Contrary to some rumors, BrokersPortal is not going out of business.
It is, however, taking on a new look as it restructures operations and positions itself to be a major player. With a new investor and a new company on board to manage the operations, BrokersPortal is aiming to be a resource for both insurers and general agents in the marketplace.
The company, which was previously owned by its founders, Angel Investors, and its primary venture capitalist, Firemark, saw the required task of raising capital becoming more difficult, so Firemark decided that reorganization and recapitalization would be best for the company in both the short and long term.
Firemark acquired all the BrokersPortal assets and, along with another company, Benefits Technology Consulting Group (BTCG), is proceeding with plans to fund the new incarnation of BrokersPortal.
StarNex LLC also helped in initially getting BrokersPortal off the ground by offering an online property/casualty resource where brokers, carriers, and vendors could get together in one central location to do daily business. StarNex markets Internet solutions to both the employee benefits marketplace and the property/casualty marketplace.
According to Joe Markland, owner of BTCG, the idea for BrokersPortal was to create a “broker friendly” service that could function as a centerpiece distribution source for insurers in the years to come.
“This was in contrast to all the talk about the demise of the broker at the time,” Markland said. “We are the brokers’ entry way into the group insurance business.”
StarNex is run by Firemark, Markland, and his brother, Jerry, also an original founder. While Joe will head the sales and operations for the company, Jerry is the chief technology officer. With offices in the Boston market, San Francisco and Seattle, BTCG receives all sales for the company.
“Where before [we were] essentially an outsourced e-commerce distribution channel for group insurers and general agents, we are now a technology company that is selling our online quoting system to insurers and general agents,” Joe Markland said. “The big difference is that we do not consider ourselves an alternative distribution channel…[W]e no longer need sales staff to call on brokers to get them to use our BrokersPortal quoting system.” Therefore, 15 sales offices nationwide were closed.
“We are now focused on selling to carriers first versus to brokers first,” Markland continued. “With the number of target customers going from 50,000 to 500 or so, we certainly did not need the national distribution.”
According to Markland, that move was actually a good one. “Our value proposition to insurers and general agents is that we can provide an online quoting and, through a soon-to- be-announced partnership, enrollment system at a fraction of the cost that they would spend building these systems themselves or through other vendors,” he explained. “We can also have a system up in two to three months, so we have a big advantage if an insurer or GA wants speed to market.”
Markland added that the trend now is that insurance companies have started to form proprietary sites to do business. “We see this as a problem for brokers because it doesn’t seem logical for a broker to have to enter the same data into each insurer’s website to get quotes,” he said.
As for the future, Markland feels that brokers will continue to be the main distribution source for insurers, for several reasons.
“Employers want their brokers,” Markland said. “Many insurers say they may want to get rid of broker distribution, but it really isn’t their choice. If a customer wants to hire a third party to represent them it is their choice. For an employer, a broker’s commission is an insignificant expense to most businesses. Basically, most broker’s are worth it. For insurers, a brokers fee is still a variable cost. To staff sales people can be quite expensive and insurers would have to staff many more sales people if they were to get rid of broker distribution. However, I do believe broker’s commission rates will go down. Rates vary significantly across the country. For instance, Massachusetts commission rates are well below California. California will most likely see this and slowly change.”
According to Markland, the BrokersPortal site is beneficial because it offers multiple quotes after just entering the data once. “At our site you get multiple access to multiple insurers. Brokers have said that our product is easiest to use. We built it to fit the brokers existing work-flow. The brokers who understand what we are all about realize that we are a ‘single entry’ solution and that they need to support third-party platforms such as ours to combat the developing proprietary systems. Unfor-tunately most don’t realize how things are evolving from the insurers perspective.”
As noted, BrokersPortal is looking at selling to carriers first before brokers. Would this plan hurt brokers in the long run? Not according to Markland.
“This should benefit brokers in the long run,” Markland said. “Insurers who decide to participate in our platform are basically acknowledging that proprietary systems may not be the best solution. It is better for brokers if we get to insurers before they spend millions of dollars building their own sites. Our focus has little impact on brokers today. We have already built a functioning site and created awareness. Brokers are now better served if we get the insurers on board.”
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