Indirect Brokerage of Repatriation Services

Brokers are not always what the stereotype portrays.  In fact, most brokers are not called brokers because the brokerage function is mixed with other services, e.g. case management/assistance services.  In assistance, the brokerage component simply becomes a line item in a variety of service offerings.   Assistance companies broker air ambulance flights and other repatriation services every day.  However, their customes will never see the words ‘broker’ or ‘brokerage fee’ on their invoice.  They use soft words like ‘case management’ or ’coordination fees.’  This is so common that insurance or corporate companies consider it standard practice.  There’s no ‘a..Ha’ or ‘Gotcha.’  Assistance companies and brokers have a bigger challenge and that is transparency in pricing.

When buying repatriation services through a broker there is a margin in the price to compensate for their services.  The same is true for an assistance company.  They coordinate logistics and repatriation services and their third party costs are reimbursed by the client/insurance company.   However, the fee for those services is often reflected in a variety of ways.  Those are:

1.  By adding a percentage price increase to the air ambulance or other repatriation service fee.

2.  By charging a flat fee for each service provided, e.g. air ambulance coordination, hospital monitoring etc.

3.  By charging large enough retainer fees to account for the expense associated with handling each case.

There are pros and cons to using each model but companies run into trouble when they try to make make short term gains on windfall evacuations, e.g. by increasing service provider’s prices by 100%-300%.  In such a small/niche industry it doesn’t take long for news to spread regarding dubious pricing practices.  Transparency in pricing is essential to ensure your company maintains integrity within the marketplace.  Don’t get caught up in short term wins to make up budget short falls.  They may provide immediate relief but they will most certainly cost you in the long run.  

Today, most assistance companies use a model that charges a retainer fee plus case fees and reimbursement of direct expenses.  In this model, case fees are clearly defined and there is no question regarding how much margin has been added to the direct expense.  Sounds straight forward.  Right?  Maybe, but how is the cost basis and margin calculated for the retainer fee?  I doubt many companies will get specific but I’d argue that competition and clear pricing policies will help sort the wheat from the chaff.  Thanks for listening!