As I write this, several industry advocates and regulators are calling to fully disclose the commissions, fees or other compensation that licensed insurance brokers receive from insurance companies when setting up insurance products.
Beneplan has always publicly disclosed all fees, commissions and expenses in both dollar figures and a percentage of premiums since the year 2000 when we started our first Multi-Employer Trust, and now, co-operative.
These figures live on our website, and in our annual report, for the whole world to see: our owners, customers, partners, and even competitors. While there's much uproar in our industry against disclosure, we have always felt that being fully transparent and upfront with compensation is the key to a sustainable and trusting relationship between policy-holder, broker, and carrier.
Here is how compensation is broken down within the Beneplan environment:
Admin fees: Beneplan earns 5% of premiums as an administration fee to negotiate renewals, calculate rates, set up quarterly reports, handle claims and customer service inquiries, manage escalations, house and transfer data securely, calculate monthly billings, handle premium collection, remit premiums and taxes, pay commissions, educate the public and brokers, and any other function that helps achieve the goal of reducing the cost of employee benefits, year after year. Beneplan may earn less than 5% if a single policyholder is bringing in over $1 million of annual total employee benefits premiums.
Expenses: Beneplan's travel expenses may be reimbursed on a tri-annual basis if significant travel is required to visit a key carrier (over 400km).
Brokers: Licensed insurance advisors who are pre-approved with Beneplan are able to set their own flat commission as a percentage of premiums, within reason, depending upon the size of the premium and group. This is a legacy feature of the 'crown scale' model which would pay a broker a flat 10% of the first $10,000 of premiums, and a declining scale at every significant premium level, all the way down to 2% over $500,000 of premiums. This is another way of implementing a standard price-break model based on volume to all policyholders. Please speak to your broker directly about the flat or crown-scale commission built into your plan.
Carriers: Insurance carriers are typically paid 5.5% of health and dental claims.
Pooled benefits are paid a combination of either crown scale commission, or a flat amount depending upon the total makeup of admin fees, broker commissions, and carrier retention. This varies depending upon the size of the group, and can fluctuate between 10% and 20% depending upon the size of the premium.
Events: Beneplan, its partners, or its preferred brokers, may hold educational events on an annual basis for the purpose of educating the public or its owners about the risks, features, and trends of managing a group employee benefit plan. Beneplan, the carrier, or the broker may choose to co-sponsor an event, which entails one or more of the parties sharing the costs of the venue, food, and parking, in order to attract benefit plan administrators to take time off work to learn about the fiduciary responsibilities and roles of managing their firm's employee benefits.