and created a new method of communication. It is not hard to imagine that businesses will adopt these same technologies in the next year or two. And for those that do, there are a whole bunch of college kids using these technologies in their dorms right now that will come well prepared to communicate in the new business world. What’s more, these same kids are also the insurance buyers of tomorrow.