How One Broker Got Lower Insurance Rates Playing the Wellness Card
This is a story about a real brokerage firm that made the decision to embrace wellness. It started with the question, “Why offer a wellness program?” and what happened as a result.
If you are a broker and you already know everything there is to know about wellness, you can stop reading now. But if you want to learn how one brokerage firm got carriers to write lower insurance rates for all of their customers, you might want to keep reading.
Why Offer a Wellness Program?
Let’s start from the beginning. You may wonder, as a broker, why launch an internal wellness program when so many brokerage firms have failed to do so. A very large and successful benefits consulting firm in the Western United States with a wellness program was identified. An interview was arranged with one of their highly respected senior leaders.
A primary goal was to learn why his firm had so fully embraced wellness as a core part of their business strategy when so many others hadn’t. But you also had to wonder what happened in the months and years following their decision to implement their employee wellness program.
So why did this firm start a wellness program? About a decade ago, the firm itself was experiencing the same painful health care cost trend as many of their customers. The partners knew if the firm did nothing, there would be even more pain in the form of rising employee medical costs in years to come.
They analyzed several possible solutions to this problem but they kept coming back to the fact that several people on their payroll were experiencing significant but modifiable health issues. They could see from a careful review of claims that lifestyle behaviors seemed to be a large part of the problem. All of this pointed to an employee wellness program as the solution.
But before pulling the trigger, they were very careful to project the likelihood of a positive financial return on their wellness investment. After much due diligence, they decided to implement an aggressive in-house wellness program to help their employees improve overall health.
How Did a Wellness Program Impact Employee Health?
Recall that this firm implemented an internal wellness program after carefully running financial projections of the return on wellness investment (ROI). While their recent health care data indicated that their cost trend was indeed lower than the national trend, after a few years of experience, the financial return did not matter to them anymore.
In other words, they were no longer concerned with ROI, instead the most compelling evidence pointed to a positive value on investment or VOI. The ROI versus VOI is a longer discussion that is discussed elsewhere. Suffice it to say that they had ample and compelling anecdotal evidence of the impact on employee health in terms of disease averted, weight lost, risk lowered, etc.
They also noticed that their employees who engaged in the wellness program were happier and more satisfied. With the benefit of hindsight, they could see that the impact of their wellness program was more far reaching than they had initially anticipated.
For example, one day a vendor who had not physically been to their primary location in months, looked around and said to the receptionist, “Something feels different around here. What is going on?” Rightly or wrongly, the receptionist attributed this vibe to a change in culture that was a product of the wellness program.
How Did a Wellness Program Impact Marketing and Sales?
This firm became so confident in the wellness value they had internally created, that they made wellness a core part of their external marketing strategy. As they visited with their employer groups about wellness, they could do so with credibility. Others knew they were walking the wellness walk. This firm could point to their own internal evidence and say “it worked for us, let us show you how we did it.”
They decided to help all of their existing customers adopt a wellness program. Prospective customers were presented with the wellness program as a value add and most accepted this offer. Not all customers began a wellness program because some individual brokers did not understand the powerful marketing impact of wellness and neglected to introduce wellness in the sales discussion.
To paraphrase the Senior Executive, “The brokers in our firm who facilitate a wellness solution during the sales process compared to those who do not are absolutely crushing it.”
Since we started helping our customers implement wellness, our book of business has doubled.
The biggest indicator of the power of wellness is that since they started presenting their prospective customers with wellness solutions, their new business sales has doubled. If you are like me, perhaps you wonder where the new business sales came from. I asked and the response I got was, “Most likely from the groups that do not offer wellness programs.”
How to Help Their Customers Implement Wellness Programs?
Once they realized that their wellness program had made a noticeable impact on employee health and on health care cost trends, they naturally wanted to share the good news with their customers. At first, they struggled to find the best way to do this. They initially tried to leverage expertise from carriers by encouraging their customers to use carrier wellness solutions.
Their customers generally did not like this suggestion indicating that it was not enough to simply show up with a carrier wellness solution. Some of their customers were investing mid six figures on a carrier-based wellness strategy and clearly expected more. They wanted to feel that their broker was knowledgeable enough to bring a custom wellness solution to the table.
It is not possible for a benefits broker or consultant to be an expert in everything but this firm realized that they needed to be better prepared to discuss wellness as a business strategy. For a more detailed discussion on these and other successful brokers have helped their clients implement a wellness program, please check out this blog.
Carriers Offered Lower Insurance Rates for the Entire Book of Business
Yes you read that correctly. The wellness program in this firm eventually resulted in lowered insurance rates for all of their customers. Every single one. You might say “but claims are claims – how could an underwriter change rates if they are based on claims?” Again to paraphrase, “The discount was sliced out of the administrative portion of rates.”
The carriers knew that all customers of our firm would have a wellness strategy and they knew that as a result, there would be a smaller administrative burden. So the carriers passed the discount on to our customers.” Groups doing wellness got lower insurance rates right out of the gate from the major carriers in the region. This finding has been replicated by many studies, including one here.
What About Worksite Health for Small Firms?
It is true that this firm was larger and that many brokerage firms are smaller. It would be easy to think that wellness benefits are only available to large, self-insured groups. But many small brokerage firms have experienced substantial benefits from wellness programs. Here is a case study for a firm of less than 30 employees who has been using the WellSteps wellness solutions for some time now. They broke all the rules and they succeeded.
So What?
As a trusted advisor, it is important to know how best to help your clients implement a wellness program. The senior executive indicated that playing the wellness card was one of the smartest things they ever did. He said that it has had an impact on their employees, on their culture, and on their business growth.
He also indicated that because they implemented an internal wellness program, they became far more credible in the sales discussion. Finally, he called their wellness program a “giant closing advantage” that their competitors did not have.
FAQs:
What is the purpose of wellness programs?
It is no secret that chronic diseases are responsible for most deaths and a large portion of healthcare costs in the United States. Healthcare costs and chronic disease rates have been increasing for decades with no signs of slowing down. Many are wondering how to stop or reverse this trend. This is where corporate wellness comes in. The main purpose of wellness programs is to help employees be healthier. When people change their lifestyle for the better, they can prevent and even reverse chronic diseases.
What are the benefits of wellness?
The brokerage firm discussed in this article is a perfect example of how a wellness program produces positive results. When employees are healthier, they reduce their health risks. Reduced health risks lead to lower insurance costs and better quality of life. Wellness programs often increase employee morale. This means a happier work environment, an increase in productivity, a decrease in absenteeism, higher rates of employee retention, and more. As you can see, wellness programs can greatly benefit both the employee and the employer, alike. For more information, visit this blog post.
Why should employees participate in wellness programs?
In an ideal world, everyone would be healthy for the intrinsic benefits of wellness. Employees should participate in their company’s wellness programs to live a longer, better life. However, extrinsic rewards are usually needed to help them get started. Some examples include: cash/gift cards, gym membership discounts, lower insurance premiums, or fitness devices. Offering rewards within wellness programs also shows the participants that they are valued and appreciated. For a complete guide to wellness program incentives, click here.