Group benefits distribution roles each play an important part in providing group insurance coverage for employees.
Insurance companies provide the insurance coverage and take on the risk. They do this through risk pooling, and sometimes they even band together for even greater risk sharing.
Insurance Pooling – How Canadian insurers handle claims above the pooling threshold
Brokers or advisors are intermediaries between the insurers and the company, group, or plan sponsor purchasing benefits. This ensures that your best interests are being protected.
Third-party administrators (TPAs) and managing general agents (MGAs) help with administration for both advisors and plan sponsors.
Group benefits distribution roles
The group benefits distribution roles have been honed over time, and they work in harmony to ensure your best interests are being prioritized. The group insurance model means that each role keeps the other accountable.
Let’s take a look at each one and explain how they help employers receive the right benefits.
Advisors and Brokers
Advisors and brokers work closely with all the benefits distribution roles. More importantly, they work with your company to determine and then find the best possible benefits solutions for your needs. These are the people on the front lines, working hard year-round to keep you and your employees happy and healthy.
Advisors will start with your benefits philosophy – your reason for offering benefits – and then work towards finding solutions that fit that reason. Once a company has agreed on the coverage they want and/or need, the advisor will market the benefits plan by reaching out to insurance companies, TPAs, and MGAs asking for quotes.
Advisors and brokers bring a lot to the table, including:
- Helping companies choose the best plan – based on needs, coverage, sustainability, and affordability
- Help with implementation of the plan – ensuring all relevant information is gathered and provided to the insurer or TPA
- Claims inquiries – from disability claims steps to travel claims, they can help guide employees through the process
- Benefits renewals – explaining reasons for increases or decreases, and entering negotiations if needed
Benefits and HR consulting firms
These firms typically serve the large client sector and offer a multitude of consulting services. They generally partner with insurers and other service providers – think virtual care – to offer packaged solutions that support employee health and well-being. Some may also own the services offered.
These firms either work with a company’s current broker, or they might work directly with the HR or benefits administration team. Aside from solutions, they can also provide white-glove services for employee benefits communication, and comprehensive reviews, recommendations, and marketing the plan.
Third-party administrators
TPAs, such as yours truly, fill a need in the industry for small and medium companies. They also work closely with the other group benefits distribution roles. Contracting with insurers and service providers to offer tailor-made benefits packages.
What is a Third Party Administrator (TPA) And How Are They Different?
In Canada, more than 98% of companies fall into the small- and medium-sized category. However, insurance companies aren’t able to offer customized plans or competitive rates based on so few employees. This is where TPAs can help. By pooling all their clients together, they can offer affordable solutions.
As the name implies, TPAs help lighten the administrative burden for both advisors and plan sponsors. Services include billing and invoicing, reporting, claims management and even adjudication, employee data management, general administration, and claims loss ratio monitoring.
At Benefits by Design (BBD), plan sponsors have access to our real-time online administration platform, Nomad, making changes, additions, billing and reporting as easy as the click of a button.
Managing general agents
Managing general agents (MGAs) provide back-office support for advisors and brokers. They become intimate with the advisor firm and create custom renewals and quotes, help with difficult regulatory inquiries, and streamline processes. This frees up time for the advisors to have deeper conversations with their clients, and really understand how they can campaign on your behalf.
MGAs also leverage their relationships with the insurers to help advisors and their groups get better rates or plans, since they often have underwriting authority to make decisions and negotiate themselves.
Insurers (via direct consultants)
While insurers aren’t legally allowed to sell directly to plan sponsors, they are allowed to employ direct consultants (direct advisors) who exclusively offer their products or services. These consultants usually deal with smaller groups, and are the insurers answer to the small group market. While they have access to the size and scale of the large insurers, they are limited to the product shelf of their employer.
Conclusion
Group benefits distribution roles are designed to create a system of checks and balances within the industry. Think of your advisor as the retail shop that sells clothing. They display everything so it’s easy to see, help you pick out special outfits, and even help you decide if you like the style and fit. Thus, saving you from going to a giant warehouse (the insurer) alone with no direction. The TPA and MGA are like the logistics department, ensuring shipments arrive on time, for the best price, and in the most appropriate manner.
Find out everything there is to know about group insurance with our comprehensive dictionary!
The Group Insurance Dictionary: Group Insurance and Everything In Between
