Industry Trends Blog

For most insurance and employee benefits needs, employers must carefully weigh the value of their plan against the needs of their workforce. To do so, employers must turn to an insurance broker for guidance. So, how do you pay an insurance broker for their services, and how much do they make?

In most cases, you do not directly pay an insurance broker. Brokers are typically paid commissions by the insurer based on your policy, and the commission is included as a retention item in your premium cost. This is the case with fully insured coverages.

For any employer needing guidance to select insurance options for your employees, you should know how brokers are compensated for their services. This involves understanding commissions and fees.

In this post, we explain how an insurance broker is paid, differences in fees between brokers and consultants, and what to expect when you hire one.

How Insurance Brokers Are Paid

Before you select an insurance broker, you should know how they are paid. Typically, brokers provide policy information, quotes and enrollment/renewal assistance at no direct billable fee to you.

Insurance brokers are typically paid through commissions based on insurance policies sold.

Commissions are typically based on a percentage of your premium payment. These may include base commissions and supplemental (or contingent) commissions.

Commissions usually fall between 7% and 15%, but can vary depending upon the type of coverage and complexity of your policy. Usually, brokers receive level commissions or graded commissions based on premium thresholds. In addition, they may receive an override commission for a block of business with a particular carrier. This override will typically also include a small percentage for persistency. The higher the persistency with that carrier, the higher the percentage.

Some brokers are paid solely through commissions for policy purchases and renewals, but some include other fees for additional services, such as voluntary benefits enrollment.

Explaining Broker Fees

Sometimes, brokers will also charge fees as they take on consultant (or advisor) roles, providing ongoing services to help determine if policies should change, assist you with compliance, and help submit claims and receive benefits.

As brokers take on more consulting and advising responsibilities, fee-based broker compensation has become a more common payment method. Usually called a “fee for service agreement,” these fees are paid by insurance companies or may be directly billed to the client.

Even with commissions and fees a broker can add value and be lower cost than not utilizing a broker.

Fee Differences for a Broker, Consultant/Advisor, or Agent

Independent insurance agents work with (and are paid by) multiple insurers, with contracts limiting them to sell certain policies. Brokers and consultants (also called advisors), meanwhile, are not limited to certain policies and can solicit price quotes from multiple insurers.

Insurance brokers and insurance consultants perform similar functions, are licensed, and have a fiduciary duty to you as the insurance buyer. But there are some differences between the two.

The main differences between an insurance broker and a consultant/advisor are their fee structures and how involved they are with a client beyond insurance purchases and renewals.

Traditionally, an insurance consultant works on a fee for service, and an insurance broker works for commission based on the policy’s premium. Consultants usually charge fees instead of, or in addition to, a commission that’s included in your premium payment. This is in the form of direct invoice of billable hours or a direct offset billable hours with commissions received.

As opposed to brokers, consultants often forgo commissions from the insurance company, which means they must charge a consultant’s fee. Unless of course, the client prefers them to receive commissions and offset their billable hours or fees in that way.

It all depends on your state, your size, and what type of insurance you need, but average consulting fees are 15% of the policy premium. The higher the premium, the lower the percentage.

Many modern insurance brokers’ services have evolved, and work more like consultants/advisors, working with you throughout the year and not just when you need to spend money on insurance. You should know what services your broker or consultant provides, if they charge fees, and what those fees are, before allowing them to search for insurance policies on your behalf.

Thus, the difference isn’t always straight forward. It is always in your best interest to define the relationship and expectations of the services expected.

Insurance Broker Main Duties

• Negotiating lower policy rates based on relationships with insurers.
• Contacting you ahead of renewal with changes in policies or rates from insurers.
• Explain benefits and insurance options to your human resources team and other staff.

Insurance Consultant Main Duties

• Expertise in how your business operates, along with how insurance and benefits impact operations and employee management.
• Administrative task management, including enrollment, onboarding, automation and billing reconciliation.
• Working with HR leaders, decision makers and other employees to help the insurance-buying team reach decisions.
• Exploring options beyond policy cost that can improve financial and operational conditions for your company.

What to Expect When Working with an Insurance Broker

With a broker, you get industry knowledge and experience. They understand the language of the insurance industry, and are best equipped to negotiate and service your needs with insurers.

As your business grows and changes, you should expect your insurance broker to provide decision support. To earn their payment, brokers and consultants should be involved in your plan several times per year, helping make decisions that complement your overall business objectives.

When evaluating insurance brokers, be sure to explore online ratings and benchmarking studies that show who is in your market.

Connect me with a broker

The best way to find good insurance and benefits is through a broker, consultant, or advisor who knows the industry, has the partnerships, knows your needs and can deliver on the procurement process.

But, how do you know who to hire? With seemingly endless options, you feel under pressure to choose the right one. We believe that transparency, information, and choice leads to better hiring decisions.

It's why we created Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.

To get started, get matched with a short-list of qualified brokers.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, or read "Can an Insurance Broker Save My Company Money?" for more information on this topic.

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Insurance Broker & Carrier Analytics Access Introduction

The type, depth, and breadth of analytics that clients can expect to receive back from their insurance broker and insurance provider (in addition rate adjustments explanations, etc.) depends largely on the size of the client’s company, whether the client is fully insured or partially self-insured, the policies of the involved provider, and market trends. Depending on your relationship and structure, this can be frustrating for a number of senior executives.

Analytics clearly play a crucial role in the insurance business, from actuarial tables to market trends that can lead to rate adjustments for existing policies, but what analytics can you as a client reasonably expect to be made available to you?

As with most aspects of commercial insurance and even individual insurance, the answer to this question largely depends on a number of factors that can yield greatly varying results.

How Are Analytics Used and Why Are They Important?

In the insurance industry, analytics play a role of utmost importance in determining how rates are set and how they are adjusted over time as more information is gathered about the insurance needs and usage or individual companies, as well as developing trends of the markets as a whole.

One of the most significant and beneficial functions of a good insurance broker is using the available data and analytics in annual negotiations with the insurance carrier in order to keep rates increases lower (or bring them down) for you, the client.

• For example, it’s common in a given year for a company to exceed the expected claims requests, at which point the carrier will typically increase the insurance rates to incorporate the new data showing that the previous year’s projections were too low. A good insurance broker, however, may be able to show that the cause of the increased claims were non-recurring events that do not need to be factored into long-term rate increases and thereby negotiate the rate increases down, if not eliminating them all together.
• Similarly, if a broker sees rate increases coming down the pipeline from the carrier, he may be able to identify a specific cause that can be remedied with an adjustment in the policy terms instead of an adjustment through rate increases. For example, if the cause of the proposed rate increase is what appears to be a trend of emergency room visit abuse among the employee population that is driving up costs, the broker may be able to propose policy revisions that include a higher deductible or copay for such visits which can help curb the abusive behavior, thereby removing the need for a rate increase across the board.

Primary Factors That Determine Client Access to Analytics

There are 3 main factors that will determine whether or not you, as a client, will be privy to the analytics that are used to set and adjust your insurance rates, and what level of access you may be able to reasonably expect.

Additionally, it’s important to be aware of the distinction between the raw numbers upon which the analytics are based vs. the process through which those analytics are computed, both of which may allow for different levels of access.

