Agencies stretched thin welcome insurance expertise/p>
By Dave Willis
In 2010, social service agencies continue a balancing act: The need for their services is strong, but for many, funding is off. “Revenues are definitely down for a number of providers,” says Katie Detroit, vice president and manager of social service and public entity at National Insurance Professional Corporation, part of Arthur J. Gallagher’s Risk Placement Services unit. “Where clients are contracted totally with certain states, some are having trouble getting paid.”
This heightens the need for increased diligence on the part of agents and brokers. “It’s especially important to maintain good business practices—collecting premiums, paying carriers promptly and maintaining close contact with both clients and markets to head off problems,” she adds.
Some social service agencies are more fortunate. “Providers are among the few segments getting federal funding,” notes Nancy Williams, CIC, vice president, marketing and sales at NIF Group. Those in this camp find it easier to respond to community needs and even grow their operations.
The insurance market remains generally competitive. “Very competitive,” Detroit observes. That said, she has seen markets starting to retract in some areas for certain classes. “Some may have jumped in a little fast,” she explains, “and now they’re backing off.”
According to Williams, “It’s not an easy class to underwrite. Claims take time to develop.” Too often, she has seen agents chase a year or two of cheap pricing and end up market-free down the road. Adds Sheila Shaw, senior vice president at Irwin Siegel Agency, Inc. (ISA), “Agents or brokers just focused on finding the lowest premium aren’t doing the best job they could for their insureds. We arm our brokers with information on ways insureds can control or prevent losses and grow their operations.”
Serving the market
In the social services arena, retention is driven by several factors. “Government contracts require funded organizations to maintain continuous insurance with an A rated carrier,” Williams notes. “Plus, while these organizations are led by boards, staff directors often have power to renew, but not change.” Because a high level of trust often exists, she says, “the reward is, when you’re in, you’re in, unless there is a personnel change.”
Sara Ruggiero, ISA director of marketing, says, “Whether the economy is good or bad, this industry typically has overworked and underpaid staff. Brokers can add value by showing clients and prospects up front how they can be more efficient. Everybody needs insurance, but brokers who deliver more than insurance make clients want to stay with their current programs.”
It is especially important for agents and brokers to communicate frequently with social services clients between renewals. “Brokers should stay close to their insureds and not assume they’re not going to go out to bid,” Shaw says. “In this market, they will be approached by other brokers or carriers.” Offers of lower premium can be quite seductive.
For agents hoping to land new accounts, Williams advises, “Make sure you are talking to someone who can buy.” When dealing with boards, know the personalities. “Be familiar with board members,” she adds. “There is usually a power broker in there. It is also important to qualify the opportunity. Some organizations’ bylaws require marketing insurance at certain intervals.” So shopping can be simply compliance-driven.
According to Howard Siegel, ISA CEO, agents and brokers should work with a market that supports them—and the clients. “As a program administrator, we try to provide tools brokers can use to help social service providers grow,” he explains, “and we deliver risk management resources to make up for gaps left by reduced funding.”
His firm’s approach mirrors that of service providers, explains Brad Storey, MSW, ISA’s director of risk management. “Social service providers often bring together a number of professionals to approach cases from different perspectives,” he says. “We have various specialists who look at the range of exposures clients face, and then offer coverages, training and resources to address them.”
Agents and brokers who can deliver such support to insureds can help counter cuts that organizations have taken in their operations. “Many times, a broker will call and ask for help with social services provider training or consultative service,” Storey notes.
Sometimes agents themselves take part in the training. “Just like executive directors of agencies change, we’re seeing new, younger agents and brokers entering the market,” says Siegel. “These newer agents truly want to understand what the clients’ needs are.” Carrier and program administrator partners can help get them up to speed.
Agents and brokers succeeding in the market are generally quite focused. “The ones I see thriving right now [are those that] specialize,” Detroit notes. “I’ve seen other agencies get into trouble dabbling, but those that really understand risk management, those that do much more than just sell insurance, do well.”
