Lets say youre the human resources executive in charge of putting together employee benefits for your company. Typically, youd evaluate your existing benefits, which could include medical insurance, life and disability insurance, and vision and dental care plans, and then find out if theres a way you can keep your company costs down while continuing to serve your employees interests.
Youd contact an insurance broker, who would help you craft a request for proposals from insurance carriers. Then, youd get out of the way and wait for the broker to research the state of the market and present you with the best packages available.
What Spitzer uncovered had cost corporations an unknown amount of money. Brokers were steering their corporate clients to insurers who were providing payoffs, under long-standing agreement, to the brokers. Spitzer has accused one large broker, Marsh and McLennan, of soliciting rigged bids for insurance contracts.
A number of other insurance carriers, including American International Group, ACE Insurance Co. of North America, Hartford Financial Services Group and Munich-American Risk Partners are accused in Spitzers suit of rigging bids and steering contracts based on kickbacks. Other insurance companies are also being investigated.
"If the practices identified in our suit are as widespread as they appear to be, then the industrys fundamental business model needs major corrective action and reform," said Spitzer, who has forced Wall Street to adopt measures against conflicts of interest among stock analysts. "There is simply no responsible argument for a system that rigs bids, stifles competition and cheats customers."
To the rescue comes technology. Aptus, a portal provided by BenefitPoint, is changing the model for how the trillion-dollar employee benefits insurance industry operates.
The Aptus portal has already been accepted into the industry since its inception in 1999, with more than 310 broker and consultant offices using the product, managing more than 40,000 employer clients with 22 million employees and about $90 billion in premium. More than 420 carrier organizations use Aptus to access broker and consultant RFPs (requests for proposals) and renewal requests.
The prior generation of employee benefits procurement, on the employer side, started with employer representatives disseminating RFPs on Excel spreadsheets. These RFPs would be distributed via e-mail, and the carriers would respond either by filling in the spreadsheets or by generating their own version of a proposal.
Employers would have multiple versions of a proposal, some in spreadsheet format and some in word processing files, and then face the task of putting the data into a format so that the proposals could be compared in meaningful ways. Brokers would spend a lot of time going through all of the proposals in different formats to pull relevant data out of them, then assemble a report that allowed their customers to compare and choose.