SOURCE: Business Benefits Insurance

July 02, 2008 09:15 ET

Edholm Uncovers "Dirty Little Secrets Your Benefits Broker Is Keeping From You" in Article From Employee Benefit News

ANDOVER, MA--(Marketwire - July 2, 2008) - How can you make sure your benefits broker acts in your best interest?

In his article, "The Dirty Little Secret Your Benefits Broker Doesn't Want You to Know," in the June 15 issue of Employee Benefit News, broker Jim Edholm reveals how bonus incentives can spur a broker to place his own needs above his clients'.

Edholm warns that "brokers have another form of compensation that they don't talk much about -- bonuses. Bonuses aren't like commissions. Commissions benefit you because they reward the broker for giving you good service, but bonuses primarily benefit the broker and insurance carrier."

Your broker might keep you with a certain carrier just to get a bonus he can collect as a reward for renewing your business with it, even though another carrier may offer a better deal, Edholm warns.

Businesses with fewer than ten employees need not worry, he writes, since "most business is written through intermediaries and bonuses just aren't a factor." Also, businesses with 100 or more employees can expose their broker's intentions by analyzing the broker's compensation on the 5500 Form.

However, businesses with ten to 100 employees must be wary. "Ask your broker what percentage of total income his practice gets from bonuses vs. commissions... When you ask, watch his expression. Shock or surprise may indicate that he's getting more than he'd like you to know."

He adds: "If you've been with the same carrier that whole time, you may have been a victim of the 'bonus boogie.' But don't forget that larger companies (more than 75-100 employees) should change carriers less frequently. Carrier switching is considered a negative underwriting characteristic, and it will raise your costs, so your broker may be acting in your best interests... it's a balancing act."

The full article can be read at http://tinyurl.com/3sqb3l.

Edholm is president of Business Benefits Insurance (BBI), an employee benefits planning firm in Andover, Mass. He has worked with employers for more than 25 years and can be contacted at (978) 474-4730, via his website www.Group-Insurance-Guide.com or via e-mail jedholm@bbibenefits.com.

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