Brokerage Ops the July/August 2012 issue

Family Business

Your benefits business model must change to meet the challenge of new customers—and competitors.
By Bob Gatty Posted on August 11, 2012

Massive change has come to her industry, with online services like Kayak, Travelocity and Expedia helping consumers find the best deal. But if you assume Diana’s Destinations is teetering on the edge, you are wrong.

“Actually, technology and the Internet have helped our business to grow,” she says. Faced with the complexity of sorting through myriad online choices and the risk of unmet expectations, many vacationers throw up their hands. Diana’s Destinations is there to help. “We are able to recommend places to stay so there will be no surprises,” she says. “A lot of clients have come to us because they’ve gotten scammed by online agencies, and we’re here to give better advice to make sure their travel experience is what they expect and hope for.”

Diana’s Destinations doesn’t have a storefront office. It’s not even in the Yellow Pages. But it is on the Internet at, an easy-to-navigate website that covers every aspect of leisure travel. The website, plus word-of-mouth, keeps Johnston, her three employee agents and seven independent, commission-only agents busy.

“For us, the difference is our knowledge and customer service. We work to find the options that fit our customers’ needs and budgets so there are no surprises,” she says.

Mike Sullivan, executive vice president and chief marketing officer at Digital Insurance, believes the success of Diana’s Destinations offers lessons for benefits brokers.

“A decade from now, the manner in which we operate today will be obsolete,” he predicts. “Change is already under way, and at its core, employees and their families will control the process rather than employers.”

Rather than solely catering to employers, successful insurance brokerage firms must effectively serve the ultimate consumer—employees and their families.

“Agencies keep talking about going into the employer marketplace and winning the customer,” he says. “But we feel the definition of the client is going to migrate down to the individual family in the group, and offering value will be as important at the individual family level as it is at the employer level.”

The implications are significant. Instead of providing service to X number of employer groups, brokers must think about serving thousands of individual consumers.

“When you start to define clients in those terms, it opens up huge challenges, but also possibilities,” he says. “It goes to technology, staffing, how to leverage a call center to help employees with questions about their benefits. Extending through the individual employer down to individuals and families is a complete structural change that we feel is inevitable.”

Extending through the individual employer down to individuals and families is a complete structural change that we feel is inevitable.”

Key elements to success, according to Sullivan, include:
1. The ability to leverage software in ways that seem unfathomable today, providing information to consumers to help them solve their specific and unique health insurance problems.
2. Resources and services that justify the relevance of the middleman. If advisors want a seat at the table, they need to bring compelling resources and services while driving down costs and enhancing efficiencies.
3. An incomparable service experience. A firm must be able to work with financial executives to devise strategic cost-saving solutions and be capable of guiding employees at every level to the right doctor.

As employers shift more costs to employees, families have a greater responsibility to determine what insurance meets their needs and budget. That requires customization and the ability to consult directly with consumers.

“I’m not implying that the employer is not going to be integral to this process,” Sullivan adds. “But the employer is going to demand that the agency do more. The employer will always be the organizing factor in decision-making, but more employers will push the agencies to provide more service and help provide the education and information that can help families make their decisions. It will be on a one-to-the-masses basis.”

Agencies will need to add infrastructure, like call centers, that largely does not exist today, says Sullivan. “You’ve got to decide, are you going to build it or buy it or leverage it, or are you going to become part of someone else, or will you go away over time?”

Sullivan warns that, if brokers do not move in this direction, others will—others, like Walgreens, CVS, Walmart, the hospital systems, or the insurance companies themselves.

“Americans, as families, need to become better consumers and make more informed and better decisions,” he says. “They need to get healthier. The only way that is going to happen is if they get help. We are primed as an industry to have an impact at that level, but we’ve got to be willing to change.”

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