Why "Costs Went Up" Isn't the Explanation Your Client Needs
Mike Smith has spent three decades watching this problem build, and he's finally put it into words worth borrowing.
A client's renewal comes in at 15% or 30% higher, and "costs went up" doesn't hold up when they're asking why. You've had this conversation more than once, and it never gets easier without something real to point to.
Mike Smith has sold health, life, Medicare, and long-term care coverage since 1993. In that time, he's watched the carrier field shrink from 8 to 10 companies down to 4 or 5, while premiums kept climbing. Business Insider recently featured him talking through why that's happening and what employers can do about it.
Where's the money going?
Smith points to prescription drugs first. They now make up 30% or more of the premium dollar, up from less than 5% when he started in the industry, and mental health costs are adding further pressure on top of that. At his own company, the average monthly premium per employee doubled, going from about $600 to $1,200 over seven years.
Then there's the conversation your client has to have with their own employees. When a raise doesn't materialize, employees often assume the employer is just being cheap, not realizing how much of the budget the insurance bill already claimed before anyone got to a raise. Smith walked through how he handled it at his own company: a carrier switch to Cigna, a redesigned plan, and about $100,000 back in the budget to put toward the team. He also talks through ICHRA as a growing alternative, comparing the shift to the move from pensions to 401(k)s.
Smith's interview gives The Brokerage Inc.'s agents something to use, real language for the next renewal conversation instead of a shrug and "costs went up."