• Company Size: Possibly the main factor that will influence whether or not clients are able to access the data and analytics underlying their insurance policy rates and adjustments is the size of the client company itself. Companies with over 1,000 employees, for example, have a significantly greater likelihood of having access to such data. At first glance, this may seem merely a result of the power dynamic at play with larger companies holding more influence when requesting that data, but the greater effect of a large employee population is adding statistical significance to the data analytics that can’t be established among smaller employee populations.
• If your company has fewer than 100 or 200 employees, expect little to no data sharing whatsoever, primarily for the above stated reason that there is limited mathematical significance to the data for such a small employee pool. In such cases, carriers make rate and adjustment calculations based largely on market trends or what’s known as ‘blended credibility,’ which is a combination of market trends and credibility tables (a type of actuarial table created based on your company’s specific data).
• Proprietary Analytical Methods: Whereas employee population size is a relevant factor because of math, the proprietary nature (or lack thereof) for any given broker and insurance carrier is of course imposed by the insurers on their own behalf. Such limitations on access to information is usually justified in order to protect trade secrets and other information that the insurance company believes is necessary to keep private in order to maintain a competitive advantage in the marketplace or for other strategic reasons. If access to this kind of data and analytical processing is important to your company, the presence or absence of such proprietary limitations is something that should be addressed as early as possible in the process of vetting new insurance brokers and insurance carriers.
• Fully Insured vs. Wholly or Partially Self-Insured: The breadth of involvement your company has with a single insurance broker or carrier can also be a relevant factor as to whether or not your company will be able to access data and analytics. At the risk of overstating the obvious, the more data that a given broker or carrier is able to collect on your company, the more likely they will be to be able to provide statistically significant feedback on that data, which in turn makes that data more likely to be shared than data from pools that are too small to be independently valuable. For example, even if a company has more than 1,000 employees – if that company is self-insured and/or only seeks outside catastrophic insurance from a traditional carrier, then that carrier is unlikely to be able to collect enough data to properly analyze that data on a per-company level. Therefore, the carrier is less likely to be able to share that data with the company. Of course, in cases of self-insurance, the company in question already has access to their own data, making the issue moot.

Client Insurance Analytics and Data Access Conclusion

As with almost all aspects of acquiring or changing commercial insurance, the best time to address issues of analytics and data sharing is as early as possible in the process of vetting potential carriers and business insurance brokers.

Whether or not you will be able to access the data relevant to your company and the methods by which that data will be used to set and adjust your rates (and whether or not such access is important to you) are decisions that need to be made on a case-by-case basis. These decisions are typically made in conjunction with a trusted advisor or broker who can take into account the specific needs of your company.

For help finding such a broker, advisor or employee benefits consultant to assist in evaluating your company’s needs, search Mployer Advisor. Our database shows ratings, areas of expertise, employer reviews and more, making it easy for you to search for and compare top-rated brokers in your area.

Mployer Advisor's goal is to add transparency to the insurance brokerage industry and highlight top performers to ultimately benefit you, the employer, and your employees.Search Top-Rated Brokers Near You

About Mployer Advisor

At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.

Is It Time for a New Broker?

Do you question whether you are getting the most value from your insurance broker? Are you doing everything possible to keep costs down and or feel that your benefit package is a commodity and not necessarily an employee retention tool?

Are you starting from scratch and need a new insurance broker?

The best first step is an insurance broker Request For Proposal, or RFP.

What is an RFP?

The first step when seeking health insurance for your company or commercial insurance coverage for your business whether you’re purchasing coverage for the first time or whether you’re considering changing policies, brokers, or carriers – usually starts with sending out RFPs to several insurance brokers and/or brokerage firms.

As the name implies, RFPs are simply requests made on behalf of the company which are typically sent to multiple brokerage firms in order to begin the process of vetting potential brokers with which the company may be interested in working.

While RFPs are in many ways synonymous with getting ‘quoted a price,’ these proposals often include additional information beyond merely the cost of services and coverage, which can be greatly beneficial in determining the range of services offered as well as the benefits (and potential detriments) of working with the particular brokerage firm providing each proposal.

Of course, in order to send out these RFPs, a company must first have identified potential brokers that they believe may be a good fit for assisting in their insurance coverage acquisition process and from which they attain more information.

Learn what makes a good insurance broker and see how to identify ones best suited to the needs of your business.

How Regularly Should I Be Sending Out New RFPs?

The short answer to this question is that RFPs should be sent out anytime your business is considering new or different commercial insurance coverage, but there are a number of other considerations that should be taken into account as well as potential events that may serve as good catalysts to trigger the need for change in an insurance broker and the accompanying issuance of new RFPs.

• Company Size: Often the most important consideration to evaluate when reconsider your company’s insurance brokerage needs is simply the relative size of your company. Operational efficiency is the primary consideration here, as larger companies tend to have greater institutional controls in place and a more regimented system that requires the use of resources that could otherwise be repurposed to another endeavor more immediately necessary for the furtherance of the company’s core business interests. Simply put, your HR team or whomever may be running the RFP process presumably has other responsibilities to attend to beyond endlessly reevaluating your insurance and benefits packages. Additionally, larger companies typically have more stakeholders with a greater variance of interests that need to be accounted for, which can take time and additional resources to properly survey.
• For larger companies (over 1,000 employees is a good benchmark for these purposes) without any other specific catalyst that triggers a reevaluation of your insurance needs/coverage a good timeline to adhere to, with an accompanying issuance of RFPs whenever that reassessment leads to the desire to explore additional options.
• For smaller companies, the process of insurance and broker evaluation is usually much simpler and can be conducted more regularly without encountering the degree of inefficiency that larger companies often face. In such cases, the 3 year timeline between broker reevaluation mentioned above would be on the longer end of the spectrum, with annual or biennial reevaluations often being appropriate.
• Other Catalyzing Events: Beyond company size and a regular brokerage reevaluation schedule, there are a number of events that often indicate that it’s a good time to reassess your company’s insurance coverage and potentially issue a new round of RFPs.
• Strategy: The most proactive reason to reconsider your company’s insurance is for strategic purposes. With cost cutting as a motivation for seeking cheaper insurance options falling on one end of the strategy continuum, the other end of that is occupied by comprehensive benefit strategies that have become critical tools for attracting and retaining top talent. In pursuit of such a comprehensive benefit strategy, an annual survey of employees needs and satisfaction-level with current coverage and benefits options can be very helpful in making sure your company stays highly competitive in the talent market.
• Change: While not as deliberately proactive as reevaluating your company’s insurance needs for strategic reasons, there are a number of changes that can serve as opportune catalysts for just such a reevaluation. Change in your company’s HR manager tends to be a good time to reassess the insurance coverage. Also, change in personnel at your brokerage firm, especially with your company’s direct contact or trusted advisor, might be a good time for a reassessment. Finally, and not to be understated, change in your level of satisfaction with your insurance coverage may be the most important catalyst for reevaluating your insurance coverage needs.

With all these considerations in mind, it’s also important to note that aside from the potential inefficiencies involved with the time and resources required to do so, there is no bad reason to reevaluate your insurance coverage and business insurance broker. The desire to refresh a policy that may feel otherwise stale or outdated is more than enough reason to look into making a change. Such decisions should always be made on a case-by-case basis and with the needs and context of your individual company in mind at the forefront.

How Many RFPs From Different Brokers Should I Request?

Because RFPs are non-committal, there is theoretically no cap on the number of RFPs that a given company could issue, but there are practical limitations and efficiency considerations that should be accounted for when deciding how many proposals are requested.

A good analogy might be requesting quotes from multiple contractors for the construction of a new warehouse. In such a scenario, your company could (in principle) request as many quotes as there are contractors, but of course that would be a ridiculous and excessive time-wasting exercise in practice. Instead, you would be wise to narrow your search at the outset based on which factors are most important to your business, including local proximity, specific expertise (i.e. warehouse construction experience), recommendations/reputation, or any other factors you may wish to weigh in order to set the parameters of your search criteria as narrowly as desired before requesting quotes from the contractors deemed most likely not to waste your time.

The process of pre-vetting potential brokers in advance of sending out RFPs is an equally valuable preliminary step that can optimize the scope of your company’s search as well as allocating your time, energy, and resources more efficiently and effectively. To identify and locate a group of strong brokerage candidates in the pre-vetting phase of this process prior to sending out formal RFPs, search Mployer Advisor today.

About Mployer Advisor

At Mployer Advisor, our focus is creating transparency in the insurance and insurance broker, consultant and advisor space to the advantage of the employer. Analytics is our core and we will bring to light new information, tools and resources to aid employers in making more cost-effective decisions. As a phase I, we are here to help employers find the right broker or consultant and the right insurance company for them. Giving choice and initial transparency is a first step in creating an employer centric insurance marketplace.

