Global Broker: Building the Business Case

Getting buy-in for a global broker can be a challenge. Here is a process to develop a strong business case as well as alternative approaches to consider.

August 20, 2020

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.

Motivation for using a global broker can vary among companies. The most prevalent reasons for deciding to leverage a global broker instead of various local or regional brokers include improved governance and oversight; data analytics and cost controls; supplier consolidation synergies; and the ability to leverage resources for global initiatives.1,2

Regardless of the reason, forming a solid business case for leadership is important. In doing so, think through these points:

Step 1: Understand how your company’s strategy and needs can be met through a global broker partnership.

Review your company’s business and benefits strategies and see how a global broker partnership can enhance those efforts. If you don’t have a global benefits philosophy and guidelines in writing, consider doing so. Providing potential broker partners with your strategy and/or guiding principles during the request for purchase (RFP) process will assist in establishing proper expectations.1,2,3,4

Also, factor in your company’s structure and C-Suite priorities. If you have a decentralized structure, it can be more challenging to build consensus for a global broker. It will increase the number of stakeholders you will need to engage. However, having a global broker can provide consistency across a decentralized structure. Regardless of your company’s structure, lack of resources are often a company’s biggest barrier. A global broker can assist with resource limitations and is a key rationale in most business cases.1

Outline your current challenges and gaps with regard to service quality and access, costs, administration, data, analytics, regulatory and internal governance compliance.Prioritize these challenges based on the company’s business and benefits strategies and identify how a global broker could address these needs.1

Questions to Ask When Considering a Global Broker Relationship

  • Do you anticipate savings? If so, can you estimate a potential savings target?
  • Will there be increased cost in some cases (higher fee or commission from one broker than another, smaller headcount countries where fees are triggered versus commission).
  • Where do you have current service/ quality concerns, and could they be improved with a change? Where do you have high service and quality? Could that be disrupted with a change in broker?
  • What are your data access needs and challenges? How does a global broker meet those needs – through analytics or inventory database capability?
  • What are your internal resources and how could a broker assist with limitations and enhance existing resources?
  • What do your local and regional colleagues think? What will they gain vs what will they lose?
  • What additional work do you foresee in the next 3-5 years (harmonization, merger and acquisition [M&A] activity, plan design changes, minimum core implementation, market assessment, global well-being strategy, communications), and how could leveraging a broker enhance this work?

Step 2: Create framework and process.

Determine who your stakeholders are and who will be involved in the strategy and selection process. Engaging local colleagues (such as country or regional compensation and benefits or HR leaders) is especially important in helping to learn more about their perspective, resulting in the selection of the brokers with the best fit for the organization.1

Step 3: Develop stakeholders buy-in.

Depending on your company's culture and structure, stakeholders may include: Chief Human Resources Officer (CHRO), finance, procurement, legal, regional and local compensation/benefits/total rewards/HR leaders.1 Hearing everyone's perspective is not only important to reach the best decision but also for mid- and long-term sustainability.5 Therefore, it is key that you identify which stakeholders you need to sell the business case to in order to move forward.

Step 4: Outline the Return on Investment (ROI) / Value on Investment (VOI) of a global broker model in a comprehensive business case.

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Business Rationale Examples

Cost savings through competitive bidding and economies of scale1,2

Governance through consistency, management of one supplier and utilizing a benefits inventory database1,2

Analytics and access to data1,2

Global initiatives consultancy synergies (e.g., harmonization, global minimum core benefits, vendor consolidation)1

Resources: With global benefits staffing resources lean for most companies, having a global broker enables the global team to have feet on the ground wherever needed and allows the company to flex additional resources from an organization intimately familiar with your company culture and local programs.2 This is important when looking for support for large projects such as harmonization and M&A activity.1,2

Alternate Approaches

As companies consider options, they may want to consider alternative approaches. Two such approaches implemented by member companies include partnership with a global broker for the company’s captive strategy and a two-global broker arrangement. A comprehensive global broker strategy can grow and adapt to meet your evolving needs.1

Captive Considerations

A few members are considering moving to a captive in the next few years. From a broker standpoint, the relationship changes with a captive.1 Rather than negotiating with the local insurer, the relationship with the broker evolves into a more consultative experience, with the company getting advice on how to address the cost drivers and the capabilities in the marketplace. In this instance, the broker fee is decoupled from medical inflation.1

One member described the experience of using a broker with a captive where the broker checks captive pricing from time to time to test the market and in those cases common broker fees/ commission apply. Otherwise, the consulting services under the captive, such as benchmarking, eligibility administration, claim review, consulting of plan design, etc., are all line-itemed for service and fee. Services required for a country is on a fixed-fee basis. This fixed fee is then converted to a percentage of the premium, thus allowing the company to only pay for the services needed. This amount is what is charged to the local plan, and the transaction is done in a transparent way .1

Two-Global Brokers Arrangement

One unique approach used by a Business Group on Health member is a two-broker structure. This decision was considered to be the best option for the company to allow for competition for the highest quality and best price point by market.1,2

Under this two-broker structure, there are two preferred global brokers. Locally, an RFP is conducted in which these two preferred global brokers must be invited to bid.Locals can also invite and include other non-preferred local brokers to bid as well. The broker appointment is based on the best proposal on cost and quality. However, if the non-preferred local brokers is in fact preferred by the local team, that broker’s selection must be approved by corporate headquarters, along with an exception granted to allow a broker appointment outside the two preferred global brokers. This selection process is a combination of local and corporate: assessing pricing and the local team capability while allowing for exceptions. If there are local brokers who are more competitive than global players, they may win the business.1

For one company using this structure, 90% of the opportunity lies with one of the two preferred global brokers, while 10% is with local brokers through an exception.This approach does have its challenges. While it may optimize quality and pricing in each individual market, there are administrative challenges, including fees and multiple brokers to manage. However, this company prefers the advantage of flexibility. For example, if the service capability is not meeting expectations in any individual local market, the company can make a change in specific locations.1

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  1. Questions to Ask When Considering a Global Broker Relationship
  2. Business Rationale Examples
  3. Alternate Approaches