By Len Strazewski

While the United States economy struggled during the economic recession of 2007 and 2008, Ironwood Insurance Services in Atlanta, Georgia, began building a thriving commercial insurance practice-and when the U.S. economy started to grow again a few years later, the agency began to accelerate-with a new employee benefits practice.

In 2011, the agency began its employee benefits operation by hiring an experienced employee benefits producer, now Managing Partner Mark R. Conner. "We began with 25 accounts purchased from my previous agency," he recalls, "but there was plenty of low- hanging fruit to pursue-commercial property/casualty insurance customers looking for assistance with their employee benefit programs."

In the first year, the agency added another 25 accounts co-produced with the agency's property/casualty division, setting a pattern of growth that has continued, Conner says. "I hired our first account manager in the first 30 days of our development, and we have been adding resources ever since," he says.

Today, Ironwood posts total revenues of about $9 million, about $3 million of which comes from employee benefits services. The agency has about 45 employees in all, including nine full-time employee benefits employees (three producers and six account managers) and two part-time employees.

The Ironwood Benefits Advisory Services Team.

Employee benefits has experienced significant growth within the agency, Conner notes. "We generate about one-third of the revenues and have one-fourth of the employees," reflecting the stability of the practice and the consistent addition of meaningful resources.

Clients range in size from very small businesses to 1,000 employees, with an average account size of about 120 employees, Conner says. The agency has developed an industry niche in mergers and acquisitions, providing due diligence and benefits consulting for private equity firms, and benefits design for manufacturing, distribution, real estate and technology companies as well as several service industries.

Conner says he expects continued growth with average account size increasing to 200 to 300 employees over the next two to three years.

Mark Watson, a partner and senior benefits consultant, says specialization and account size are important considerations as the agency attempts to provide the best strategic solutions to its employers. "We focus on what we define as the middle market, 100 to 1,000 lives," he explains, where there are opportunities to manipulate plan and funding arrangements to provide better opportunities to control costs.

"And there are distinct advantages to being an industry specialist," he says. "We know we can assess risk accurately and determine an organization's level of exposure. With that information, we can analyze their cost drivers and develop a plan to reduce their largest claims and generally improve their outcomes."

Many of these clients have adopted high-deductible health plans and tax-advantaged account features like Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs) that encourage employees to make better choices.

"Many employers are going with high-deductible health plans to reduce their premiums and then return a portion of the savings to their employees with HRAs, which puts more control in the hands of their employees."
Agency executives say about 40% of clients that are eligible use HRA or HSA options with high-deductible health plans.

Ironwood designs fully-insured, partially self-insured and fully self-insured programs, depending on each employer's claims profile and appetite for risk, Watson says. While many employers are still reporting premium increases, implementation of various funding techniques reduces the increases from double digits to much smaller, manageable increases.

The Ironwood Benefits Advisory Services Account Management Team includes: Susan E. Prout, Senior Account Executive (seated front left); Tricia Brown, Wellness Coordinator (seated front right); Beatrice M. Stoney, Account Manager (seated back left); Haley D. Garcia, Account Associate (seated far back left); Cynthia Salazar, Account Associate (standing back left); Julie Stannard, Account Executive (standing far back left); and Ciara Armstrong, Account Manager (standing right).

Leading health plans in the region include BlueCross/BlueShield, UnitedHealthcare, Humana, Cigna Health and Aetna Health and its acquisition Coventry Healthcare. Many of the insurers provide some funding flexibility, Watson says, but the agency also works with regional third-party administrators and reinsurers to develop self-funding arrangements.

The agency is also exploring the use of domestic captive insurers to self-fund benefits and private exchanges that allow employees a wider range of benefits choices, Watson says. "There is a lot of interest in the defined contribution models which are facilitated by private exchange platforms."

The exchanges, implemented in compliance with the Affordable Care Act provisions, host traditional group benefit plans which can be purchased by employees using defined levels of funding contributions from the employer.

The plan design decisions, however, come after extensive analysis and deliberation. Senior Account Executive Susan Prout says the agency has developed a team-based approach to analyzing the needs of a new client. The Ironwood team can include a producer, account manager, a junior account executive, as well as wellness and human resource management consultants, and continues to meet with clients on a quarterly or semi-annual basis to review progress toward cost and human resource goals.