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Insurance brokers are valuable assets. Whether you’re a small business owner or a benefits manager at a large company, brokers can help make your insurance shopping experience simpler and, in many cases, more affordable. By acting as an intermediary between consumers and insurance carriers, they provide industry knowledge and expertise to ensure their clients are getting the right coverage at the right cost.

Insurance brokers differ from insurance agents in that they represent the client, not the insurance company. Because they aren’t incentivized by a specific insurance carrier or carriers, they’re able to keep the interests of their client and their client’s business at the forefront of the insurance shopping experience. This focus often results in a more positive outcome, with the client’s coverage needs being achieved in full and on budget. Let’s examine the three most important responsibilities insurance brokers should fulfill.

Support the Client's Needs

At the very least, every company should have property, interruption, and liability insurance; because all businesses are different. However, the specific circumstances of each one -- such as what services or products they provide, whether or not they possess a fleet, and whether or not they handle sensitive information -- must be taken into account. In these cases, additional coverage, such as cyber insurance, commercial auto insurance, and data breach insurance needs to be purchased. This is true whether you’re a small business owner with six employees trying to expand, a large corporation with significant assets, or a medium-sized company trying to maximize revenue.

At the same time, brokers should be actively listening to the concerns of their clients; it’s important that clients feel their needs are being addressed and appreciated. For example, if a business owner in Kansas is particularly worried about tornadoes damaging their office building, a great broker will spend extra time finding the right coverage to soothe those concerns.

Act as a Liaison

Compared to the average individual looking for health or life insurance, businesses require more attention, care, and knowledge when it comes to finding coverage. The greater financial risks translate to more intensive and encompassing insurance packages that can be increasingly difficult to understand for a typical business owner or benefits manager, especially if they’re trying to go it on their own. The industry experience possessed by insurance brokers is especially beneficial when it comes to communicating directly with potential insurers; they should explain complex lingo, help with filling out any necessary forms, and negotiate final deals. Ultimately, this provides comfort and security for those unsure of what coverage they need and why.

Research Insurance Trends, Policies and Products

Insurance brokers are uniquely equipped to sift through the mountain of different insurance options to ensure their clients and their client’s business are protected. Their experience and in-depth knowledge of current policies and trends allow them to hand-pick the most ideal plans depending on client interests and concerns. Great brokers will always be paying attention to industry changes and policies in order to provide the most up-to-date information. This means that clients from all experience levels and backgrounds can rest assured that they’ve made the right choice for their business.

Signs To Look Out For

Unfortunately, every industry has its bad eggs. Insurance brokers aren’t immune to selfish, unprofessional individuals that are more interested in turning a profit than looking out for the needs of their clients. If your broker is displaying any of the following four behaviors, you may want to start searching for a new one.

• They cannot be easily reached. Accessibility and communication are vital for any professional relationship. If a broker does not answer your calls, emails, or messages in a timely manner, forcing you to leave several messages before they finally respond, they aren’t providing you with the best service. This goes double if they aren’t effectively explaining the essentials of your plan, why it matters, and what it costs.
• They do not provide you with copies of your insurance policies. Insurance policies are designed to protect businesses and assets from financial loss. Without examining your policy, you won’t be able to guarantee that it includes all the coverage you need. Your broker should be walking you through the details, not expecting you to trust them explicitly.
• They are not sending you actual bills for your insurance premiums. Billing statements provide concrete proof of what your policy costs and why. If you’re not receiving either a direct bill (a bill that comes directly from the insurance company) or a brokerage bill (a bill issued by your insurance brokerage) and are instead simply told to write out a check, your broker is most likely being dishonest about the costs.

• All of your bills are round numbers. Insurance premiums are not neat, with pretty numbers like $10,000 or $5,000. Instead, they’re ugly and can appear almost random (think $10,304.78 or $5,235.13). If your insurance bills are perfect and even, there’s a solid chance your broker is lying about the true cost in order to skim a little off the top -- especially if you’re not receiving actual billing statements.

Brokers are supposed to make the insurance buying experience easier and more transparent. If yours is concealing information, ignoring your questions, or forcing you to go on the faith they aren’t doing their job; even worse, they may be stealing from you.

How To Deal With a Bad Insurance Broker

Luckily, business owners, benefits managers, and other professionals who feel they’ve been wronged, or believe they are currently being wronged, by their brokers aren’t helpless. Depending on the damage that’s been done -- which can range from mishandled claims to overt theft --, you have two main options beyond simply firing them: file a claim against the broker or file a lawsuit. The legalities surrounding suing your insurance broker vary by state; it’s wise to consult with a lawyer on whether or not a lawsuit is even possible based on your circumstances, let alone practical.

Change your broker here.

When filing a claim, you’ll need to contact your state’s department of insurance and may need to fill out a few forms. Focus on the professional details; list all events and contacts in chronological order, including any interactions you’ve had with the broker, police, insurance company, and others that are relevant to the case. Attach any necessary documents (for example, health records if the mismanaged claim was related to health coverage) and photocopy all your documents for safekeeping. Following up on the status of the claim after two weeks will ensure it gets handled.

The best insurance brokers are knowledgeable, trustworthy, experienced, accessible, and transparent. Remember, insurance brokers work for you; if they aren’t satisfying the above responsibilities or you suspect something underhanded may be going on, you’re well within your right to end the relationship and take action.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and check out this article if you are considering changing your broker.

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There are more than 32.5 million businesses in the United States, operating in industries as vast as healthcare and manufacturing and as far-reaching as technology. Though the size and specifics of these businesses can vary immensely, all U.S. companies are legally required to obtain certain forms of insurance, namely employer-provided health insurance, worker’s compensation insurance, and unemployment insurance. These mandated types of insurance offer protection for employees against a myriad of risks and circumstances.

As a result of their mandated status, businesses can face serious consequences if they don’t provide sufficient coverage for their employees. Let’s take a look at each option to learn about what could potentially happen if a business doesn’t have insurance.

Health Insurance

The Affordable Care Act (ACA), more commonly known as Obamacare, plays a vital role in today’s world, especially when one considers the impact of COVID-19. It was designed to achieve three main goals: make affordable health insurance available to more people, expand the Medicaid program’s coverage, and support innovative medical care delivery methods in an attempt to lower overall health care costs. Employer-sponsored health insurance is an essential part of the first goal; it applies to companies with 50 or more full-time employees and/or full-time equivalents (FTEs).

The Law

Employer-provided health insurance must meet two fundamental requirements: it must provide “affordable” coverage and “minimum value”. Affordable coverage is calculated by looking at an employee’s contributions compared to their household income; if the contributions exceed a certain percentage of their income (9.78% in 2020 and 9.83% in 2021), the coverage is not considered affordable. A plan that provides minimum value must pay at least 60% of the cost of covered services, such as deductibles, copays, and coinsurance. This affordable, minimum value coverage must also apply to any dependents the employee has up to the age of 26.

The Consequences

If an employer does not offer any health insurance despite having 50 or more employees or does not offer at least one medical plan option that provides “affordable,” “minimum value” coverage, the business will incur the following penalties.

• No coverage offered:
• $2,570 per full-time employee minus the first 30.
• If coverage is offered but is not affordable:
• The lesser of: (1) $3,860 per full-time employee receiving a federal subsidy for coverage purchased on the Marketplace
• or (2) $2,570 per full-time employee minus the first 30.
• Covered offered, but does not provide minimum value:
• The lesser of: (1) $3,860 per full-time employee receiving a federal subsidy for coverage purchased on the Marketplace
• or (2) $2,570 per full-time employee minus the first 30.

Depending on the size of the business, these penalties can add up to a considerable cost very quickly.

Workers’ Compensation

With the exception of Texas, workers' compensation insurance is legally required for businesses throughout the United States, although the threshold varies by state. For example, California requires workers’ comp insurance as soon as the first employee is hired, while Florida doesn’t require it until four or more employees have been brought on board. It was designed to provide wage replacement benefits, medical treatments, vocational rehabilitation, and various other benefits to employees who have been injured at work or have acquired an occupational disease.

Because the law isn’t federally mandated, each state is allowed to set its own base requirements. This varies primarily depending on industry and employee numbers, meaning that business owners should take the time to check their local laws if they want to protect themselves from the penalties.

