Capitalizing on Benefits

Building benefits business

At Meeker-Magner, producers team up to deliver total account solutions

By Len Strazewski

Focus, consistency and teamwork.

These ideals were good enough to bring both Chicago major league baseball teams into the playoffs this year—and they also provide a great model for one of the city’s leading independent agencies and employee benefits marketers.

The Meeker-Magner Company in Des Plaines, Illinois, focuses almost exclusively on mid-market and larger companies with 100 or more employees, says President Gerry Magner; and the agency applies a consistent “risk reduction” approach to both employee benefits and property/casualty risks.

“Whenever we call on clients, we go as a team, bringing both employee benefits and property/casualty producers to each meeting so we can address the full range of their needs,” Magner says. “What we bring to the table is a single strategy that addresses both employee benefits and property/casualty risks and a consistent three-year plan that is designed to produce results.”

Rusty Magner, employee benefits and group wellness specialist and Gerry’s son, agrees. “We usually meet with the decision maker, the chief executive officer or the human resources director and spend our initial meeting digging deep into their business and learning about the obstacles they encounter.”

For many employers, rising health care costs are an important concern, he notes; but for most clients, benefit expenses are hardly their only concern. Workers compensation costs, driven by the same health care cost inflation, continue to be a concern, as well as risks that are unique to their industries or business niches.

The agency tends to seek a broker-of-record letter, Rusty says, and likes to begin a process of education for the decision makers about what can be done to influence and control the risks that drive their costs.

“That’s what differentiates us,” Rusty says.

Meeker-Magner also stands out because of its deep roots in the insurance history of Chicago. Founded in 1902 with an office on LaSalle Street in the city’s financial district, the firm began as a general agency serving retail brokers. It restructured itself as an independent retail agency in the early 1970s and in 1975 moved to the northwest suburb of Park Ridge. The agency is now in its fourth generation of family ownership.

In 1989, the agency settled in nearby Des Plaines in a landscaped office park that is adjacent to the O’Hare Airport business district. According to Gerry, the agency continues to serve both city and suburban employers as well out-of-state commercial clients from New Jersey to California.

Meeker-Magner now has 23 employees and posted $3.9 million in gross revenue in 2007, about 45% of which was derived from employee benefits, 35% from commercial property/casualty lines and about 20% from personal lines.

The agency provides both employee benefits and property/casualty and risk management services to 20 of its 25 largest customers, Gerry notes, and about 70% of its new business comes from referrals from existing clients.

Winzeler Gear, a small manufacturing firm in Hardwood Heights, Illinois, was founded in 1940 and has been a Meeker-Magner client for more than 35 years, using the agency for both employee benefits and property/casualty coverages—and a healthy dose of friendly business advice, according to President John Winzeler.

“It’s hard to know exactly how long we have been together; the relationship began with my father, and Meeker-Magner has been our broker for as long as I can remember,” he says. “We have about 40 employees but not a lot of executives and specialists. We don’t have a formal human resources department, so we rely on them very heavily for service, information and strategic advice.

“We built our company with strategic partnerships like the one we have with Meeker-Magner, and we trust them to keep us informed and educated about our options and any new techniques we can apply to keep us ahead of our competition.”

Modest beginnings

Meeker-Magner’s burgeoning employee benefits business grew from modest beginnings, Gerry recalls. Like many independent agencies, Meeker-Magner began its retail life with a solid book of property/casualty business and offered employee benefits as an accommodation. When Winzeler became a customer, the hot topics were probably fire insurance, workers compensation and comprehensive general liability insurance,

“Twenty-five years ago, we had one or two associates with their own book of employee benefits business that we turned to when our property/casualty clients needed assistance,” Gerry says.

Rusty joined the agency 12 years ago, at a time when health care cost inflation was beginning to drive up employee benefits costs. This trend in turn spurred growth in the market for value-added services that target health care claims and health management issues. The agency began to strengthen its employee benefits expertise about 10 years ago, hiring experienced producers who had solid relationships with the health plan markets.

“Times were changing,” Rusty says. “At one time, all an employee benefits broker had to do was bring in a good price. There were more health insurance carriers in the business, and a broker could hold an auction and deliver the lowest price to the client.”

But as the number of competing health plans dwindled, price competition became moot. Similar underwriting information submitted to the remaining handful of carriers yielded similar prices, and agents who could not provide more sophisticated service and a cost reduction strategy struggled.

Robert Brooks, vice president of Meeker-Magner and a property/casualty specialist, says the addition of employee benefits producers was welcomed by his side of the agency’s operations. “Of course, we were just trying to be competitive, trying to retain our largest and best customers who needed more sophisticated employee benefits services. But the new business also brought in great new revenue and new opportunities for cross-selling our existing client base,” he says.

The first employee benefits customers were conversions from the property/casualty client list, but Brooks notes that today, the property/casualty producers now cross-sell the employee benefits clients, using the team approach to forge synergy.

The agency also shifted its focus to larger clients for whom its more sophisticated approach could yield better results, Gerry says. “It’s not that we abandoned our smaller clients, but at sizes below 90 lives, there is simply less that we can do to influence rating,” Gerry says.

Strategic planning

Meeker-Magner is a founding member of the Sitkins 100 Group and uses the Sitkins “Total Benefits Approach” for employee benefits strategic planning and the companion methodology, “Risk Reduction Approach,” for commercial property/casualty insurance.

Both techniques use consistent terminology and follow a four-step strategic process:

—Discover: an analysis of risks and costs

—Design: the creation of a plan to address the factors that drive costs and meet strategic goals

—Implement: the introduction of the plan across the enterprise

—Continue: a process of ongoing evaluation and improvement.

Meeker-Magner producers say the consistent methodology helps the joint teams communicate comfortably with clients and helps the team address risk and cost factors together as part of a strategic plan for the client.

The Total Benefits Approach takes about one year to design and implement and about three years to execute, Rusty says. In the initial stage, the employee benefits specialists help the customer identify and rate factors that are significant drivers of increasing expenses. Together they design and implement a plan to enhance the health and wellness of employees, and together they choose services and techniques that address the most critical of those factors first to begin reducing the incidents and trends that drive costs over time.

“We use the analogy of tools,” says Rusty. “When you have a job to do, you go to the tool shed and choose the appropriate tool for the job. What our customers choose depends on what we have identified and the level of resources they can bring to the system.”

Tools include local wellness services, employee education and local partnerships with health promotion organizations, and technology tools such as Benergy from A.D.A.M. in Atlanta. Benergy is a Web-based employee benefits and health management portal that combines benefits, health and wellness, human resources and employee communications and education.

The goal, the employee benefits specialists say, is to implement a plan that is measurable and quantifiable, that can promote employee loyalty, enhance retention and recruitment, and reduce costs over time.

Self-funding options

“Today, many of Meeker-Magner’s benefits clients self-fund a portion of their health care claims, and about 40% of customers are involved in wellness and health management programs,” says Patrick Nugent, an employee benefits and group wellness specialist.

More than 10% of plan participants now sign up for consumer-directed health plans (CDHPs) that include Health Savings Accounts (HSAs) or Health Reimbursement Accounts. Interest in both options is on the rise as both employers and employees face increasing contributions and seek more efficient ways to fund their benefits, Nugent says.

In addition to health insurance, Meeker-Magner also provides group life insurance, dental plans, vision plans and voluntary supplemental coverages. The agency has also developed a retirement practice and can design qualified defined contribution retirement plans and non-qualified executive compensation plans.

Focus, consistency and teamwork clearly are driving Meeker-Magner’s success in meeting its clients’ needs for effective, affordable employee benefits solutions.