Life and Disability Cost-Cutter: IBX
When technology as newsworthy as the Insurance Brokerage Exchange (IBX) becomes available, it merits single-subject focus on its features, benefits, and source.
Streamlined, On-Line
The Insurance Brokerage Exchange — initially developed for Fortune 500 employers with complex life and disability plans — streamlines the Request for Proposal (RFP) process, increases carrier competition, offers best-in-class solutions, and significantly reduces the cost of life and disability insurance. Since 2007, IBX has processed more than 375 RFPs, covered 2.5 million employees, and saved employers an average of 21 percent.
Competitive Advantage
IBX simplifies the RFP process, saving business-owners time and money, while gaining a quality program at the best price. The Insurance Brokerage Exchange increases competition for insurance business by accessing multiple markets. The IBX process and transparent technology enable carriers to engage in on-line bidding. IBX works in concert with trusted insurance brokers, who identify qualified carriers, confirm contract specifications, and help select the best match for a company’s needs at the lowest rate among best-of-class solutions.
IBX is changing the way businesses access and purchase life and disability insurance coverage for employees. Compared to time-consuming and limited-scope traditional marketing approaches, IBX expands the solution pool and organizes specifications. The result is a competitive comparison of “apples to apples.”
Four Steps
IBX technology simplifies the RFP process in four simple steps that shorten the bid time.
Data Warehousing organizes a company’s relevant RFP information in a uniform way. The result: exact information precisely when and where it’s needed.
Sourcing Providers opens the whole marketplace to specified needs. By increasing carrier participation, the paradigm shifts, and the underwriters seek insurance-buyers rather than companies hunting for coverage.
Technical Response simplifies comparison. Accurate and uniformly organized RFPs make it easier to identify differences in coverage and cost.
Price Negotiation leads to lowest rate because the process is transparent and competitive.
Case Studies
Two real-life examples demonstrate the effectiveness and economic impact of IBX.
CLIENT A: A welfare benefit program serving more than 6,000 employees of 200-plus agri-business companies in more than 10 states.
CHALLENGE A: Benefit levels must be suitably designed and priced across all geographic locations and economic classes to ensure company growth and employee retention.
COST A: The premium for life and disability was costing Client A more than $2.2 million per year. The incumbent carrier proposed a significant annual increase.
SOLUTION A: With IBX and broker assistance, Client A reviewed seven carriers that matched specified needs at a lower cost. The selected new carrier’s proposal resulted in better coverage and $300,000 in savings per year. In most cases, rates are guaranteed for three years; therefore, CLIENT A experienced approximately $900,000 in savings over three years.
CLIENT B: Leading hospital groups who need Life and Disability programs designed to meet their unique needs.
CHALLENGE B: In today’s healthcare environment, cost is a priority concern for providers as well as patients. Hospital systems need affordable benefit programs that attract and retain employees while meeting unique needs.
SOLUTION B: With IBX and broker assistance, five hospital-systems clients across the nation secured life and disability solutions matched to their unique needs with cost savings between 17 to 41 percent. The following chart records the effectiveness of IBX technology and broker expertise.
| Location | Employees Covered | Line of Coverage | Incumbent Annual Premium | IBX Final Pricing Event Results | Annual Premium Saving | % Savings vs. Incumbent |
|---|---|---|---|---|---|---|
| Pennsylvania | 3219 |
Basic Life Optional Life Long Term Disability |
$267,477 $272,024 $493,432 |
$158,487 $192,576 $314,002 |
$108,990 $79,448 $179,430 |
41% 29% 36% |
| Ohio | 8500 | Long Term Disability | $1,851,429 | $1,304,124 | $547,305 | 30% |
| Georgia | 4838 |
Basic Life Long Term Disability |
$201,023 $1,064,929 |
$167,519 $857,000 |
$33,504 $207,929 |
17% 20% |
| California | 2270 |
Basic Life Optional Life Long Term Disability |
$73,023 $220,095 $337,840 |
$47,884 $140,486 $224,920 |
$25,139 $79,609 $112,920 |
34% 36% 40% |
| Mississippi | 1221 |
Basic Life Optional Life |
$70,105 $30,307 |
$56,084 $17,220 |
$14,021 $13,087 |
20% 43% |
Additional case studies from other industries are available through Holmes Murphy. In each case, the numbers tell the tale. The Insurance Brokerage Exchange can save companies 10 percent or more on life and disability insurance.