"We like to sit down with a new client and get a solid understanding of how their employee benefits programs fit into their overall business strategy," she says. "You cannot manage benefits in a vacuum. It's important to understand each client's business goals and how employee benefits fit into their plan to achieve those goals."
The agency team can analyze claims history to build an economic model and can also survey employees to identify their preferences and interest in new plan options and additional benefits. Medical benefits dominate the plan, but Prout notes that ancillary benefits such as dental and vision care play a role in both the design of the package and the cost structure.

Not much has changed in the design of these ancillary benefits, but health insurers recently have become willing to offer a 1% or 2% package discount to employers that purchase health, dental and vision from a single insurer, she notes.

Wellness and health management has become an important addition to many employers' business strategy, adds Tricia Brown, wellness coordinator. Employers are seeking ways to reduce their costs over the long term and realize that higher deductibles, co-payments and payroll deductions are reaching the limit of their ability to contain expenses.

"Wellness is a hot topic among employers these days," she says, "and while return on investment is something that all employers are seeking, they have come to realize that they cannot expect results immediately. They are learning that health management is a long-term strategy that has benefits that extend beyond reducing medical insurance claims."

The Ironwood Benefits Advisory Services Producers include: (from left) Mark R. Conner, Managing Partner; Mark K. Watson, Partner; Susan C. Harris, Senior Benefits Consultant; and David J. Adams, Partner.

Brown says some employers are ready to "jump right in," with health activities such as weight loss and smoking cessation competitions. However, she advises employers to consider a three- to five-year plan which applies diverse tools and strategies that can help re-shape an employer's culture. Employers should begin with an educational program, including extensive benefit communication that will help employees realize how they can use their benefits and reduce their own costs if they are active in company programs.

Health management tools such as biometric screenings, health risk assessment and health coaching are key components of a wellness strategy, and several of the region's health insurers offer a "wellness benefit," she says, which offers employers a small discount for participation.

However, Brown notes that the insurance company package of wellness services may not be enough to drive a cultural change. "There is so much more that needs to be considered in designing a comprehensive strategy."
Disease management programs help reduce the long-term costs of lifestyle-related diseases such as diabetes and obesity, and activity programs can create a more fit and productive workforce. However, employers should also consider programs that support a work/life balance, such as stress management and financial management, she says.

Human resource services provide a valuable addition to the agency resources and a steady source of revenue growth, Managing Partner Conner says.

Ironwood provides two sets of human resource-related services: payroll administration and general HR consulting.

The agency has formed a joint venture with a payroll services company, CertiPay, that can provide administrative services to small to medium-sized employers. This business is called Ironwood Employer Services, and this group assists small employers making a transition from professional employment organization (PEO) management to more traditional management structures that provide their own workers compensation insurance, payroll and employee benefits programs.

The Ironwood Benefits Advisory Services Employer Services Team includes: (from left) Mark R. Conner; Amanda S. Kell, SPHR, Human Resources Practice Leader; and ?David J. Adams.

Human Resources Practice Leader Amanda Kell, SPHR, splits time between the payroll company and the agency's general human resources consulting practice, Conner says. Tapping her expertise, the agency offers clients a wide range of human resources management and regulatory compliance services.

They include: HIPAA, FMLA and Fair Labor Standards Act compliance, I-9 form reviews, call center support for employees, employee surveys and employee handbook development. Kell can also provide human resource and supervisory training, assistance with conflict resolution and administrative reviews of human resource policies.
Conner says the agency also looks to a growing list of professional partnerships to help expand client resources and generate future referrals. Earlier this year, the agency joined Benefit Advisors Network, a national network of employee benefits advisory and consulting companies. Ironwood is one of four BAN members in Georgia.

"BAN membership is a real plus for us and gives us access to national resources" in plan design, funding, analytics and wellness solutions, he says.

Ironwood has also developed partnerships with local professional firms, including retirement plan consultants, law firms and certified public accounting firms, to exchange expertise and co-sponsor seminars and client education programs, he says.

The relationships have generated several new business clients, Conner says, and are likely to help continue to do so throughout 2015.

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.