Wednesday, April 20, 2005

Benefit compliance and vendors

I’ll be on a benefits kick today. I visited an organization that allows it’s broker access to the employee base in order to sell voluntary benefit plans. Due to their close relationship with the broker, they were adamant that the broker be allowed to do this. By voluntary I mean auto, home insurance and stuff like that. My question is why would you allow your benefits broker access to your employee base to sell benefits?

First of all, you are setting a precedent for someone to talk to employees one on one. If you are a non-union organization, it’s hard to keep unionizers outside because you have set a precedent that other 3rd parties can have access.

Second of all, with the whole Spitzer thing going on, do you really want your brokers collecting commissions on direct sales to your employee base? This has the potential of a smaller Marsh (they paid US $850M to settle). As the employer giving access, is it worth the risk?