November 29, 2022

Global Broker Guide

This guide breaks down the process, from business case development to account management, and provides employer tools and lessons learned from utilizing this strategic relationship with global brokers.

Full Series

Once the broker decision is made and the implementation process starts, it is the ideal time to review the SOW to develop an effective ongoing relationship management process. Sharing guiding principles is key to a strong strategic partnership as well as reviewing critical elements, including governance, fees, service level agreements (SLAs), renewal process, escalation protocols, benefits database and analytics. Companies should establish a review process to ensure that the partnership is working as expected and to see what can be improved.

Sharing a summary of the guiding principles with all relevant stakeholders internally and with the broker will ensure that everyone is on the same page. The global partnership can be critical for effectively implementing a global consistency strategy (e.g., well-being strategy, minimum standards, benefits harmonization, vendor integration, governance, financing mechanisms).^1,3,6 When reviewing and finalizing the global broker SOW, it is ideal to have a high-level understanding of key strategic initiatives and clarify what falls within the scope of the global broker SOW and fees and what will be out of scope. Any global initiatives should be communicated from the very beginning and look for synergies across global efforts to reduce workload and change management.

With adequate, transparent discussions, employers can create a solid partnership with their global broker. Spending time in the SOW phase to build realistic expectations and creating viable processes in the Account Management phase will allow employers and brokers to be more in sync. This dynamic will strengthen the governance process and enable a global consistency strategy.^1,3

Governance

Brokers can be key partners for a company’s governance process. Companies utilize their broker relationships to assess whether their benefit offerings and changes align with their strategy and priorities. This is done tactically through the renewal process, benefits inventory database management and analytics. Companies can be clear about who is responsible for governance and making sure it’s not just the broker’s responsibility; otherwise, the governance process may meet resistance from internal stakeholders.³ For more information on governance, please see the Global Benefits Governance Guide.

Fees and Commissions

Fees are an area where companies have different approaches: local remuneration, global/regional coordination fees, minimum commissions, flat fees and other services and retainers. A base global fee applied to each separate business entity or plan brokered can serve to compensate the broker for the services that must be provided to the company at a global level (benefits inventory, financing evaluation, reporting, etc.). Often a pre-negotiated base commission fee level applies for each country and/or benefit plan type. Locally, the commission fee can be higher if other services such as benefits enrollment administration are conducted by the broker. In addition to the fee structure, a retainer is useful to meet unexpected needs, especially if there are budget restrictions. Make sure the retainer has clear guiderails in the SOW to keep the broker from always pushing the retainer. Employers can make sure the services outlined in the RFP process are reflected in the SOW and set clear expectations to limit challenges.

Types of Fees and Commissions

Local Remuneration

The most common method of remuneration for local benefit brokers are commissions. Commissions are paid directly from the insurer to the broker per terms agreed upon at placement/renewal of a benefits contract. Commissions are generally seen as the most efficient means to pay brokers, as the company makes just one payment for its insurance, with the built-in commissions forwarded to the appropriate broker.

Global/Regional Coordination Fees

Core brokerage fees cover the costs to operate a global brokerage model. The fee ensures that the global and regional account managers who are not compensated through individual policy commissions are remunerated for the services they provide, including (but not limited to) establishing a governance framework, implementing the global brokerage model, managing and reporting on annual renewals, providing strategic guidance on benefits-related issues, and acting as an escalation point for any perceived local issues.

Minimum Commissions

Depending on the size of the business in a country, local commissions may not be enough to cover the costs for a local broker to deliver the additional services required by a sophisticated global governance model. In these cases, local brokers may require a minimum fee to ensure that they can adhere to the agreed global requirements. It is important for companies to identify where minimum fees may be applicable early on whenever engaging with a global broker partner.

Flat Fees and Other Services

A flat fee may be charged for certain aspects of the model regardless of size and scope of global engagement. This can include fees for technology, access to research materials or other out-of-scope services such as alternate financing feasibility studies, health care analytics or benchmarking and management of non-insured benefits.

Retainers

Global benefits cover a large population through a variety of policies that differ in each country. This inevitably leads to unexpected situations for a variety of employees who will turn to their employers for guidance and hold them accountable for resolution of any issues that occur with their employee benefits. Internal resources often do not have the capability to resolve all issues and will turn to their global broker partners for assistance in navigating country-specific complexities and situational anomalies. For companies that have strict budgeting guidelines and a low tolerance for out-of-scope time and materials charges, a pre-agreed-upon retainer can help ensure that these unexpected needs are met immediately without a lengthy contracting phase or volatile periodic costs.

Service Level Agreements (SLAs)

To effectively manage the relationship, creating and tracking against effective SLAs is key. One way employers evaluate service is through surveys. In the SLA, some employers identify a minimum score value that is expected to be earned in such surveys.

Key elements of SLAs include:

• Recommendation report expectations (bidder quotes, global financing mechanism impact);
• Project management metrics and milestones;
• Regulatory guidelines and guidance;
• Claims data reporting and analytic recommendations;
• Invoice reconciliation;
• Inventory database implementation and maintenance; and
• Customer satisfaction measurement (e.g., net promoter score).

