Many agents and brokerages that started in the highly competitive world of commercial property/casualty insurance and risk management struggle with building a portfolio of stable and lucrative employee benefits.
Agency traditions in the property/casualty market and the need for specialized expertise may hold them back; but at Mortenson, Matzelle and Meldrum, Inc., or “M3” as their employees call the firm, employee benefits are a big part of their history and fit naturally into the broker’s business.
Sean LaBorde, executive vice president of sales at the Madison, Wisconsin-based firm says the agency was founded in 1968 as a personal lines agency specializing in life insurance and financial planning, but expanded rapidly into employee benefits in 1972. The agency only started in the property/casualty insurance and risk management business in 1985.
Today, with revenues split nearly equally between employee benefits and property/casualty insurance, the firm takes a consistent data-driven risk management approach to both areas of business.
“Property/casualty and health benefits exposures are both risk expenses for our clients, and we believe the way to handle them is in a consolidated way that recognizes patterns of expenses and identifies the prospects for reducing the costs,” LaBorde says.
Many of the risks are connected, he explains. The medical expense component of workers compensation and employee health costs “are all part of the health culture of the client that can be examined and modified with the right programs to manage or reduce costs over time,” he says.
M3 has five offices in Wisconsin—in addition to the corporate headquarters in Madison there’s Milwaukee, Eau Claire, Green Bay and Wausau—and another in Denver, Colorado. The brokerage’s 170 employees are split evenly between property/casualty insurance and employee benefits services and serve about 5,000 commercial customers. Most customers use the firm for both property/casualty and employee benefits services, according to LaBorde.
Data analysis, proactive wellness initiatives and disease management programs have become more important and more effective. M3 offers three health data report services—the Health Plan Performance Monitor, the Benefit Compass and the Actuarial Analysis—designed to assist clients in tracking their costs and identifying components leading to health benefit rate increases.
The Health Plan Performance Monitor provides a monthly status report on plan costs. The Benefit Compass provides a graphic analysis of claims data arranged in various ways such as per-employee costs for medical, dental, and prescription drugs; it includes major diagnostic codes and employee contribution levels and shows how a client’s results compare with industry standards. The Actuarial Analysis identifies and analyzes components of the health plan renewal calculation.
The data reporting helps identify opportunities for controlling costs, LaBorde says, and suggests programs that can have a positive impact, such as wellness, disease management and employee education.
“Behavior leads to risk which eventually leads to claims,” LaBorde says. “If we can modify behavior, we can reduce the risks and reduce or eliminate the claims.”
Abigail Nadler, M3 health promotion advisor, says employers continue to be very interested in wellness programs and many are willing to invest in the cost of health management services, but the commitment varies among employer leadership and by client type.
“My goal is to help our clients develop comprehensive wellness plans that will reward them with healthier, more energetic employees and lower costs over time. But it all works best when there is leadership buy-in,” says Nadler.
Insured employers, particularly those with the local health maintenance organizations (HMOs), receive health management services including health risk assessments at little or no cost and promote the programs, she says. Self-funded employers who must pay directly for the services are a little more difficult to convince and tend to be more concerned with the prospect of measuring their return on investment.
“We believe in wellness with metrics,” LaBorde says, “and we can provide the data they need to evaluate these programs.”
Communication is critical to the success of wellness initiatives as well as other aspects of employee benefits programs, the M3 experts say. As part of its comprehensive package of services, the firm provides both education for employers on benefits topics and consulting on strategic employee education.
The firm provides several client seminars each year on employee benefits management topics, including a continuing series of conferences with the Wellness Council of Wisconsin, as well as ongoing sessions led by M3’s compliance attorney, covering regulatory issues such as HIPAA, COBRA, and FMLA.
All customers also receive “Market Alerts”, a newsletter that covers hot topics in the insurance marketplace and legislative environments.
Employee communication consulting is a very popular value-added for employers with increasingly complicated employee communication needs, says Bobbi Jones, employee communications advisor. The employee communi-cation practice is particularly valuable for larger clients with 500 or more employees who have diverse groups of workers, often in multiple locations.
Jones joined M3 eight years ago in the risk management and data management practices. She soon began to share her communications expertise with clients looking for effective ways to better engage employees in benefits enrollment decisions, wellness programs and consumerism practices.
A graduate of the multicultural studies program at University of Wisconsin in Madison, Jones specializes in helping client employers develop a strategic communications program that can target multiple audiences among employees.
“We approach employee communications differently than many firms, especially other insurance agents and brokers,” she explains. “Most others will assist in choosing and producing some very basic products, such as an employee benefits brochure or a Web portal vendor and then leave the strategy to the employer.”
Jones says M3 tries to address basic communication goals with clients and then helps develop programs that are appropriate for the goals. “We like to examine who we are talking to and the nature of the information that we are trying to communicate. We try to read everything from the employee perspective so we can refine the message to what they can understand and absorb,” she says.
Jones works with both high-tech and traditional tools and can help with everything from the text for letters and brochures to the design and implementation of branded Web portals. M3 partners with Milwaukee-based Zywave on developing custom Web services for clients, “but not every employer is ready for Web-based communication,” she says.
“Many employers are convinced that their employees are not prepared for online benefits services and may not have access to a computer. However, in many cases we have found that their concerns are unfounded,” she says. “Many employees understand and have access to the Web, even if they aren’t utilizing computers in their daily job duties.”
Retirement benefits are another growing portion of the M3 employee benefits business, executives say. M3 Financial LLC is a wholly owned subsidiary of the parent company and provides investment and retirement planning services for commercial and personal lines clients.
The subsidiary employs two licensed financial advisors dealers who design and implement ERISA-qualified defined contribution plans, including 401(k) retirement programs, and can provide mutual fund investment options and financial planning for employees.
Chris Henderson, director of M3 Financial, says the greatest growth in retirement plans comes from employers with 100 employees or fewer. “Of course, we continue to manage retirement plans for our larger clients and can take over plan management of existing plans for new clients of our company,” he says.
“But the market for human resources talent in Wisconsin is very competitive, and all employers are working hard to recruit and retain quality employees,” he says. “As small employers continue to grow and pursue new employees, they reach the stage at which they must provide retirement benefits and the defined contribution plan such as a 401(k) has become the accepted minimum.”
Henderson says the company offers a level of comprehensive service that allows it to compete successfully against larger mutual fund companies and consultants in Wisconsin.
“What distinguishes us is our ability to provide both plan design services and investment management as well as financial planning education. We understand the legal requirements and can help an employer create a plan design that addresses minimum vesting requirements, profit-sharing features and other plan provisions, and then help the employer choose the invest-ment solutions that meet their strategic goals.”
M3 Financial also conducts financial planning group and personal sessions for employees. Since the series of credit and investment industry crises late this year, they have been particularly active responding to employee questions and concerns.
“We’re prepared to talk to employees about what the current conditions mean to them and their personal retirement strategies, and lately we have had to do a lot of hand-holding as they all watch what the economic crises are doing to everyone’s retirement,” he says.
“It’s a difficult time and we do all we can to help our clients get through it.”
© The Rough Notes Company. All rights reserved. Originally published December 2008 and written by Len Strazewski. Reprinted with permission.