Poised for growth
Improving South Florida economy spurs client interest in benefits
By Len Strazewski
Today the sun shines brightly in South Florida. But beginning in 2008, the sun did not shine quite as brightly on the local economy, with construction slowing and unemployment rising. Leading independent agency Frank H. Furman Insurance Inc., in Pompano Beach, Florida, has had to work hard and evolve quickly to maintain revenue levels, as employers reduced headcounts and cut operations.
But the local economy is rebounding in 2012 and so is agency growth, says Furman Agency President Dirk DeJong. And the agency's employee benefit services have the firm poised for stable growth as local businesses increase employee count and revenues.
"The economy has created a large bump in the road for our clients and our agency over the past few years," he explains. "Employers reduced headcount, which led to a significant reduction in insurance premiums and employee benefits revenues."
The insurance industry had also cut back on resources provided to clients and compensation to agents, putting some additional strain on agencies to maintain their level of service to clients, he says.
"But now we are starting to see growth again in some of our core businesses, including manufacturing and construction. And as these businesses rehire employees and build for their growth, they are coming back with an understanding that employee benefits are one of the key attributes of a successful company, and main driver of successful recruitment and retention of talented employees," he states.
The Furman Agency is celebrating its 50th year of operation. During the past five decades the agency has developed specialties in middle market privately held firms in several industry niches, including construction, health care, commercial property management and manufacturing. The agency has 55 employees in its headquarters and a satellite office in Orlando. About half of the employees have been with the firm for more than 10 years.
Complementing agency strengths
The agency's benefits department employs producers, account managers and benefit specialists, supported by partnerships that include health and wellness services, legal, and accounting firms.
Employee benefits business contributes approximately 10% of the agency's total revenue. "Benefits and related services, including voluntary benefits, group and individual life insurance, and key executive benefits, are critical components of a spectrum of full service," DeJong says.
He continues: "Within our operations, employee benefits have become one of the most important of our agency activities. Our employee benefits advisors deliver the expertise that we need in order to be considered a trusted advisor of our clients."
Cross-selling to property/casualty insurance clients is a natural development of agency marketing, and having employee benefits expertise available complements the agency's strengths, he says. The agency has helped facilitate teamwork between commercial property/casualty insurance producers and employee benefits staff by encouraging both social and business interaction.
Team presentations reinforce the depth of the agency services, he says, and also position the agency for executive and individual marketing opportunities. "I can bring in an employee benefits expert to meet with a client, including representatives for key person insurance, group life insurance and voluntary benefits as well as group health benefits," DeJong says.
By serving the entire set of client needs, including the personal insurance needs associated with client executives, the agency builds a high level of loyalty, he notes.
"Our property/casualty insurance clients trust us. They respect our ability and realize it extends to all our areas of service," explains Neal Murray, senior account executive, one of the agency's benefits specialists. And as a result, clients are open to consultation with the agency's employee benefits producers on a series of issues that have been troubling them for several years.
"They are frustrated by rising health care costs and overwhelmed by the regulatory environment," he explains.
The medical cost trend points to premium increases of 10% to 15% and most clients report increases in that range, but some have seen increases of 20% to 25% after a year or more of expensive claims history.
Local group health plans have been competitive, Murray says, but after "buying the business" with attractive rates, have demanded increases to accommodate true claims costs. Furman has responded with benefit solutions tailored to each client's needs, using a variety of strategies designed to improve control over cost drivers, including consumer-directed health plans, self-funding arrangements and wellness programs.
Within some business segments, new plan strategies have reduced cost increases to 5% to 10%, executives say.
Health Reimbursement Accounts (HRAs) have been very popular in the past few years and have proved to be easy to understand and easy to manage for small to medium-sized companies. Health Savings Accounts (HSAs) have also become important plan options, popular with middle and top executives for their tax advantages, Murray says.
Leading health plans in the region include Blue Cross/Blue Shield of Florida, UnitedHealthcare/Neighborhood Health Partnership, Humana Medical Plan, and Coventry Healthcare of Florida.
Local employers have also turned to Furman to develop supplemental benefits that can improve their recruitment strength and employee satisfaction. Popular supplemental benefits include dental insurance, group life insurance and group long-term disability insurance--"any products that can be bought at a discount below individual coverage rates," he says.
Executive and employee education is essential for employee benefits clients, Murray notes. Executives need to be informed about changes in the regulatory environment on a regular basis and employees need guidance on making the best choices among plan options. Furman manages and conducts benefits open enrollment sessions and introduces new benefit options in a comprehensive and thoughtful way to employees enrolling in a benefits plan, he says.
"Most employees understand co-pays and deductibles, but need help in understanding more recent innovations in plan design and how to use their benefits most effectively," Murray says. "We rarely get a client based purely on premium, but we often win new clients with our service."
Health and wellness
Health and wellness have also become important issues for clients as they look to not only reduce medical claims but also improve the overall health and working environment of their employees. "Some employers have jumped in feet first with comprehensive programs that include health screenings, biometric tests and incentive plans," says benefits producer Jeff Moxley. "Others are focused on their specific needs."
The construction industry, for example, poses very specific health and wellness challenges. "The industry knows it makes money only when work is done in the field, so they understand the value of healthy employees. As a result, we focus our wellness education on issues that are most important to construction employees," he explains.
What is important for construction and manufacturing firms is very different from what is important for law firms and other white collar employers, he says.
The agency has helped raise awareness about skin cancer and the need for sunblock for outside workers, ear plugs for employees who operate or work around loud, heavy machinery, and safety.
Service is an important differentiator for Furman, executives say. Agency producers meet regularly with clients, at least twice annually but often quarterly for some employers that are working to maintain tighter control of their benefit costs.
Vice President Patti McLain manages the benefits department and sets a high standard for service. A 30-year veteran of the firm, she says she learned about the value of service from founder Frank Furman.
The account management team provides a wide range of services, including enrollment processing, claims and wellness services management.
The agency produced three health fairs this year, partnering with local health care providers. The health fairs provided opportunities for employees to receive some medical testing and learn about employer incentives for improved health management, McLain says.
DeJong also notes that as employers rebuild their businesses for a new growth economy, they are facing more sophisticated management challenges, including state and federal regulations that have changed since the beginning of the recession. The health care reform rules under the Affordable Care Act, recently upheld by the U.S. Supreme Court, complicate business management, demanding many new decisions from business owners.
The flurry of new regulation has been tough on the American public and its businesses, DeJong says. And as clients face these decisions, they go back to their independent agency for help and guidance.
"Of course we must continue to help with their insurance, but our clients also require of us a lot more advice and counsel. We have become more of a general benefit resource to our clients as an advisor, consultant, and guide to recommended service providers," he points out.
"Our agency has increased its internal expertise in business administration and human resource management," notes McLain, "and we also invest revenue to provide value-added services to our clients that include human resource consulting through Seay Management, a very experienced human resource consulting firm, and COBRA administration processed by Diversified Administration, Inc. Other business partners include payroll administration services and accounting services. "Does it cost the agency to develop these relationships and provide these additional levels of service? Yes, but we look at our clients as much more than a source of revenue. Our agency's consulting approach really deepens our relationships with our clients," DeJong says.
"Whatever service they need," he says, "we can guide them to trusted service providers who will maintain a level of client focus."
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.