Companies can build performance guarantees that meet the SLA. Penalties of performance guarantees include a percent of fee or commission--or an available consultant credit—due if expectations are not met for the impacted quarter.

Renewal Process

The renewal process does not always have to be a time crunch, nor does it have to sideline global consistency imperatives. With effective planning, timeline management, communication and reporting, companies can have a smooth process that allows them the time needed to think strategically and also complete the plan task at hand. For a company to effectively implement its strategies prior to renewals and smoothly throughout the endeavor, it needs to develop a renewal process and timeline in collaboration with the global broker. Most brokers have a template to guide this process. The timeline should include key milestones, such as obtaining and reviewing quotes from insurers, financing mechanism viability (captive, pooling, underwriting), negotiation time, company approval requirements, documentation requirements and employee communication requirements.

Volume management is key when it comes to renewals. For a global employer with a footprint in dozens of countries, each having various policy types (e.g., medical, life and disability) and the possibility of multiple policies for each policy type within a single country, the majority of that work is all occurring simultaneously. This can lead to strained resources, making the need for a strong process and adherence to individual policy timelines crucial. It is important to note that some countries/markets have a higher degree of complexity or maturity when looking for solutions. The number, frequency and/or intricacy of the activities required can vary significantly from one country to another. As a result, differences in local requirements are to be expected.² What should not be expected, however, is a different form of governance or varying protocols from country to country. A knowledgeable global broker should be able to walk a client through the countries where added complexities are required and set expectations accordingly. For employers with a captive, this is a critical step for ensuring that broker and captive resources are clear on roles and responsibilities.

Escalation Protocol

While neither party wants issues to occur, given the scope and complexity of global benefits, there will inevitably be issues that result in escalations. To best address these, the company and global broker should define a process stating how escalations and issue resolution will be addressed. This should include which stakeholders should be informed and who has ultimate responsibility. A documented process with expectations removes the surprise factor, mitigates confusion and increases the likelihood of a faster resolution.

Benefits Database

A global broker’s global benefits inventory database is a web-based tool that enables multinational companies to efficiently store, manage and analyze the design and financing information for employee benefits, HR and compensation programs. Information stored in the database includes plan design, financing, contacts and policy documents. Available reports include individual country reports, cross-country reports and market comparison reports.

Major purposes of a regularly maintained global benefits inventory database identified by participants include:

• Collecting information to help set priorities and use economies of scale for purchasing and administering benefits;
• Guiding employers when planning strategies for multinational pooling networks;
• Ensuring adherence to corporate governance processes and compliance; and
• Conducting benchmarking that is industry specific.

Analytics

Most brokers have technology systems for the inventory database and analytics, some with ongoing enhancements. It is important to understand the features of the technology system, its capabilities and what will be available at the time of launch, as well as future enhancement possibilities. While companies may receive straightforward data reports such as costs of benefits, they don’t feel that they receive analytics from their broker, such as claims costs drivers, upcoming trends and innovative benefits/programs. However, some global brokers continue to enhance their technology capabilities to provide clients with access to additional analytics, such as year-over-year cost trends, placement within the market, etc. Keep in mind that some countries may not meet the company’s expectations for data reporting based on the maturity of the market and other factors. Some employers are moving to a captive in order to get better claims and reporting data. As claims are paid out of the captive, reporting from external vendors does not slow down employers given their data access within their captive systems. In addition, more details of the claim are reported in the captive systems compared to external vendor reports (Figure 1).

 

Figure 1: Analytics and Reports Employers Receive from Broker

Review Process

It is important to set aside time to regularly review the global broker arrangement. This review provides an opportunity to assess progress against expectations and contractual obligations, as well as identify areas of improvement and action plans for both the company and broker stakeholders.

To make the review process effective, employers can:

• 1 | Determine frequency: Typically, companies hold quarterly reviews.
• 2 | Identify stakeholders: Ideally, there should be input and representation from local, regional and global stakeholders. Also, understand which team (supplier management, procurement, benefits, broker) should facilitate and lead the review.
• 3 | Have an agenda: Make sure that all participants know what is expected of them, what is being assessed and what constructive, pointed feedback is sought. A template(s) for collecting and reporting feedback is a best practice to keep everyone on task.

When measuring the success of the broker relationship, it really depends on the company’s strategy and priorities, including cost avoidance, savings, global consistency efforts, global financing mechanism (pooling / captive / underwriting) and value from the partnership.

Conclusion

A global broker partnership—whether leveraging one global broker or a multiple broker approach---can help make an employer’s global strategy a reality. The key is to be intentional and transparent at the beginning of the process by sharing the employer’s strategic vision with its potential partner(s), bringing all the stakeholders to the table, and clearly defining the SOW. These efforts will make the relationship management undertaking easier to navigate once a broker decision is finalized. As the relationship is established, building metrics, escalation protocols and regular review cycles will ensure that challenges are addressed before becoming untenable. Meeting the needs of a diverse global workforce with globally consistent benefits is more feasible with a strategic broker partnership.

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Data Insights Global Benefits Management