The Consequences

Failing to provide adequate workers’ compensation insurance for your employees can result in significant ramifications, including jail time. These also vary by state, so let’s take a look at a few examples.

• New Jersey
• Considered a criminal offense punishable by a fine of $10,000 or imprisonment for up to 18 months.
• California
• Considered a criminal offense punishable by fines that can reach up to $100,000.
• Illinois
• Carries misdemeanor charge, with the willful failure to obtain insurance categorized as a felony.
• Pennsylvania
• Intentional non-compliance is considered a third-degree felony, punishable by a fine of $15,000 and up to seven years in jail.

While fines alone can do a lot of damage to a business, imprisonment can sink it entirely.

Unemployment

Unemployment insurance programs exist in all 50 states on both a federal and state level, serving to provide financial assistance to unemployed individuals who meet the following criteria: they are unemployed through no fault of their own, e.g., work simply isn’t available; they worked during a specified period, usually up to 18 months; they earned a minimum amount of wages as determined by each state, and they are actively seeking work each week they’re collecting benefits.

The Law

When an individual is approved for unemployment compensation, the money they receive comes from payroll taxes their company has paid to the government.

The Federal Unemployment Tax Act (FUTA) is an employer-only tax that costs 6% on the first $7,000 each employee earns per calendar year; this means the maximum amount a business will have to pay per employee is $420 per year. The State Unemployment Tax Act (SUTA) varies due to the fact that states are allowed to determine their own wage base and tax rates. Compliance with these acts results in a 5.4% tax credit, bringing down the FUTA tax rate to a much more affordable 0.6%.

The Consequences

Failing to pay unemployment taxes can result in penalties that are usually financial, including punitive fees or interest assessed on the money owed that was not paid. Fortunately, these penalties never extend to the company’s employees that are seeking unemployment support.

There are certain types of insurance that companies are simply required to pay into. While the details may vary from state to state, the consequences can be utterly ruinous. If a company is looking to save money, skimping on health insurance, workers’ compensation insurance, and unemployment insurance is the wrong way to do it; with penalties that can lead to bankruptcy and even imprisonment, it just isn’t worth the risk.

Want to read further? Read up on everything you need to know about compensation and employee benefits packages.

Looking to browse through all of our exclusive content? Check out our blog.

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Business travel accident (BTA) insurance, also considered a voluntary benefit, protects employees and organization members when traveling for work. This type of insurance offers coverage against any financial burden that may arise if an employee is injured or even dies in a tragic accident.

The main components of BTA insurance are accidental death and dismemberment; however, some forms of BTA insurance also include medical benefits and on-premise coverage. Employers pay premiums, but payouts go directly to employees or their beneficiaries.

Who Needs Business Travel Accident Insurance?

BTA insurance is recommended if your employees travel frequently, either for domestic or international trips. BTA insurance should even be considered if you take annual excursions with members of your team or the entire company.  

Typically, companies invest in BTA insurance to cover the potential loss they would bear if an employee is injured or even dies while traveling. These professionals could include high-level officials or key position holders whose loss could severely impact the company, but BTA insurance is also recommended for all traveling employees regardless of company rank.

In specific, many travelers can benefit from this type of insurance, including:

• Journalists, war correspondents, or people who visit dangerous destinations for work
• Missionaries

• Frequent business travelers (both global and domestic)
• Government employees

What’s more, business travel insurance mitigates all risks associated with local or international travel. Whether it is the loss of baggage, theft, illness, or trip cancellations, BTA insurance can offer protection against all mishaps. For that reason, providing this should afford traveling employees and employers peace of mind.  

Traveling for business can pose more risks than traveling for leisure, so BTA insurance addresses business travelers' unique concerns, including coverage for terrorism, kidnap and ransom, and emergency evacuation, among many others.

What Do the Policies Cover?

Every BTA insurance policy varies in coverage options, price, and additional benefits. Here are some common coverage options that business travel accident insurance includes:

• Natural disasters and terrorism  
• Trip/baggage delays, interruptions, and cancellations
• Accidental death & dismemberment (AD&D)
• Flight accidents

• Ransom or kidnap
• Emergency evacuation
• Repatriation of remains

Again, various policies have different limiting provisions; for instance, some BTA insurance plans may only cover air travel-related accidents. On the other hand, some BTA plans could stipulate a certain travel distance from home or travel to specific destinations before coverage kicks in.

Why Business Travel Accident Insurance Is a Good Idea

If your business requires employees to travel frequently, you should consider BTA insurance for your employees' financial well-being and protection–not to mention to safeguard your company from unnecessary expenses. In the absence of this insurance plan, any emergency, fall, or slip accident could cost your company thousands of dollars.  

BTA insurance protects your business by helping you avoid medical bills or expensive lawsuits. Of course, this type of insurance also protects your company’s greatest asset: your employees.

Because traveling is unpredictable, BTA insurance eliminates the guesswork out of your employees’ business or paid trips. This coverage also allows both the employer and employees to focus on their work and enjoy a hassle-free trip, rather than worry about possible travel risks or repercussions out of their control.

How to Get Business Travel Accident Insurance

It doesn’t matter if you own a small local retail shop or a large manufacturing company, offering BTA insurance to your employees can protect your workforce–and your bottom line– against injuries and accidents.  

To obtain BTA insurance, work with your business insurance broker to discuss customized options appropriate for your industry and specific needs. An experienced broker can help employers find the right coverage for their unique needs.

Search now on Mployer Advisor to see top-rated commercial insurance brokers near you.

Curious about other insurance topics? Check out the Mployer Advisor blog where you can find all your insurance questions answered.

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Voluntary benefits, also known as supplemental benefits or employee-paid benefits, are coverage options offered through an employer but paid (either in part or entirely) by workers through pretax payroll deductions. A key attraction is that they offer employees group rates that they might not qualify for individually, proving valuable for workers whose varying life circumstances could make it difficult for them to get the coverage they need from traditional benefits.

It can be hard to understand everything included in a comprehensive voluntary benefits plan, including what you can choose from and the positive impact it can have on employees and employers. For an easy-to-follow explainer, read on.  

Categories of Voluntary Benefit Options

There are several different categories of voluntary benefits. At little or no cost to employers, businesses can add voluntary benefits to their coverage packages, giving employees the ability to customize and the full coverage they need.  

Here are the most popular categories of voluntary benefits.

• Health:  This category can include benefits such as critical illness insurance, cancer insurance, or accident insurance. These supplemental policies protect against unexpected medical costs and associated financial losses.  

• Financial:  Financial benefits help employees manage their finances. The range of topics includes credit card debt, student loan debt, investment advice, tax advice, saving, and budgeting.  

• Wellness/Lifestyle:  A much broader category, these benefits can include everything from legal services to gym memberships and virtual healthcare access.  

• Personal/Miscellaneous:  Personal benefits include remote work policies and pet insurance, both of which can afford employees greater peace of mind and support inside and outside of the workplace.  

• Security:  Security benefits predominantly revolve around life insurance and identity theft protection. These options offer a direct financial benefit and cover the potential losses resulting from events such as identity theft or the death of the policyholder.  

So, what do these optional offerings actually look like? Here are five real-life examples to see the positive impact voluntary benefits can have on your business as a whole.

A fast-growing manufacturing company adds disability and life insurance benefit options.

The company is rapidly expanding and in need of talented and committed workers to join their team. Offering these relevant benefits will help this company attract potential employees and edge out other competing companies in the area. Plus, these additional options will provide new employees with protections that are excluded from basic coverage plans. 

A community hospital adds pet insurance to its benefits package.

At no additional cost, the hospital boosts morale and productivity by demonstrating a vested interest in their employees’ lives outside of the workplace. The employees feel grateful to have this additional financial and emotional security, and they feel comforted knowing their pets will be well taken care of in an emergency.

A tech start-up offers short- and long-term disability benefits options. 

The start-up is looking to hire employees who are in it for the long haul and want to communicate to potential applicants that the company is dedicated to employees' well-being. New hires can take advantage of these benefits and feel secure knowing they will be covered for circumstances, such as pregnancy, a mental health crisis, or an unexpected medical emergency. 

