Benefits & HR—A winning combination
Chas. Lunsford Sons & Associates recognizes need for more than group benefits marketing and management
By Len Strazewski
Employee benefits sales don't have to dominate or even come close to matching commercial property/casualty insurance revenue to be a valuable component of agency strategy. Even a small portion of the lucrative group health benefits can make a difference in the bottom line—and help an agency establish its role as a full-service trusted advisor.
At Chas. Lunsford Sons & Associates (Lunsford) in Roanoke, Virginia, benefits generates only about 10% of gross revenues—about the same as personal lines—but it is a key resource for commercial clients and a valuable addition to the firm's capabilities, according to President Roy E. Bucher Jr.
"Employee benefits help us round out our accounts," says Bucher, who also serves as the agency's chairman of the board and treasurer. "If we can do a good job on the property/casualty insurance—and we do—we can convince our customers to give us an opportunity to handle the employee benefits."
It's all about the trust—both outside and inside the organization. Bucher admits that the agency's property/casualty insurance specialists, who are responsible for the largest accounts and the greatest premium volume, were cautious at first.
"They didn't want anything to interfere with the relationships they had developed with the commercial clients. If our employee benefits staff wasn't successful in meeting their needs, they were concerned they could lose the accounts."
However, the fears proved to be unjustified as the agency acquired both benefits and human resource management experts who also understood commercial property/casualty and risk management. Today, the employee benefits staff does more than follow the leader. Benefits has spurred new business growth and is on the rise.
And Lunsford's service credibility has soared in its Virginia and North Carolina service areas.
Founded in 1870 in Roanoke, the agency has strong roots in the community. Bucher, a graduate of Virginia Commonwealth University, serves on several local boards, including the Virginia Museum of Transportation; Virginia College Fund; and Center in the Square, the city's popular arts district.
The firm has 50 employees. In addition to the Roanoke office, it has branches in Blacksburg, Virginia; Richmond, Virginia; and Raleigh, North Carolina. Clients range from two to 400 employees and compete in industries that include construction, health care, manufacturing, and retail.
Hand in hand—employee benefits and human resources
The agency roster includes three full-time employee benefits and human resource professionals. However, Bucher notes that all agency producers—including those who specialize in property/casualty insurance—are licensed life and health insurance producers and include the agency's group benefits capabilities in presentations.
"We'd like employee benefits to continue to grow over the next three to five years and reach toward a goal of 20% to 25% of revenue," Bucher says.
Part of the growth, he adds, is derived from a recognition that clients need more than group benefits marketing and management. Human resource management services have also become a growing service component that follows employee benefits as a package.
"The more our clients come to trust our insurance services, the more they have turned to us for help in other areas of their business—particularly human resources and regulatory compliance, which has become a growing challenge," Bucher says.
Tammy White, vice president and employee benefits specialist, and Mary Johnson, account manager and human resources director, both joined the agency five years ago after teaming up to provide comprehensive employee benefits services at another agency.
Bucher says their arrival launched a new era for Lunsford and triggered the growth in employee benefits. The property/casualty producers were quick to learn and trust their expertise—and include the specialists in comprehensive presentations.
The property/casualty insurance producers tend to make initial new client contact, White notes, leading the engagement with a risk management and strategic needs audit that includes employee benefit issues and services. When the audit checklist reveals a need, the employee benefits specialists are called into the engagement.
For most employee benefits customers, cost is the big driver and most clients fear that always increasing health care costs are poised to skyrocket with health care reform, White says.
"Benefits costs are what we are always talking about," she says, "and the conversation has become even more intense since the passage of health reform. Our clients want to know how the provisions will affect them both in the short-run and long-run.
"Will their programs be grandfathered under health care reform? What about pre-existing conditions? How will the requirements to pay for preventive care affect their costs and plan design? They have a lot of questions and we do our best to keep them informed."
White says Lunsford has also been at the forefront of introducing new plan designs to help their customers get better control of their costs. Consumer directed health plans have become more common in the region as clients have come to understand how they direct plan participants to make more sophisticated health choices.
Health reimbursement accounts (HRAs) are the preferred model among their clients. HRAs feature accounts funded by employers and provide tax advantages to employers who retain control over health funds until they are used.
Health savings accounts (HSAs), which feature participant-funded accounts, provide more personal tax advantages to participants and are more popular with highly compensated individuals and professional groups. White says the agency has introduced the plan design to several physician groups.
Wellness programs and health management services have also become new, innovative aspects of Lunsford's client programs. By partnering with a local wellness service provider, the agency is able to fortify its group health plans with wellness education and incentive services for those customers that want that service.
"One of the most important things we can do for our clients is to help them help their employees live healthier lifestyles which in the long run will help them reduce claims cost," White says.
The leading group health plan providers in the region include Anthem Health, Southern Health Services/Virginia Association of Health Plans, and Optima Health. Aetna Health and Cigna are also small but significant competitors in some parts of Virginia.
In addition to various designs of group health benefits, the agency also markets a full range of ancillary group benefits, including short- and long-term disability insurance, dental insurance, long-term care insurance, and vision plans.
The agency also has a retirement benefits practice, supporting defined contribution plans, deferred compensation plans and individual retirement accounts.
Voluntary benefits and human resources services
Voluntary and individual benefits have become a growing business niche, White notes. As employers strain to meet their group benefits obligations, many client companies have turned to worksite marketing programs to encourage employees to purchase an expanded set of benefits to meet personal security needs. Among voluntary benefits available are STD, LTD, additional life insurance, cancer insurance, accident insurance, and long-term care insurance.
"There really has been a change in the employer consciousness about their employee benefits," she says. "They are all in survival mode. More and more employers realize that they cannot continue to pay for all of the benefits they would want for their employees. But they need to remain competitive with other employers in their industries."
The best option is to make additional benefits available at group discounts and guaranteed issue while encouraging employees to make their own purchases. Voluntary programs have proven popular with employers and employees who appreciate the availability and potential cost savings, she says.
High costs also drive the need for human resources services, notes Johnson. As employers struggle with rising costs, many have reduced their human resource management staffs to a minimum, and many small employers do not have a trained human resources professional on staff.
"One of the owners just takes on the responsibility for managing employees, state and federal compliance and employee benefits management. They turn to us for help in dealing with all of the regulatory matters such as ADA, COBRA, OSHA, FMLA, FSLA and HIPAA compliance, among other needs," Johnson explains.
In addition to compliance counseling, Lunsford provides a wide range of general human resources services, including payroll management services, employee training, hiring reporting and compliance, employee handbook development, and employee benefits communications.
Johnson often conducts on-site training, including sexual harassment and discrimination training for managers and employees, and additional human resources advisement on other personnel management issues.
Comprehensive and personal service is critical, the team says, to maintain the trust that has become Lunsford's hallmark.
"What really differentiates us is our personal service. Our service doesn't end at five o'clock. Essentially we are 24/7—we take cell phone calls and read our e-mails all the time," White says.
"Many agencies offer their clients a Web site with a database of documents to help them manage their technical needs," Johnson says. "When they have a question, they have to do a keyword search and hope the database provides them with a relevant document. Then they can spend hours poring through it looking for a section that is useful.
"Our clients can pick up the phone and can have instant access to our expertise, "Johnson concludes. "We can get them immediate answers that they can use to solve their pressing concerns."