How Consultants & Brokers Choose Benefits
Insurance Consultants cannot sell insurance without being licensed as an insurance agent or broker. Brokers are allowed to sell benefits and are paid a percentage of the premium.
DISCREPANCY ON INSURANCE CONSULTANT SELLING POLICIES
- According to New York’s Department of Financial Services, insurance consultants are not allowed to sell insurance without being licensed as an insurance agent or broker.
- According to an article published by Parker, Smith & Feek, consultants are also brokers because both recommend the right insurance products.
- However, consultants are considered more reliable as they are bound to contractual agreement, while brokers may or may not collaborate with an insurance company while choosing the right plan for the buyer.
HOW CONSULTANTS CHOOSE WHICH BENEFITS TO SELL TO EMPLOYERS
- Benefits consultants are hired by the company with a contractual agreement to choose the best insurance plan and remain unbiased while choosing them.
- They are only responsible for recommending the perfect insurance plan to the company (buyer) but do not sell it on behalf of the insurance company.
- Benefits consultants analyze the structure of the company and choose the perfect competitive benefits program that helps to retain employees.
- Companies use benefits consultants to bridge the gap between skills and knowledge of the company in a cost-effective way.
- Other services that consultants provide include health and wellness consulting, insurer claim audits, taxation support, vendor service monitoring, benefit plan financial management, financial accounting audits, and plan design development.
- Benefits consultants know how to negotiate with insurers and leverage their resources to provide their clients with the best possible value.
HOW BROKERS CHOOSE WHICH BENEFITS TO SELL TO EMPLOYERS
- In general, insurance brokers sell insurance products by comparing multiple products and recommending the right one for the company in an unbiased manner based on a thorough knowledge of the whole industry.
- However, some insurance brokers might have tie-ups with insurance companies and recommend products from a specific insurer.
- Thus, companies must conduct due diligence before accepting the broker’s recommendation.
- Some brokers may not be tied exclusively to the company providing the benefit or specialize in only one type of benefit.
- A commission is paid by insurers to brokers for every employer they sign up.
- The brokers search for the right insurance by comparing the coverage of various insurers to get the best conditions and rates.
- The fee is usually 3 to 6 percent of the total premium but can also reach 40 to 50 percent of the premium.