A restaurant expands its benefits to offer dental and vision options. 

For no additional overhead, a restaurant owner offers a broader array of benefits to their employees. These expanded coverage options make the restaurant more attractive and allow them to stand out as a competitive employer. Increased retention means that the quality of service at the restaurant can continue to grow as each employee continues to hone their expertise.

A city offers employees mental health support and financial counseling benefits.

A mid-sized city’s municipal employees, who often find themselves in stressful work environments, are able to receive the support they need to care for their mental and financial well-being. This leads to a higher degree of productivity and job satisfaction and a more balanced work environment across the city.

Are you curious to see what kinds of benefits companies like yours offer? Download your custom benefit benchmarking report to see how your benefits package compares. 

Curious to learn more about voluntary benefits? Read our explainer titled “Insurance 101: What are Voluntary Benefit Plans?”

Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.

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If you are shopping around for health insurance, chances are you have heard the term ‘insurance broker’ thrown around a few times. While both insurance agents and insurance brokers act as intermediaries between insurance sellers and buyers, they have different job functions.

Where an insurance agent represents one or more insurance companies, an insurance broker works directly for the client. On the other hand, brokers work for you and only you and will use their experience to provide the best insurance package for your specific needs.

When shopping around for a business insurance broker, there are a few things you should ask to ensure they are the best fit for what you are looking for. Here’s an insider’s guide of what an employer should ask an insurance broker before hiring them.

Can you tell me about your business?

You’ll want to know more about your broker’s business to get a sense of their experience. A business insurance brokerage that has been around for a while is a great sign that they are well-versed with a lot of different business types and the issues you may face. It’s also a good idea to ask for references and to ask about what some of their success stories are. Doing this will help you see their track record, and if their previous experience aligns well with your goals.

There’s no such thing as a good answer or a bad answer to this question, but make sure to follow your gut. Your insurance broker’s job is to represent you, but if something seems off, make sure to act on it.

Who will I be working with?

Insurance brokerages can be quite large, and you want to make sure that you are more than just a number to them. It is important to ask about who you will be working with, as this gives you an idea of how this firm operates. They should provide you with a dedicated account manager that serves as your only point of contact, but if they don’t, proceed with caution. An account manager makes sure that all your needs are met, and that you are treated as an individual. You will need to evaluate if a large firm or small firm is best. Who are you working with and how long have they been in the business.

Can you help me review my current coverage?

You may already have some type of insurance coverage, and an experienced broker can take a look at what is working well for you and what isn’t. Based on their findings, they can create a customized plan for your needs, and fill in any coverage gaps you may be experiencing. Make sure to sit down with the broker to analyze your specific plan before you start discussing other options, as you want to make sure your concerns are heard before you enroll in a new plan.

What are the different types of plans you offer?

Not all plans are created equally, so you will want to hear out all the different types of options available to you before you decide. There is no such thing as a one-size-fits-all type of insurance plan, so take your time listening to the plans they offer, and ask as many questions as possible.

Additionally, you’ll want to find out about the different types of health plans. Indemnity plans are a type of health plan that require you to pay a certain percentage of healthcare costs when the healthcare company pays the rest. There are also managed care systems, health maintenance organizations (HMOs), and preferred provider organizations (PPOs), that can add versatility to your health insurance plans. At the very least, you should expect your broker to provide a comprehensive list of health insurance terms, rates, and benefits for multiple options for your review.

Please explain the fees you charge.

Some insurance brokerages have salaried workers, whereas others rely only on commission-based sales. The health insurance company will pay the broker out of their end of the sale, so it doesn’t cost you anything to use a broker’s service. But sometimes, they add on an extra brokerage fee on top of your plan.

Asking upfront about any extra charges ensures you’re not surprised down the line.

How do you handle the enrollment process?

Each brokerage handles the open enrollment process in a different way. Some may take care of enrolling for you when others require the clients to do it themselves. It is important to ask your insurance broker how they will streamline the entire process to make everything easy for you. They may even offer some tools that can make the process a bit easier for you, but again, this may take some time to learn. You want to be as prepared as possible going into open enrollment, and asking all these questions ahead of time will set you up for success.

Does your brokerage have a specific renewal process I should be aware of?

You will need to renew your plan every single year, and some insurance brokerages have certain automatic renewal processes set up as a way to streamline the entire process. Generally speaking, a systematic renewal process will go into place about 45 to 60 days leading up to the renewal date. But it is important to be aware of your insurance brokerage’s renewal process because it is best practice to ask your broker to negotiate a better rate for you every year, and you don’t want to get enrolled in the same plan if you wanted to make a change.

What are your capabilities in the following areas?

It is best to know your business insurance broker’s capabilities in the following three areas:

• Claim advocacy. Does the brokerage have specific claim specialists at your disposal for difficult situations?
• Claim reviews. How do they close and review claims? Do they have a standardized process for doing so?
• Loss control. Can your brokerage complete a lost trend analysis, if need be?
• Benchmarking is very critical to ensuring competitive benefit structure.

The answers to these questions will shed light on how the brokerage works, and if its operations align with what you are seeking.

Finding the right business insurance broker for your business doesn’t have to be a daunting task. With these questions to help guide the conversation, you’ll be confident in knowing that you’ll be making the right decision for your business needs and goals. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.

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There are many challenges to overcome when an organization is determining what employer health insurance plan is the best fit for their specific needs. However, there are professionals who can help guide you through the process, such as health insurance brokers, employer benefits advisors, and consultants. What are each of these roles and how do they differ?

To help navigate the potential advantages and pitfalls in their paths, employers and their HR departments have historically turned to outside employer health insurance brokers in order to present them with options and help advise the decision-making process. As the employer health insurance market has in many ways become increasingly complicated over the years (and because there can be a perceived conflict of interest with regard to broker commission structure), additional guidance roles have been established to fill the informational gaps.

Those roles are often labeled employer health insurance advisor/consultant or employee benefits advisors, but - as with employer health insurance brokers – their function is guiding employers toward their ideally optimized health and benefit plan coverage. Given that all of these labels accompany a similar advisory role, one of the main differences is how each may be compensated – although there is a great deal of overlap there, as well.

What is an Employer Health Insurance Broker?

Traditionally, employer health insurance brokers have been the primary means through which companies have attained employer health insurance benefits for their employees. Brokers often work directly with one or more insurance providers and will typically be required at some point in the coverage process even when working with an outside advisor or consultant to build the coverage plan for the employer.

• Primary function: Analyze the circumstances of a given employer and provide options to resolve their employer health insurance needs.
• Payment and compensation: Typically commission-based, though there are exceptions.

• Differentiating factor: Brokers are licensed professionals who work directly with one or more health insurance providers. The options they are able to provide an employer may be limited by their relationships with affiliate insurance providers, but they are also the most direct way to access those insurance providers given that employee benefits consultants and advisors will still need to go through an employer health insurance broker in order to execute the plan.

What is an Employee Benefits Advisor?

Employee benefits advisors primarily serve a complementary role to brokers in an employer’s effort to attain health insurance coverage for the company employees.

In fact, after working with a client to determine the ideal scope of coverage for that client, employee benefits advisors will then assist the client in evaluating potential brokers in order to assess which broker can provide the coverage that best fits the client’s needs.

• Primary function: Analyze the circumstances of a given employer and provide options to resolve their employer health insurance needs, including making connections with relevantly specialized brokers and vetting choices in accordance with their clients’ goals.
• Payment and compensation: Typically fee-based, though commission-based and other arrangements are also possible.
• Differentiating factor: In addition to employer health insurance coverage, employee benefits advisors may take a broader approach to optimizing employee benefits plans and have more tools at their disposal than employer health insurance coverage alone when helping an employer put together a comprehensive benefits package uniquely suited to their organizational needs.

What is an Employee Health Insurance Consultant?

Similar to an Employee Benefits Advisor, Employee Health Insurance Consultants serve a complementary role to brokers. In many ways, the designations of benefits advisors and consultants can be interchangeable, although such designations can be used to convey distinctions between fee structure or the depth of background analysis involved in general.

