Benefits Agency: Catalyst For Growth
It’s all about the costs, isn’t it? Not so much anymore. For decades, health care costs and rising group insurance premiums have driven employers to shop their group health benefits coverage annually, and change brokers frequently as they look to cut a few percentage points from annual premium increases.But today, regulation-swamped employers need more than a small financial incentive to support their choice of agent or broker, says Greg Carlton, CLU, ChFC, RHU, ChHC, principal and senior vice president of employee benefits and wellness at Peel & Holland in Benton, Kentucky.Carlton, who joined the 90 year-old agency in 1994, has seen the employee benefits business evolve from an ancillary service to an essential component of the firm’s risk advisory practice. Costs matter, he explains, but most employers now realize that controlling benefits costs is not just about shopping insurers more effectively.
“After more than 60 years as an exclusively property/casualty insurance agency, Peel & Holland got serious about benefits services and incorporating benefits expertise into our approach of helping our clients manage and lower their overall cost of risk,” he says.
The decision tracked other evolutionary steps for the firm, including a key merger with an employee benefits specialty firm and a philosophical Switch from insurance marketing to risk advising services.
“From our perspective, we have become true risk advisors, focusing not just on matching clients with insurance coverage, but on working strategically to lower their cost of risk,” Carlton says.
The agency has adopted a multistep risk advising process that tracks financial challenges through discovery and analysis, development of an action plan, implementation and review. The approach applies both to traditional property/casualty risks and employee benefits costs, he notes, and supports strategic advising and cross-selling.
Peel & Holland property/casualty and benefits advisors meet with clients as a “synergy team,” Carlton says, to address the total risk structure and identify opportunities for crossover, such as the health care intersections of workers compensation and group health benefits.
The more sophisticated approach has been a catalyst for growth, especially in employee benefits, which have grown rapidly, he says.
Peel & Holland has about 50 employees and additional offices in Paducah, Mayfield and Murray, Kentucky. The benefits department has four advisor/producers, six account managers and a specialist in enrollment and claims analytics, as well as contracts with wellness coaches for individual client companies.
Benefits and related services account for about 35% of total revenue and have been growing at a rate of about 20% per year, Carlton says.
He says agency leadership regularly reviews survey data from National studies and their own clients.The survey sources include the Zywave Broker Survey of clients, The National Small Business Association survey and The Towers Watson National Business Group on Health survey of employers.
“This type of industry and client intelligence helps shape our thoughts as we look at our own regional needs and best practices as we interact with our clients,” Carlton says. “From our 2013 Zywave Broker Survey, for instance, we cross match client expectations closely in terms of what clients expect from a broker/advisor and what managerial concerns clients have when operating their businesses and employee benefit plans,” he says.
The survey indicates that clients in general rank regulatory compliance information very highly (80% say important); employee communication information and documents (71%); and a strategic benefits plan (61%).
“Our clients respond in a very similar fashion,” Carlton says. “They have come to realize the costs and challenges of Affordable Care Act compliance, FMLA, COBRA and other regulations.”
The agency also relies on insights from industry support groups, including Keystone Insurers Group, Sitkins International, and Benefits Advisors Network. The agency recently announced a partnership with Capstone HR, a local human resources consulting firm.
The research indicates that benefits costs remain an important issue, but not nearly as dominant as it was in previous years, Carlton notes.
“This was prevalent, but as more ‘total cost of benefits and care’ data is brought forward and clients see the Real impact of noncompliance, fines, and penalties of the ACA (Affordable Care Act), and as they connect the total burden of disease, the picture changes dramatically and we see a huge awareness created among our clients. These insights are what have driven us to take on more of a risk advisor’s role and to connect in developing innovative practices and strategies to prevent, mitigate, transfer, or finance risks.”
Carlton describes the agency’s benefits products and services as “concierge” offerings that support a strategic plan.
The group benefits team provides group health, dental, and vision care insurance, voluntary supplemental benefits through payroll deduction, and a variety of self-funding structures, including access to captive insurance companies.
The agency supplements its employee benefits products with individual life, health, disability and long-term care insurance for executive clients. Benefits advisor Greg McNutt, CLTC, is the agency’s specialist in individual life and health insurance and teams with both the property/casualty and group benefits specialists.
He says the agency’s group and individual benefits guidance is a personal risk advising service for clients Who are thinking strategically about the needs of individual executives as well as the total employee base. “It’s important that the agency provides primary insurance services that meet the individual needs of key executives, business owners and other employees who may, at various times of their lives, require higher limits of term life insurance, disability insurance, and other special needs.”
McNutt is also an advocate of longterm care insurance, a product that he says is an important asset for individuals, especially as higher rates and tighter underwriting rules exclude more and more middle-aged individuals.
“It’s become a very different market in the past 36 months,” he remarks.Rates for traditional long-term care coverage have been increasing 20% to 80% for individuals depending on age group and underwriting category.
“A 55-year-old executive who has just realized a need for the coverage simply may not have access to the market at all these days,” he points out.
Instead, insurers are promoting universal life insurance products with endorsements that allow access to cash value for long-term care needs. However, this approach can deplete the value of the life insurance, undermining the original estate planning strategy that led to the life insurance purchase.
Risk advisor Heather Elliott specializes in small business and key accounts, defined as employers with 50 to 99 employees. She notes that, while the agency is based in a rural area, its clients come from around the country and include public entities and other non-mainstream risks that demand a high level of creativity.
She says benefits costs are always an issue, particularly for small to medium-sized clients, and she agrees that the emergence of the ACA has complicated their concerns.
Small employers have many of the same needs as large employers as they compete in the human resources marketplace for top employee talent, Elliott says. ACA rules, however, weigh more heavily on small employers that may not have the resources of larger competitors.
“Employers are concerned that they may not be able to continue to offer benefits plans to their employees that both support their needs and comply with the legislation. They are afraid they may not be able to recruit the talent they need to compete,” she says.
Most employers, however, are not planning to abandon group health benefits, she says, though they are seeking plan designs and funding approaches that can give them greater control. About 80% are interested in some form Of self-funding, and several clients are exploring benefits captives.
Her goal is to provide techniques that can help her clients compete effectively at affordable costs, she explains.
Wellness programs are increasingly important components of Peel & Holland client programs. Wellness advisor Jimmie Holder, CPT, and wellness account specialist Sara Christiansen, RD, CSSD, LD, NSCACPT, say that 90% of their wellness clients are using health risk assessments, biometric screenings, and challenge incentives and more than 30 employers are enrolled in incentive and activity programs that encourage healthy lifestyles.
Many of the programs are simple to execute while providing measurable results, Holder says. Employees choose from several activities, including walking and exercise programs, nutrition changes, and education, and receive points for their participation. An employee who earns enough points receives an incentive reward.
As employees seek higher-tech approaches, the agency has begun offering online tracking tools, Holder adds, and the agency is working on new tools and expanded programs to include mobile apps.
Disease management programs are also on the rise among a growing number of employers. Claims-based data points to chronic health problems within the workforce that can be reduced through targeted programs, Christiansen says.
“We are looking to see to what extent better disease management can reduce claims and improve the overall health of employees.”
Health insurers are more aware than ever of the value of wellness programs, Holder says. Many health plans offer immediate premium discounts of 1% to 3% and promise to track return on investment over time to increase discounts as the programs progress. Employers are also increasingly interested in the overall impact of wellness programs on productivity, reduction of lost time, and crossover with workers compensation claims reduction, he adds.