Sometimes passion drives specialization. One agency that Detroit works with serves adoption agencies. “A number of their staff are adopted,” she explains, “so they are very close to the issues. They know all of the federal regulations and, as a result, bring more value. They are really good consultants to their clients—and that goes beyond standard risk management and safety issues.”
Williams has seen this, too. “Many agents in this niche have some involvement in the community they serve,” she explains. “Agents definitely get farther in a nonprofit by showing interest in what they’re trying to accomplish.” Interest can take many forms. For instance, one West Coast agency she works with features nonprofits they serve in their agency newsletter, to get employees involved.
“Brokers or agents trying to grow their social service business should look first to where they’re already involved in the community,” says Ruggiero. “If they’re on a board, if their children are involved in programs, they have a better feel for the exposure and can deliver better support.”
Reputation in the social services arena is also important. “Word-of-mouth referrals drive business,” Williams notes. “People in most of the social services sub-segments know each other. They share a common mission and they move around quite a bit.”
Siegel sums up the market this way: “Social service programs are very important, especially in today’s economy. Agents and brokers can help providers grow by delivering stable insurance programs, excellent risk management services and personalized support. Challenging times don’t last forever, but efficient programs do.”
When more is needed
Some people require a different type or level of service than what social services providers offer. For medical and emotional needs, for instance, they often turn to inpatient or outpatient medical facilities. According to Dan Brown, senior vice president, The Hartford’s Industry Markets Group, whose organization serves the business insurance needs of both types, these providers face a number of challenges, many unique to their operations.
On the inpatient side, patient handling has been the number one cause of loss for several years, says Brown. Various risks associated with patient lifting and patient transport concern these firms. “Patients are being moved in and out a lot,” he explains. “Having proper controls and risk management services is important.”
Administrators, particularly those running emergency rooms and mental health treatment facilities, also worry about patient violence. “There’s limited information available on how to detect it and how to handle it,” explains Brown.
The aging of the health care workforce is an issue that concerns inpatient and outpatient facilities, says Dorothy Doyle, director of operations for The Hartford’s health care industry practice. “Older workers who are injured tend to take more time to recuperate and get back to work.” Blood-borne pathogens represent another risk. “Employees are handling clients, giving shots, and they need to do so in a way that reduces exposure,” Brown says.
Business continuity planning is also critical for both types of facilities. “Whether there’s a tragic event caused by weather or something else, these facilities need to be back up and running quickly,” Brown explains.
These issues underscore the need for customized coverage for health care clients, notes Brown. “You can’t just take a general property form and layer it over health care.”
While inpatient and outpatient providers want customized, comprehensive products, outpatient facilities, in particular, need risk management expertise. “Inpatient facilities often have a CFO or risk manager, but in outpatient operations, office administrators typically wear a number of hats, including insurance,” says Doyle. “They need their agent and carrier to fill that risk management role.”
While risks are pervasive, Brown encourages agents to pursue health care services business. “It’s a growing industry, and it should continue to grow for the foreseeable future,” he explains. “For the most part, we’ve not seen payrolls drop,” he notes. “We’ve even seen slight employment growth.”
This presents opportunities for agents, particularly for those who specialize. Brown says this move toward specialization is occurring. “Over the past few years, we’ve seen agents move to an industry-practice model,” he explains.
Agents want a market with health care underwriting, claims and loss prevention expertise, and one that delivers focused education around top risk management concerns. Doyle says her operation has offered Webinars on topics like business continuity for health care facilities and the impacts of an aging health care workforce, which agents have attended along with their insureds.
For agents interested in pursuing the market, Brown offers some guidance: “Service really matters,” he says. “If you’re just making a price decision, that’s probably not in the client’s best interest. The same holds true with product. If you’re just offering a shelf product with shelf services, you’re not serving your client as well as you could.”
Dave Willis is a New Hampshire-based freelance writer and regular Rough Notes magazine contributor.
"Whether the economy is good or bad, this industry typically has overworked and underpaid staff. Brokers can add value by showing clients and prospects up front how they can be more efficient.”
Director of Marketing
Irwin Siegel Agency, Inc.