• Primary function: Analyze the circumstances of a given employer and provide options to resolve their employer health insurance needs, including making connections with relevantly specialized brokers and vetting choices in accordance with their clients’ goals.
• Payment and compensation: Can be either fee or commission-based.
• Differentiating factor: As a term, employer benefit consultant can for the most part be used interchangeably with employer benefit advisor, although using ‘consultant’ may imply a greater degree of emphasis on the initial conditional analysis while using ‘advisor’ typically places more focus on the advisement with regard to selecting from among employer health insurance coverage and brokerage options going forward.

How to Find a Good Employee Benefits Advisor

When selecting someone to help guide your organization through the procurement of employer health insurance – whether it be a broker, an employee benefits advisor, or a consultant – the key questions to ask are what relationships and specialization does this person have that may either limit or expand the options that they can present me with as a result.

Also, it is important to understand how this person will be compensated for their work and how that incentive structure may in turn affect the advice you receive, how reliable you feel that it is, and with what confidence you can assure others in your organization that you have achieved the optimum result.

Additionally, in the process of selecting a broker, employee benefits advisor, or consultant to work with, you may find it advisable to search among professionals in those fields who operate locally and/or who specialize in your industry if there are industry-specific factors that may require special consideration.

In fact, you may wish to contact such a professional to help determine if there are industry-specific considerations that you may be able to benefit from and to which you are otherwise currently unaware.

You may even want to contact the brokers, consultants, and/or employee benefits advisors who have been working with those tiresome competitors who keep poaching your talent – or perhaps you’d be better served by contacting the advisors and brokers of the competitor with such thoughtful and comprehensive benefits packages that their employees can’t seem to be poached.

Find the Right Insurance Broker Today

Luckily, searching for the right broker, consultant, or employee benefits advisor to best serve the needs of your organization is easier than ever before through harnessing the power of public databases. Not only can you refine your search by a variety of different criteria, you will also have access to an algorithmically compiled rating system, thereby ensuring that the professional you choose to work with is verifiably capable of meeting your needs.

With such powerful tools at your disposal - despite that the employer health insurance and benefit plan market may seem murkier than ever - finding the perfect broker, consultant, or employer benefits advisor to suit your organization’s needs requires little more than a few clicks to get the process started.

Mployer Advisor helps employers find top-rated insurance brokers, advisors, and consultants. Our listing database also showcases customer reviews and feedback to help you compare and evaluate different brokers. Start your search today.

Find brokers near you.

Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog or read more about insurance brokers here.

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Using an insurance consultant, advisor, or broker to find and implement the right insurance policies for your company is a good way to save time and money. But how do you know when to hire one?

Some insurance brokers offer strictly brokerage services, finding the best insurance and benefits policies and assisting with renewals. Others, acting as insurance consultants or advisors, offer additional services and strategies for more complex business insurance needs.

You should hire an independent insurance consultant if you need ongoing expertise about insurance and benefit options, beyond finding and purchasing a policy.A consultant can bring your company savings, insights, and strategies that help shape your risk management and human resources plans.

In this post, we explore the main duties of an insurance consultant, the pros and cons of hiring one, and how to find a business insurance consultant that fits your needs.

The Main Duties of an Insurance Consultant

At a basic level, an insurance consultant may advise on insurance policies and claims, procure employee benefits, offer plan administration and provide compliance documentation. The consultant will be involved in your plan throughout the year.

Along with administrative tasks, onboarding and billing reconciliation, insurance consultants give your company advice to control costs, manage risks and process complex claims. A consultant is particularly helpful when you need specialized insurance expertise or services.

Insurance consultants typically have these responsibilities:

• Has expertise in how a business operates and how benefits and HR impact operations and employee management.
• Assists with administrative tasks, including enrollment, onboarding, automation and billing reconciliation.
• Works with decision makers on policy, strategy and execution.
• Explores solutions  that impact financials.

• Actuarial and other specialized services.

The hourly or project based fees for an insurance consultant depend on the size and complexity of the services and hours provided. An insurance consultant or advisor can be an important resource and partner in adding value.

Insurance Consultant vs. Insurance Broker

Business owners and HR professionals might wonder whether they need a broker, consultant or advisor for their insurance and benefits needs.

Since a consultant and advisor usually have the same responsibilities to clients, we can generally interchange their definitions. However, business insurance consultants and business insurance brokers have different responsibilities – primarily in the scope of their services to employers.

Historically, an insurance broker typically worked on commissions while a consultant worked for a fee. However, many brokers now include fees and many consultants charge or are capable of offsetting fees with commissions. The reason for these changes is the evolution of additional administrative services or solution partners provided by both brokers and consultants.

The more important distinction between brokers and consultants is a transactional vs. consultative relationship with your business.

A broker’s primary focus, by definition at least, is helping you buy and renew insurance and benefit products. They may offer additional services, such as enrollment assistance and administrative work, but the scope of services is more specific.

A consultant or advisor may provide those tasks associated with procurement and enrollment, but also manages your company’s collective benefits package in ways that improve your overall human resources strategy and other business objectives.

Consultants offer ongoing support and expertise into how a business operates and how benefits, finance and HR impact operations. Beyond assisting with administrative tasks, they explore options aside from policy costs that can improve financial and operational conditions within your company.

Pros and Cons of Hiring an Insurance Consultant

Whether a consultant, advisor, broker or agent, the quality of advice provided by your insurance representative is their most valuable asset.

A good consultant or advisor will understand which insurance policies best fit your business and will tailor coverage options to maximize protection and minimize cost. When evaluating which brokerage firm you partner with, ask yourself whether or not your team feels the value in the service they provide.

Here are some of the “pros” of hiring an insurance consultant:

• Licensing requirements, coupled with experience in their field, make consultants well suited for business owners with complicated insurance needs.
• Consultants can help strategically plan for the future needs of your business, including short- and long-term financial modeling and risk management.
• A good consultant will use competitive benchmarking to assess and improve the role of benefits in employment recruitment and retention.
• When you hire an insurance consultant, they work directly for you – not the insurance companies. They can still negotiate lower rates for clients based on relationships with insurers.
• Consultants provide a partner approach and will be involved in your business plan several times per year.
• A consultant can be useful if your operations require specialized expertise based on risks in your industry.

Here are some of the “cons” of hiring an insurance consultant:

• Not all small businesses need to the expense of an insurance consultant. Sometimes an agreement with a broker will suffice.
• Picking the right consultant is crucial. They require deep expertise surrounding businesses like yours in order to solve your specific insurance and benefits problems and provide value.
• Consulting fees are often tied to the complexity of the services or project.
• You can't buy insurance from an insurance consultant. A consultant must hand over the account to an insurance agent or insurance carrier directly to initiate the policy. But they can help you find the best policy.

How to Find an Independent Insurance Consultant

Independent insurance consultants and advisors can help you choose coverages and risk-management strategies that make the most sense for you.

There are about 413,000 insurance consultants and associated businesses in the U.S. as of January 2021, according to IBIS World. How do you find the independent insurance advisor that is right for your company?

When you are looking to hire a broker, consultant or advisor, you can focus on three things: what they do, how well they’ve done it, and how they get paid. Insurance buyers should compare brokers and consultants based on need, professionalism, demonstrated knowledge in insurance, understanding of your industry, transparency and fees and or commissions.

The quickest way to find qualified insurance consultants is through Mployer Advisor, a free marketplace that allows employers to compare brokers, consultants, and advisors in one place. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and be sure to catch the latest episode of This Week in Benefits.

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According to new data from Willis Tower Watson’s 2023 Salary Budget Planning Report, overall salary increases in the U.S. will rise to 4.6% in 2023. The predicted 4.6% increase is 0.4% higher than increases in 2022.  

Interestingly, survey data from the new report found that 77% of companies reported being motivated to boost earnings due to inflationary pressures, whereas 68% said they were motivated by the tight job market.  

What’s more, 57% of respondents hired candidates higher in the relevant salary range, while a further 76% adjusted or are considering adjusting salary ranges more aggressively, increasing ranges by 2% to 5%.  

