Be like Amazon. Consider avoiding Benefits, HR, & Payroll inefficiencies.
I was reading an article the other day about how Warren Buffett of Berkshire Hathaway, Jeff Bezos of Amazon and Jamie Dimon of JPMorgan Chase are creating their own health insurance company and thus lowered prices by eliminating inefficiencies in the process. The back of my brain was tickled, and I was instantly reminded of a conversation that I recently had with an employer. She was a CEO of NJ based company with just over 100 employees.
It is my standard practice to inquire about the current broker relationship. I knew with 100 employees, she had to be working with a broker. I asked, “Do you currently use a broker?”
She thought for a moment and said, “Oh, I love my broker…she is awesome!”
“That is great, is she a friend that happens to be a broker? Does she specialize in just health insurance or does she primarily sell other products, like life insurance?” I asked curiously.
“She is a great friend and yes she sells everything” she quickly replied.
Thinking for a moment, I said “Are you aware that one day, insurance companies will stop paying your friend commissions and she will have to ask you for her fee? How much do you think you would be willing to pay your friend?”
She pondered the question… “Well, We will have to have that negotiation when the time comes”
I said, “Fair enough, but let me provide you some insight for that future negotiation…you mentioned that you are spending $100K per month with Aetna for fully insured health insurance…your “friend” is making approx. 4.5-5% commission per month, are you willing to pay your friend $60,000+ per year (not including dental, life, std, ltd & vision commissions)?”
She said, nothing for about 15 seconds, “Oh my, well, Oh I had no idea, um…well she is not getting that type of money from me!!”