By Len Strazewski

Small in stature, but large in complexity.

Small companies may not have a lot of employees, but between their evolving health needs and the demand for regulatory compliance, these employers need steady and well-informed support. Unlike large corporations that have national brokerage and consulting firms at their beck and call, small employers have few experts available to meet their needs.

Except independent agents and brokers like PBP Insurance, Inc. in Portland and Eugene, Oregon.
PBP specializes in small businesses that may fly under the radar of large employee benefits brokers and consultants, says Senior Principal Marvin Revoal. "They don't get a lot of attention from the big guys, but they all have to comply with the same rules and regulations. They all have the same needs."

PBP Insurance, Inc., Co-Owners Darby Giannone, COO, and Marvin Revoal, Senior Principal.

Team members from the Eugene office include (from left): Kimberlee DeVault, Accounting Administrator and Executive Assistant; Michele Mello-Gonzales, CISR, CPIA, Personal Lines Account Manager; and Anna Johnson, CISR, Commercial Lines Account Manager.

"The changes have been drastic, and while ACA may have reduced some of the costs for some small employers, the possible savings don't always equal the risks." -Marvin Revoal

"You can provide a base benefit and allow employees to buy up to meet their needs. You can give employees options that allow them to customize their benefits at their cost." -Darby Giannone

Portland office team members (from left) Gladys Boutwell, Life/Health Producer, and Christine Wallace, Employee Benefits Senior Account Professional.

PBP was founded in 1989 and opened its first office in 1990 as Pacific Benefit Planners, a benefits specialist agency. Since then, the agency has diversified. Three years ago, the firm began building a property/casualty practice from scratch and later increased personal insurance coverages, including individual and family health insurance.

About 60% of revenue is still generated by employee benefits, and 40% is now derived from property/casualty coverages. Clients range in size from 25 to 400 employees, Revoal says. About 90% are small businesses, according to the state definition. The agency also has several clients with 200 or more employees that executives say want the personal service the agency offers. The agency has eight employees.

Working with small businesses is not a simple task, Revoal notes, and new state and federal laws have made the task even more difficult. Oregon is particularly sensitive to the needs of small employers, which dominate the local economy. In 1996 the state defined the size of small businesses and mandated rating procedures and health insurance plan designs.

A dozen years later the Patient Protection and Affordable Care Act, now generally referred to as the ACA, arrived and called for dramatic changes, Revoal says.

"The changes have been drastic," he observes, "and while the law may have reduced some of the costs for some small employers, the possible savings don't always equal the risks. The law came out with all sorts of plan designs that basically consumers didn't want."

The ACA and its amendments defined small employers as firms with one to 100 employees and also granted rule-making power to states to adjust those definitions to match evolving federal definitions. In October, Oregon legislators passed a law that defined small employers as those with one to 50 employees, matching new federal rules that had not yet gone into effect.

The definitions affect small group rating, putting additional stress on employers and their agents to make rate calculations and the premium participation by the employees.

The law also put lots of new stress on local agents and brokers for service, giving them responsibility for the administration of many new programs and setting new compensation standards, Revoal says. "In short, we have been forced to do much more with a lot less."

The new plans were reasonably well defined, however, and the process also turned out to be relatively well defined. The health insurance marketplace responded with products and competitive pricing.

Unlike other states where competitive health plans are limited to a handful, including a local BlueCross/BlueShield company and a couple of local provider networks for small employers, Oregon has a very competitive marketplace.

Revoal says the state has about 10 competitive markets, active in both small business and individual health insurance, including Regence BlueCross/Blue Shield, Health Net, LifeWise, Moda Health Plan,,PacificSource and Providence Health Plan.

Among those, PacificSource and Providence have the longest and most stable relationships with PBP employer clients, Revoal says. Regence and Providence maintain their own wellness clinics and related services available to health plan participants.

The new rules also triggered a period of expansion. Since the implementation of ACA, the agency has also been actively working with individuals who need health insurance to comply with the federal law, attracting more than 1,000 individual customers in the first year of the law.