Similarly, more than two-fifths of organizations have adjusted or are considering adjusting salaries more aggressively; 90% of organizations making or considering salary increase adjustments are doing two adjustments per year, according to the report.  

In addition to pay pressures, 75% of respondents noted problems with attracting and retaining talent—a figure that has nearly tripled since 2020. In fact, the tight labor market was an influencing factor in the decision of nearly seven in 10 companies (68%) to increase salary budgets.

In a release, Hatti Johannson, a Research Director of Reward Data Intelligence at Willis Towers Watson said: “As inflation continues to rise and the threat of an economic downturn looms, companies are using a range of measures to support their staff during this time. Organizations should prioritize their actions based on the needs of both employers and employees and pay close attention to market data to inform any changes.”

Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, or tune in to listen to the latest episode of “This Week in Benefits.”

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Is it Possible to Negotiate Insurance Broker Fees?

Negotiating the fees you pay to your business insurance broker may be possible, and is largely dependent on the size of your company, as well as the specific internal incentive policies of your insurance provider.

Anytime that fees and especially commissions are involved in business transactions, the first question that often comes to mind for the customer or client is, ‘Can those commissions and fees be reduced?'

Given that insurance is a field in which commissions and fees make up most if not all of broker compensation packages, this is a question that comes up a lot.

In many ways, buyers are almost conditioned to have this response, given that so many industries use reduced commissions and fees as one of the primary incentives to induce a potential buyer into closing the sale. But is that how it works with insurance brokers, too? Can a buyer negotiate their way to lower broker compensation?

Insurance Broker Commissions Calculator

In What Situation Might a Company Negotiate Broker Fees?

While far, far less common of an occurrence in the world of insurance than it is in car sales, the answer is that it may be possible to negotiate for reduced fees and commissions with a broker.

The likelihood of that negotiation being successful, however, varies widely depending on a few key factors – specifically, the size of the buyer’s company, the type of fees and commissions in questions, and the policies of the provider with regard to matters of broker compensation.

• Company Size: As with many factors involving insurance, whether or not your company is able to negotiate-down brokers fees is largely a function of the size of your company. If you have fewer than 100 employees, it will be nearly impossible to negotiate your broker fees as a general rule. While there may always be exceptions to any rule, this tends to be a fairly firm general guideline.

• With more than 100 employees, it never hurts to ask for a fee reduction, though the likelihood of effectively negotiating for such a reduction goes up significantly as your employee pool size passes several hundred and approaches 1,000.

• Types of Fees and Commissions: Any attempt to negotiate a reduction in fees or commissions must first begin with a complete understanding of how all fees and commissions are being paid out to the broker. Many states have laws requiring the disclosure of how brokers earn their compensation, and even where such laws aren’t on the books, just about any broker with which you’re likely to want to work will be forthright with such information. As a result, gaining a thorough understanding of how your broker is compensated and incentivized can usually be accomplished simply by asking.

• While brokers are more rarely going to be able to offer reductions in their base commission, they may have more flexibility to work with additional incentive compensation such as contingent or supplemental commissions.

• Provider Policy: Even if your company is large enough to make negotiating-down commissions and fees feasible, and even if your broker has agreed in principle to such a fee reduction, the specific policies of your provider will most likely be the determining factor as to whether or not such a fee reduction can be implemented.

• Similar to determining and having a thorough understanding of all the ways in which your broker will be compensated, figuring out whether such brokerage fee and commission negotiating is even possible is something that you’ll want to do at the outset of the process when vetting various brokers and providers and policies in the first place. Further, along the same lines as determining the ins-and-outs of your broker’s compensation package, if you neglected to inquire about these details prior acquiring your insurance coverage, it’s still never too late to ask!

Why Not Try to Negotiate Your Broker Fees?

Whether or not you and/or your company are ultimately successful at negotiating a lower rate for your broker’s commission and fees, there is little to no downside to inquiring about the possibility.

When evaluating potential new insurance brokers with whom you’re considering working, such a discussion can be a good way to broach the subject of the various ways and contingencies that your broker may be compensated, which is always good information to have available.

In situations where your company may have been working with the same broker for years, raising this issue may be a good way to come by a better understanding of your broker’s compensation structure if you’re not familiar with it already. Additionally, such a discussion may serve as inspiration and motivation to reassess your insurance situation in general, potentially leading to a desire to compare your broker’s and provider’s negotiation flexibility with that of other brokers and providers on the market.

In any case, if such an inquiry leads you to consider changing brokers or reevaluating and potentially refreshing your insurance policies, access Mployer Advisor's searchable database. You can find and contact brokers who meet all the criteria and qualifications most relevant to you and your business.Search Insurance Brokers Near You

Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, or learn more about broker fees and comissions here.

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An insurance broker can save you a lot of time but can they save money for your business, compared to going directly to insurers?

The short answer is yes. Insurance brokers get better rates by leveraging industry expertise and insurer relationships to find the right policy with proper coverage at appropriate costs.

With access to multiple insurance carriers and policy packages, independent brokers can find value in the insurance market based on your company’s specific needs.

In this post, we explain how insurance brokers get better rates and how they can make your job easier.

How insurance brokers get better rates for your business

A good broker addresses your specific insurance and benefits needs at optimal costs by connecting you with the best insurance for each of your identified risks. This way, they are often able to get better rates on insurance policies for clients than individuals buying insurance directly from the company.

At a basic level, an insurance broker will compare the coverage of various insurers to get you rates specific to your needs. And they will save you time on administration and claims by managing your policy. But there are more ways that a broker can get better rates for your business:

Finding policies.

• An independent broker is not obligated to sell insurance policies from any specific carrier. So, they can compare coverage packages from various insurers to get you the best rates available. Brokers will assess your business’s specific insurance needs to match you with policies from carriers best equipped to meet your needs at the right price.

• After all, there are so many carriers, types of insurance, and complex policies for even a small, at home business to consider. The best mix of insurance may involve products from different companies. A broker will conduct that search for you, and can also combine different types of insurance and different carriers to reduce your premiums.

Making insurance decisions.

• One of a broker’s main responsibilities is to work with clients to understand their needs before matching them with policies. With a broker or brokerage firm guiding you through insurance options, you can know exactly how much protection you need and what rates are available.

• Having a broker to answer your questions is an easy way to make informed, fast decisions on insurance and benefits. They provide you with unbiased, cost effective policy recommendations tailored to your business. Then you can confidently buy coverage that gives you the best solution.
• Not only does this expertise make an easy job of insurance procurement, it also helps you avoid unnecessary extra costs and coverage you do not need.

Negotiating with insurance carriers.

• With “broker” in the title, you would be correct to assume insurance brokers also negotiate with carriers to get you the lowest prices on coverage. Acting on your behalf, they can leverage partnerships with insurers to negotiate better premiums or specific discounts.
• Brokers’ licensing and expertise in risk assessment presents a lower risk to insurance companies, so they often discount the premiums for these representatives. In this way, a broker can access policies and rates that may not be available for those going directly to the carrier.
• Brokers searching for better coverage and rates ongoing can also save you time and expenses long term. Your brokerage could help build loss-prevention programs and review your policy every year, remarketing your premium to get your business the best priced renewals.

Is it easy to work with an insurance broker?

Good Independent insurance brokers make it easy to understand your coverage needs and pick a carrier based on coverage types, deductibles, covered risks and prices that work best for your business.

For many reasons, it is easier to work with an insurance broker than finding and purchasing policies on your own.

After all, you are not paid to be an insurance expert, and sifting through dozens of policy plans can be stressful, at best. Brokers add value by assessing your needs based on all your operations and risks, and then finding insurance plans that fit your profile.

They guide you through the buying process with professional advice, listening carefully to your needs and asking questions that lead to intelligent choices. Importantly, a good broker also helps you by breaking down insurance options into terms and conditions you can understand.

From claims management to employee benefits education, a full-service broker will provide the knowledge and detail that lets you focus on running your business.

