One size rarely fits all, and in the realm of employee benefits, few employers can buy a program “off the rack” that meets their goals for recruitment and retention.

Do you need high-tech employees who roll up their sleeves to write space-age computer code? White collar professionals that uphold the highest accounting and financial standards? Blue collar technology workers that meet deadlines and keep to budgets?

“It’s become a much more sophisticated market and agents and brokers have moved steadily away from a negotiating service to a consulting role.” —Jeana Hutchings Benefits Practice Leader, Partner

It takes a lot more than a standard health insurance policy to attract the best human capital. At Diversified Insurance Group in Salt Lake City, Utah, the ability to build unique one-of-a-kind employee benefit programs is what differentiates the agency from its competition, says Spencer Hoole, managing partner.

“It’s almost an arms race out there. Agents and brokers are competing aggressively for new business and all of them are looking for new arrows for their quiver. Our group has been particularly effective in looking beyond the horizon and staying a couple of steps ahead of the competition,” Hoole says.

Founded in 2001, the Diversified Group began as a commercial property/casualty insurance generalist but quickly grew to become a technology industry expert, executives say, meeting the risk management needs of high-tech start-ups and more established technology service and supply companies.

The agency has provided some employee benefits services since its inception, but evolved a more sophisticated consulting approach about five years ago, Hoole says. Benefits revenues have been increasing steadily for the past four to five years, Hoole adds and today, employee benefits is the agency’s fastest growing business segment, generating about 37% of total revenues. Of the agency’s 60 total employees, 20 are involved in the employee benefits practice.

The agency focuses on health benefits, wellness and claims management services, but also provides regulatory compliance consulting, human resource information system consulting and employee benefits communication consulting.

Benefits and property/casualty producers have been successful in cross-selling across their client lists and both disciplines are usually included in brainstorm sessions, Hoole says. “We always make sure that both benefits and property/casualty has a champion in our meetings.”

Unlike other agencies, however, Diversified refers life insurance and retirement services to an outside firm. The agency provides some voluntary, employee-paid benefits products, but Hoole says the programs are not significant contributors to revenues.

Diversified’s expansion into benefits consulting was a response to market trends and client needs, executives say. In the early days of the firm, employee benefits sales was a transactional business. Agents and brokers prepared a dossier or spread sheet of the employer’s workforce and sought bids from competitive insurers.

The lowest premium won the business and often kept the business for years. But rising healthcare costs and the erosion of competition changed that pattern and pushed employers to seek more sophisticated support from their agents and brokers and strategies for controlling their rising costs.

“We are constantly telling clients to think for the long-term. Most wellness programs need three to five years to show the fullest results.” —Sean Oliver Chief Financial Analyst, Partner

Now competitive health plans are fewer than ever, and bidding out coverage is a dead art, says Jeana Hutchings, partner and benefits practice leader. Hutchings has 20 years of experience in healthcare, benefits consulting and managed care, she says, and has seen the industry change dramatically. She joined Diversified in 2003.

“It’s become a much more sophisticated market and agents and brokers have moved steadily away from a negotiating service to a consulting role,” she explains. “Our employee benefits practice is no longer an accommodation for our property/casualty insurance customers, but rather is a complement to our property/casualty practice.”

Hutchings says Diversified tends to work with employers with 500 or more employees and focuses on growing technology companies. “We help them get to the next level,” she explains.

Acknowledging the need for cost control, ways to meet strategic human resource goals and help with the “piling on of the problems of regulatory compliance,” Diversified guides clients in creating “a unique, total solution,” for employers who are willing to explore new approaches to benefits administration.

Wellness programs, biometric screening, onsite clinics are among the techniques Diversified has introduced to clients, she says. And the results have been impressive.

For example, Hutchings points to the experience of a local employer with about 500 employees that suffered premium increases of 20% to 30% annually for five years. Diversified helped the company transition from a fully-insured to a self-funded plan and introduced an onsite clinic and concierge medicine program that provided 24-hour access to health care. Employees also participated in biometric screening and follow-up preventive care.
The changes resulted in a 25% reduction in health claims and substantial reductions in overall health insurance costs.

Self-funding and better control of health services delivery provided the employer with a flow of claims data that helped the employer identify drivers of its rising costs, she explains. In response, the employer was able to target case management and improve outcomes.

“We helped them see the big picture. The more information you receive, the better able you are to take control of your claims and costs. We have to teach them what is important and guide them to appropriate responses.”
Hutchings says, “It was fun and exciting to see their evolution as they captured more information about their situation.”

Sean Oliver, principal and chief financial analyst, has 14 years’ experience in health insurance underwriting. A data analysis expert, Oliver designs self-funded health benefit plans and assists employers in developing a predictive model for claims management.

The agency provides a wide variety of data services that provide support for self-funded employers and sophisticated companies that seek high levels of control over claims management, expenses and medical cases.

Special services include:
• Insurance guarantee tracking (risk, aggregate liability, specific claim protection)
• Historic analysis of large claims for recommended pooling charges
• Reserve evaluation
• Annual renewal risk evaluation
• Preparation and Evaluation of ad hoc reports
• Quarterly and annual reports indicating cost savings and/or utilization trends.

Diversified can also review large claims, provide on-site employee claims assistance to help individual employees with claims resolution, provide toll-free access to a service representative and evaluate experimental treatment, and changes in medical protocols and unique procedures.

Oliver agrees that wellness and health management programs are important components in comprehensive health benefits programs. Employers are increasingly interested in these approaches, he notes, and Diversified has at least one client that has been engaged in wellness and health management for 10 years with ongoing positive results.

However, change does not come instantly, he says. “We are constantly telling clients to think for the long-term. Most wellness programs need three to five years to show the fullest results. But it is important to have a strategy and follow it, and more employers than ever understand that.”

Corporate leaders are also more likely to be involved in benefits decisions and a commitment to wellness programs.

“In the past we worked almost exclusively with human resources, but now we work more frequently with chief financial officers and sometimes chief executives.”

Brian Carter, Partner/Consultant.

One of the biggest challenges Diversified has faced in the past few years is the growing need for regulatory compliance consulting, especially the need to comply with the Affordable Care Act, Oliver says.

“Most employers are struggling with managing and understanding the ACA,” he says. “Most aren’t trying to avoid the ACA, but rather, to determine how to provide the best possible employee benefits that comply with the ACA.”

But one size does not fit all in ACA compliance, he notes. “Every company is different and it is important that we get down to the individual case with every client. We have to figure out what the law means to them and how it will affect their employees.”

Hutchings agrees. “The ACA is incredibly complicated and we spend an inordinate amount of time with compliance audits,” she says. While concern about ACA is beginning to diminish, the rules and their applications continue to evolve.

For example, the “30 hour rule” which defines eligibility is one of the most interpreted aspects of the new rule, as employers are directed to apply the rule to telecommuters, seasonal employees and other untraditional workers. The applications change quickly and often.

“What I tell clients is that ‘what I am telling you now is good for the next two hours.’ After that, well, we will keep you informed,” she says.

However, the ACA has created some positive change and an opportunity for employers, Oliver says. “The law has driven a lot of innovation, including new products and services that are designed to be compatible with new health plans.”

The ACA has also created a new transparency in healthcare, driving forward the long-time trend toward health consumerism. “Consumer-directed health plans have been available for 15 years, but because of the ACA, we are just starting to see the flow of information that can make better consumer choices a reality,” he says.

The author
Len Strazewski is a Chicago-based writer, editor and educator specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, Risk & Insurance, the Chicago Tribune and Human Resource Executive, among other publications.

The Diversified Insurance Group Benefits team.