Harry Beckwith, author of ‘Selling the invisible’, pointed out that many companies we think make products are exclusively about services.
Take Nike. It designs and markets running shoes – but the manufacture is done by another company entirely. Nike itself is a service.
Buying company health insurance may seem like a world of simple products. A policy costs ‘X’, it covers ‘Y’ for these lives and medical claims.
Unlike car insurance, health quotations don’t come from glancing through a website, but rather, engaging with someone. The HR shares details on staff and existing claims. Perhaps then, ask a follow up question.
Health insurance, therefore, has firmly one foot in the service industry. It makes sense to then ask: what is the total service I’m paying for?
A separate but related question is: do I have full clarity and confidence that this insurance reflects the necessary coverage and meets budget?
Buyer and seller challenges
Most HR professionals have never worked in the insurance profession. There’s no reason why choosing a solution that accurately meets their staff’s needs and is the best option after comparison would be obvious.
Add to this the present inflation levels of medical costs and ever-evolving regulatory requirements.
So, service is crucial if they’re to achieve the best outcome. Where, then, does it come from?
During the buying process, insurers may be more than simply the product, but it’s a challenge for them to give a rounded service to direct enquiries. Even global players have a limited local team, and both in-house and outsourced functions deal with claims, underwriting, re-insurers and brokers.
HR managers reaching out directly - particularly from smaller companies - often face delays in receiving quotes.
As the insurance renewal date looms, therefore, they’re squeezed, with limited options. Since each insurer presents information in their own way, it’s difficult to compare, like-for-like.
Overwhelmed, they either choose a ‘good enough’ solution or simply renew with their current provider.
Adviser versus broker
An insurance ‘broker’ is seen as the service provider. It doesn’t have products. Indeed, multiple HR challenges - information, market comparison, time constraints – can be hugely reduced working with an intermediary, such as:
- Higher buying power: Brokers serve many customers, and so are a single source of higher total revenue for the insurer.
- Relationships: They know exactly who to speak with, cutting the time that would be taken by a HR manager.
- Knowledge: They know the insurer, the new products and all the jargon. They’re marketed to every day, after all.
If a broker achieves the above basics, it may address issues of price and speed, sometimes add an extra insurer to the mix. But does this add up to a full service if HR were to ask two questions: am I getting real value? Is a problem being solved?
Too many HR managers respond to higher-priced quotations by commissioning a broker to simply get cheaper cover - with all potential cuts in benefits on the table. Too many brokers act to achieve just that. It’s a hand-to-mouth existence between customer and agent.
An adviser, by contrast, shows ways in which a policy can be sustainable, provides advice and strategy and doesn’t just initiate a transaction.
They may ask, what mix of hospitals can be included in the network without compromising treatment in specific areas?
Advisers also look at a staff behaviour. What awareness is there about the benefits provided - are they using clinics that work against the sustainability of the policy?
Is ‘telemedicine’- an online consultation instead of making an outpatient visit – available to staff, reducing claims costs?
Moreover, are there more claims and more sick days this time around? These all represent higher cost, year on year.
This relates to wellness and prevention. Advisers play a role here too. Insurers typically reserve wellness programs for staff for their bigger clients. That’s understandable.
But an adviser will make this integral to all clients who want to install change and don't know where to start.
These deeper areas I believe represent call true service to get the best outcomes in group health insurance.
Have a healthy start to the year…
