Bernard DiFiore, chief executive officer of BenefitMall.com, which enables brokers to use the Internet to gain real-time access to a comprehensive portfolio of group benefit products for small businesses.
our client, who owns a small local accounting firm, calls to tell you she wants to provide group life and health insurance for her six employees. If you're like many property/casualty producers, you either tell her you're afraid you don't know any companies that would write a group as small as hers, or suggest that she call a life insurance agent you know. In either case, you've lost an opportunity to perform a needed service for a valued client (and perhaps caused her to wonder whether she's with the right agency)--and you've passed up what could be a handsome commission.
How can you turn this all-too-common situation to your advantage? One option is to get on the Internet and contact BenefitMall.com, an online marketplace for small business employee benefits. Currently used by some 7,000 brokers, the facility offers a selection of more than 40 national and regional insurers and 3,000 benefit plans in selected states. And for P-C producers who steer clear of small group business because they aren't familiar with its complex terminology, BenefitMall.com also serves as an educational resource. In this article we'll talk with Bernard DiFiore, president and chief executive officer of the company, to find out exactly how it operates and how it can help property/casualty agents find the right group coverages for their small business clients.
From general agency to Net facility
The company that is now BenefitMall.com was established in 1979 as a local general agency called West Coast Insurance Marketing Corporation. The company expanded regionally and in 1994 became Centerstone Insurance and Financial Services. That year Centerstone was purchased by Employer's Health Insurance, which was acquired by Humana in 1995. In June 1999 the company changed its name to BenefitMall.com and was spun out of Humana as an independent entity owned by company management, Humana Ventures, and Austin Ventures, a venture capital company.
Vast market potential
The size of the market for small group benefits is significant, DiFiore points out. With more than 7 million U.S. employers having fewer than 100 employees, he says, the market is worth an estimated $115 billion in annual premium--and he believes that estimate is conservative. BenefitMall.com focuses on groups of under 50; "our 'sweet spot' currently is eight to 15 employees," DiFiore says.
Outsourced sales services
Since 1997, BenefitMall.com has been providing outsourced sales services under contract to group health insurers in specific market segments. For example, Di Fiore explains, "A company might tell us, 'You can sell all of our group health products in Colorado for groups of less than 100.' " BenefitMall.com handles broker contact and management, marketing, quoting, underwriting, enrollment, and commission payment. Claims are handled by the producer and insurer. The costs associated with using BenefitMall.com are paid by the participating carriers, so producers receive full commissions.
In addition to providing sales services for insurers, BenefitMall.com often acts as a back office for brokers. "Our proprietary software system gives brokers the sales management tools they need to present, close, and manage their book of business," DiFiore says.
Customized proposals--fast
Via the Internet, brokers who use BenefitMall.com gain real-time access to a comprehensive portfolio of group benefit products for small businesses. Carrier profiles help brokers select the insurers most likely to meet a prospect's needs, and brokers also can learn about available carrier incentive programs. Quotes are provided at no cost, and BenefitMall says brokers can create customized proposals in less than one hour. "Most brokers are driven to close sales and get bogged down packaging quotes. We give them a presentation-style grid to speed up the sales process," DiFiore says. "This increases their sales efficiency and can help increase their revenue." According to DiFiore, for brokers who work through BenefitMall.com, "The closing ratio is 24%--three times the industry average of 8%."
Brokers also have access to a password-protected "extranet," which helps reduce the time they spend on administrative activities related to sales management. This allows brokers to focus on customer service and selling instead of paperwork. BenefitMall.com handles benefit questions, eligibility requirements, and renewals.
BenefitMall.com has 150 employees at its Dallas headquarters and has 17 offices to support its distribution activities. Offices are located in New York, New Jersey, Connecticut, Florida, Georgia, California, Colorado, Illinois, and Texas. The company also operates a customer service and sales center that supports its Internet-based sales nationally.
CEO Bernard DiFiore says BenefitMall.com "can help property-casualty producers develop a complete insurance package for their small business customers: auto, property, and liability coverages plus competitive employee benefit plans."
Menu of products
The carriers with which BenefitMall.com contracts offer the spectrum of group health products for small businesses:
* HMO (Health Maintenance Organization)
* PPO (Preferred Provider Organization
* POS (Point of Service)
* EPO (Exclusive Provider Organization)
* Indemnity (fee for service)
* Basic Hospital (inpatient care only)
* Stand-Alone Life
* Stand-Alone Dental
* Stand-Alone Prescription
* Vision
* STD (short-term disability)
* LTD (long-term disability)
Plans call for BenefitMall.com to roll out a suite of retirement planning products such as pension plans and 401(k)s. The company also envisions creating relationships to offer discounts and incentive plans to insured employees.
"Small business owners would have difficulty putting together a trip as a sales reward," DiFiore comments. "Using the Net, we can form strategic partnerships with entities such as hotels, travel agencies, and sales motivation firms. This will allow us to offer small business employers the same menu of choices that's available to large companies."
What's ahead?
Not long ago, industry pundits were saying the Internet would never be a viable vehicle for insurance sales. Today they're eating their words, and companies such as BenefitMall.com are flourishing by combining the speed, power, and flexibility of the Net with the knowledge and experience of insurance producers. Although small business owners can access BenefitMall.com directly to compare group health plans and costs, the company emphasizes the critical role played by the producer in providing advice and service.
"We think the future is very exciting," DiFiore says. "We look at how large companies design, administer, and communicate their employee benefit plans, and as a Net player we can create the same scenario for small business owners. There's a lot of competition for small group business, from both traditional providers and newer entrants like banks and other financial services entities. At BenefitMall.com, we're able to reach this market by combining the advantages of the Internet with the advantages of broker knowledge and expertise. In doing so, we can help property/casualty producers develop a complete insurance package for their small business customers: auto, property, and liability coverages plus competitive employee benefit plans. That's truly the best of both worlds." *
©COPYRIGHT: The Rough Notes Magazine, 2000