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Benefits Products & Services
After the recession
Health care reform isn’t the biggest change facing benefits brokers
By Thomas A. McCoy, CLU
The employee benefits community is bracing for the start of health care reform. Fear of the unknown, and of government programs, can be powerful, so maybe it’s helpful—both for brokers and their clients—to remember a little history. When Social Security was enacted in the 1930s, it was thought by many to be a great social intrusion. But today it coexists alongside a thriving retirement planning market.
The new Patient Protection and Affordable Care Act initially may prove a little more complicated for employers, since the benefits it mandates apply to current workers (phased in over the next several years), not at some future date of an employee’s retirement. But there will be opportunities for brokers to build rapport with clients by providing practical guidance about the new law.
Kevin Trokey, who built a successful benefits practice in a sizable St. Louis property/casualty agency and now is president of Benefits Growth Network, provides a more practical history lesson for benefits brokers. Speaking at a Sitkins International conference recently, Trokey suggested that brokers think back five years to the climate that was prevalent in the HR field.
“In 2005-2006, the U.S. Bureau of Labor Statistics was predicting that by 2010 the U.S economy would face a surplus of 10 million jobs,” said Trokey. “We were headed for ‘employee free agency’” (a term that implies a bidding war for the best employees, as in professional sports where players who attain “free agent” status jump from team to team).
Trokey continued, “In 2006, studies by MetLife and Deloitte showed that the number one concern among company decision makers pertaining to human resources was hiring and retaining good employees. The second most important concern was controlling costs.”
Then, along came the recession. “Over the past five years the focus of HR departments has changed to the bottom line,” he said. “Employers stopped investing in training and education. Salaries and bonuses were cut, and communication with employees stopped.”
The resulting workforce of today, Trokey observed, is one where “employees are happy to have a job, but they aren’t happy.”
That’s not a good place for a company to be as the economy gains momentum and Baby Boomers begin to exit the workforce. Companies with weaker benefits programs may find themselves vulnerable to turnover among high-quality employees.
“Employers are going to have to start competing for employees by differentiating themselves,” Trokey said. They can start this process, he said, by “rebuilding their culture through reinvesting in training, education, and actually talking to employees.”
Trokey pointed out that HR departments themselves have been subject to cutbacks at many companies as non-income-producing employees were eliminated. So brokers may well be dealing with a leaner, overworked team of benefits decision makers at their client companies.
It might sound a little presumptuous, for both commercial property/casualty and employee benefits producers, to say they are engaged in “rebuilding the culture” of their clients. Yet, a number of progressive agents are doing just that by providing their clients with resources to help guide them in their HR decisions.
Neace Lukens, a 500-employee Louisville-based regional property/casualty agency, for example, just hosted its eighth annual one-day wellness conference in Indianapolis, attended by almost 150 people, including 55 client entities—about two-thirds of them benefits clients and the balance property/casualty. About 25% of Neace Lukens’ revenue comes from employee benefits.
Mike Campbell, the agency’s managing partner for corporate health and productivity, opened the conference by noting, “In this country, we don’t have ‘health care,’ we have ‘disease care.’ Wellness is about a lot more than just reducing health care costs,” he emphasized. “It’s also about changing the culture of an organization.”
One problem for brokers with wellness programs has been how to demonstrate to employers the return on investment they can achieve by implementing such programs. Results from wellness initiatives may be difficult to measure in their early stages.
One of the speakers at the conference, Dr. Troy Adams, COO of WellSteps, a California-based wellness consulting firm, emphasized the need to “reframe” the ROI calculation for wellness.
“If $100 is spent on wellness and it yields $100, it should be thought of as a ‘free benefit,’” Adams said. He added: “ROI for wellness is not the same as investment ROI. You are already spending on the health of employees, so it’s a ‘savings ROI.’ It enables you to spend less.” Wellness programs typically cost less than 1% of health insurance premiums, Adams said.
Trokey suggested several ways that brokers can become more involved in the strategic side of their benefits clients’ operations. They included actuarial analysis for mergers and acquisitions, training, team building, benefits ROI, and compliance. “Brokers can provide the resources themselves, or introduce clients to other third parties that can help,” said Trokey.
If his historical perspective proves accurate and employers begin to refocus on employee retention, brokers who offer benefits will have new opportunities to provide solutions linked to their clients’ strategic goals.
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