The Consultative Broker™ Briefing
Volume XII, Number 2
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2010

"Creating a Benefits Value Proposition"

As many of you know, our firm C. R. Ekern & Company is the originator Consultative Brokerage and how to deliver TCOR to the middle market buyer.  While many of you are Property/Casualty agents and brokers, we are constantly asked; is there an application to Benefits?  You might be stunned to learn that the birth of Consultative Brokerage came from benefits selling techniques!

How did this happen?  Ask yourself this question.  “What is the major difference between a property casualty and a benefits transaction?”  After you ponder it from all angles it comes down to this.  Benefits brokers have never been able to use the carriers as a point of differentiation.  The insurance carriers will release quotes to virtually all competing brokers.

In order to be appointed the broker, most benefits organizations have learned to compete conceptually.  They have become adept at showing a buyer why they should be allowed to place the coverage with the various carriers.  And, those that are Consultative Brokers also know how to show the buyer one more important thing . . . the Total Cost of Human Capital™ (TCHC).

The Total Cost of Human Capital is our proprietary methodology for the delivery and quantification of a value proposition by a Benefits organization.  TCHC is based upon some of the principles of our Property/Casualty Total Cost of Risk applications.  Just as TCOR can be quantified, so can TCHC.

For those of you who are unfamiliar with Total Cost of Human Capital, it is made up of four important facets:

• 1.       Medical and Pharmacy Costs – The premiums for shifting these risks.
• 2.       Loss Costs -  Direct Losses and Indirect Loss Costs such as: Presenteeism, Absenteeism, Longterm Disability, Shorterm Disability and Workers Compensation
• 3.       Administrative Costs – The costs of people, programs and procedures incurred by a business in the administration and delivery of a benefits program.
• 4.       Taxes, Fees, and Regulatory Costs of the Insurance Program

When taken together, these four Facets of Total Cost of Human Capital represent the actual costs to an organization.  The key is understanding how to impact each cost, thereby reducing your client’s Total Cost of Human Capital.  Also that 80% of the TCHC is outside the insurance and risk financing transaction.

Just as with property casualty TCOR, it is imperative that your organization understand how to apply TCHC to offset your client’s Business Risk.  This is the application of your TCHC value proposition inside the client or prospects business model.  This is the result of TCHC and represents a quantifiable improvement that affects profitability, productivity, competitiveness and human capital.

Of course, the question remains:  “How do I impact the TCHC by specific actions?” or “What steps do I take to make a difference and quantify our client’s TCHC?”  That, my friends, will be the topic of our next briefing.  During which we will introduce you to the “Six Tenets of Human Capital” or how to impact your client’s costs.

Best Regards to Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company