PBP also expanded its other benefits services, including the research and design of retirement benefits, flexible spending accounts and voluntary benefits. The agency also offers executive disability benefits and deferred compensation plans, and insured succession plans, highlighting key person products.

The agency expanded beyond its benefits niche to include commercial property/casualty insurance services. Unlike many independent agencies, PBP began as a health insurance and employee benefits firm, providing commercial property/casualty insurance beginning eight years ago as an accommodation to its benefits customers. Executives say that property/casualty insurance has become an important companion business. As noted above, the firm built a complete property/casualty insurance practice from scratch about three years ago.

Account Manager Anna Johnson has 12 years of experience in commercial insurance service and leads the agency's internal service operations. With expertise in property/casualty insurance, her role is identifying and negotiating with insurers for the best rates and policy terms and shepherding claims through a complex process.
Her responsibilities also include managing both customer and insurer relations with firms to balance their property/casualty and employee benefits needs. She notes that many coverages now overlap in maintaining the health of employees.

Workers compensation and health insurance, for example, both involve health management, and a healthy workforce leads to lower rates in both lines of coverage.

"We do a lot of workers compensation and commercial auto insurance," she says, "and as our clients grow, they require more special coverages for evolving risks, such as directors and officers liability, employment practices liability and cyber liability."

PBP's ability to provide one-stop coverage and consolidated support for all employer needs has allowed the agency to build a stable customer base, Johnson says. "We have put together quite a list of clients and developed a great reputation for personal service. Our clients are mainly small businesses but include a large multilocation addiction treatment center and several companies with employees in multistate locations. "Many employers look to local agents for the level of personal service and attention that they can't get from larger brokers."

PBP also supports its clients' human resource management and related compliance, Johnson notes. For example, "Many local employers are unaware that Oregon recently changed its sick leave regulations-becoming the fourth state to mandate protected sick leave accrual.

"Employee handbooks all had to be changed," she notes. "We sent an email blast to our clients alerting them about the details of the new law and assisted them with revising their communications."

PBP also offers a special human resources asset-Chief Operating Officer, Darby Giannone-who is not only an agency principal and Revoal's spouse but also an experienced human resources and organizational development consultant.
Giannone, who holds a Ph.D. in organizational development, has worked part time with the agency since 1989 and joined PBP full time as a principal in 2001. She designed the agency's internal business processes, including a system of continuous quality improvement focusing on efficiency and customer satisfaction.

She also brings to client employers her 30 years of consulting experience and insights, helping them with strategic planning, regulatory compliance and human resources management-from the stratospheric strategic questions to the nuts and bolts of business management.

"Many small employers don't have a human resources department. The owner plays all the roles: sales and marketing, financial management, human resources and risk management," she says.

As a result, they turn to their independent agent for help, particularly with employee benefits and employment law issues. The ACA has forced many employers to confront benefit issues and rethink their strategic decisions, she says, and many clients have asked for her assistance in strategic planning. Giannone stays ahead of the curve, providing clients a steady flow of her research on new laws and regulations and a diet of solid business sense.

Giannone says PBP also works at ground level, assisting employers with managing their insurer relations, shepherding claims and just answering the day-to-day questions that can drive small businesses wild.

While the ACA allows employers to opt out of offering health benefits, few employers took that step. "Only three employer groups opted out of providing health insurance benefits," she says, "But nearly all employers had to reevaluate their employee benefits strategies. They needed to ask themselves some important questions.

"What's your real reason for offering benefits? Care for your employees? Taking the load off workers compensation-where employees turn to for healthcare when they do not have health insurance? Maintaining a competitive position with recruitment and retention?"

The ACA gives employers more choices to meet their strategic objectives. "You can provide a base benefit and allow employees to buy up to meet their needs. You can give employees options that allow them to customize their benefits at their cost."

Giannone leads employers in a three- to five-year strategic planning cycle, choosing employee benefits structures that are compatible with business goals and appropriate for the employer's size and financial resources.

She says private exchanges are available under healthcare reform, but few clients have shown much interest; however, self-funding provides employers some freedom from regulatory restriction. Local health plans can provide plan designs that feature some portion of self-funding for employers with as few as 50 employees.

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.