Smart businesses have good insurance and benefits. The best way to find good insurance and benefits is through a broker, consultant, or advisor who knows what you need and provides you with significant value. But, how do you know who to hire? With seemingly endless options, you feel under pressure to choose the right one. We believe that transparency, information, and choice leads to better hiring decisions.

Connect me with a broker

It's why we created Mployer Advisor, a free broker marketplace that allows employers to compare brokers, consultants, and advisors in one place.

To get started, find brokers near you to get matched with a short-list of qualified brokers.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, or check out some more insurance broker content.

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As regulations and business expenses rise, so has the value employers place on advice about insurance and benefits. Insurance consultants and advisors are sought for many risk management and insurance services.

The hourly fees for an insurance consultant depend on the size and complexity of the insurance policy being taken out, along with the scope of the consultant’s services.

It is critically important to know what is included in standard fees and/or commissions for consultants, advisors, and brokers as you look for help with insurance and benefits.

In this post, we explore what it costs to hire insurance consultants and what makes these advisors valuable.

What Does It Cost to Hire an Insurance Consultant?

The cost of using a consultant to insure your business depends on the type of business, amount of coverage you need, optional coverage policies, and complexity of your insurance and benefits management.

A consultant’s fees, also called “intermediary fees,” are fees that insurance buyers pay consultants or brokers on top of a policy’s premium. The cost to hire an insurance consultant ranges depending on the size of your company, your operations, and complexity of the insurance policy or services provided.

Broadly speaking, commissions and fees usually fall between 10% and 25% of the base premium amount. It all depends on your state, your size, and what type of insurance you need, but average consulting fees are typically 15% of the policy premium.

Traditionally, an insurance consultant works on a fee for service, and an insurance broker works for commission based on the policy’s premium.

Consultants usually charge fees instead of, or in addition to, a commission that’s included in your premium payment. This is in the form of a direct invoice of billable hours or direct offset billable hours with commissions received.

As opposed to brokers, consultants are usually not paid commissions from the insurance company, which means they charge a consultant’s fee for services. Unless of course, the client prefers them to receive commissions and offset their billable hours or fees.

Why Hire an Insurance Consultant for Your Business?

A good insurance consultant will understand coverages and policies tailored specifically to your business, and will find ways to maximize protection and minimize cost with your coverage.

Consultants should be involved with your business strategy and involved with you several times per year or as often as you need their services.

Here are key services that insurance consultants offer:

• Find and implement insurance policies, advise on employee benefits, offer plan administration and provide compliance documentation.
• Create strategic, long-term plans suited to the needs of the business, including financial modeling, risk management and large claims processing.
• Competitive benchmarking to assess the role of benefits in recruitment and retention, making benefits a talent attraction and retention tool.
• Specialized expertise in Risk Management and Health and Welfare.

How Do I Vet an Insurance Consultant?

There are about 413,000 insurance consultants and associated businesses in the U.S. as of January 2021, according to IBIS World. But how do you vet an insurance consultant to find the one that is right for your company?

Insurance buyers should compare brokers and consultants based on professionalism, demonstrated knowledge in insurance, understanding of your industry, transparency and cost.

When you are looking to hire a broker, consultant or advisor, you can focus on three things: what they do, how well they’ve done it, and how they get paid. The right expert for your business will have a proven track record of helping businesses like yours solve their insurance and benefits problems.

The quickest way to vet your insurance consultant is to visit Mployer Advisor, a free broker marketplace that allows employers to compare licensed insurance consultants in every state.Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.

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All business owners do their best to take good care of their valuable workers, and to provide health insurance options that benefit their employees. But it’s equally important to consider cost and the financial health of the entire company when making decisions about employer contributions to employee healthcare coverage.

In most cases, employers who do offer health insurance will pay a percentage of the fee. So how much should this employer contribution amount to, and what does it mean for your business?

On average, employers offering healthcare benefits in 2020 paid 67% towards health insurance premiums for family coverage plans, and 82% for single coverage. This average rate of contribution supports a consistently healthy, happy, and high-performing workplace for everyone on the team.

Contributions from employers can vary greatly depending on the size of your company, the type of insurance you decide to offer, and the scope of the benefits packages available to your employees. Insurance plans purchased for employee coverage are often called “group health insurance plans” or “fully-insured plans” as they typically cover all of the eligible employees and their dependents and are a covered risk through premium payment to the insurance company.

Fully-insured health plans are the most common way to organize employer-sponsored health coverage. This is how they work:

• You choose an insurance plan for your business. Your business can work with insurance agents or brokers to determine the best plan for your employees, depending on the type of work they are engaged in.

• You decide what amount you will contribute. You consider factors such as your tax savings (employer contributions to workers’ healthcare coverage are tax-deductible) and lower worker compensation premiums when deciding on the amount you will contribute.

• Employees enroll in the health insurance plan, and pay the difference. Employee contributions often come directly out of a paycheck, which allows them to pay for their healthcare plans with pre-tax dollars.

• Your company pays a premium to your chosen insurance carrier. Premium rates are set annually, and depend on the number of employees enrolled in the plan every month. This monthly premium will only change if the number of enrolled workers changes.

• The insurance carrier covers your employees’ healthcare claims based on the benefits defined in your company policy. Enrolled employees and their dependents are responsible for paying the deductible and any co-payments for health services they receive under the plan.

• Workplace productivity gets a boost. 60% of employers reported in a Metlife study that offering healthcare coverage to their employees led to a significant increase in productivity. The CDC also says that employees who are able to engage in regular preventative care, like routine physicals, are likely to accomplish more at work.

Are Employers Required to Offer Health Insurance?

There is no law requiring employers to offer their employees health care benefits. However, the Affordable Care Act (ACA), which was passed in 2010, states that businesses employing more than fifty people must either provide affordable health insurance or pay a large fine to the IRS. The fine amounted to an annual $3,860 per employee in 2020, so while it is at the discretion of the employer whether or not they choose to offer health insurance, most do.

In addition to the ACA requirements, most employers are motivated to provide health care coverage for their employees because it demonstrates an interest in their wellbeing and possibly productivity. According to a Glassdoor survey, employees consider health insurance to be the most important benefit a business can offer. Prioritizing the needs of employees leads to a successful, productive, and happy workplace, so many employers consider their health insurance offerings essential costs.

In order to comply with the ACA guidelines, larger employers must meet the minimum standards of coverage and affordability for the employee and their dependents (the ACA does not include spouses as dependents). Small businesses, on the other hand, are not included in the ACA’s health insurance mandate, and are therefore immune to the financial penalties. Less than half of businesses with only 3 to 9 employees offer health care benefits, whereas nearly all employers with 1,000 or more workers do.

Some small businesses still elect to offer health insurance coverage as a voluntary benefit, however. An Urban Institute study done in 2016 found that 83.1% of all workers were offered health insurance through their place of work. The high cost of insurance premiums might seem prohibitive if you own a smaller business, but the benefits of offering health care coverage to your employees can be a worthwhile investment in spite of the high cost.

The cost of providing group health insurance to your employees can depend on some of these factors:

• Which insurance carrier your purchase your policy from
• The location of your business
• The type of plan you choose (PPO or HMO)
• The network of available providers
• Features like deductibles, co-payments, or out-of-pocket maximums
• The type of work your business engages in (this can affect the demographic of your employees as well as incurring higher or lower healthcare costs)
• And finally, the amount you decide to contribute

While some of these things are outside of your control, your choice of insurance carrier and which plan to offer your employees can have a big impact on your insurance overhead. Additionally, your rate of contribution will play a role in how much your company is paying each month for employee insurance. The most important thing is to combine all these factors and calculate a contribution amount that allows you to meet the needs of your employees and fits within your budget.

The Takeaway

Offering competitive healthcare contribution rates can be a powerful factor in recruiting potential employees who are making decisions about the future of their careers. It is also a key factor in retaining top talent. Coverage and employer contributions can vary between companies depending on the size of the business, the number of employees, and the type of plans that they offer, and your business can gain an edge by offering high quality health insurance plans that will attract and retain talented, healthy, and productive workers. Providing affordable, comprehensive health care plans is beneficial for you, your employees, and your entire business as a whole. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog, and learn how your employer contributions compare to your competitors here.