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Consultative cross selling

With an eye on health care reform, this Connecticut agency diversifies its employee benefits and services offerings

By Len Strazewski

It's all part of the same risk assessment puzzle—property risks, casualty risks, and employee health and safety. Total asset protection, including employee benefits that protect employees, should be a strategic target for all agents and brokers, says Joseph B. Smith, CPCU, ARM, president of Smith Brothers Insurance in Glastonbury, Connecticut.

"We take a diagnostic approach. When we meet with clients for the first time, we bring a team that includes P-C producers and employee benefits producers and any other agency experts that can help our clients take a comprehensive look at their company, its risks and potential solutions.

"'What are your goals, objectives, strengths, needs, risks and opportunities? How does it all come together?' Those are the types of questions we ask."

Employee benefits contributes about 20% of revenues and benefits expertise is a critical component of the full service the firm provides, Smith says.

"When we meet a prospect for the first time, we are there as a team to introduce our culture and our capabilities and explore how they align with the potential client and its spectrum of needs."

Smith Brothers Insurance was founded in 1971 by the original Smith Brothers, Bob and Brian. The agency now employs about 100 in six divisions: Risk Management, Surety, Benefits, Special Accounts (small business and commercial), Property and Casualty (large and mid-sized accounts) and Financial Services.

About 20 employees specialize in employee benefits, including a wellness coordinator who assists employers with designing and monitoring wellness and health risk assessment plans, and a labor attorney who assists with regulatory compliance issues as well as risk management strategy.

Smith Brothers also operates a separate risk management consulting company, Green Tree Risk Management, which serves as a risk management outsourcing service for small to medium-sized companies.

Clients range in size from about 10 employees to as large as 1,500 employees, but the agency specializes in employers that lack a full-time risk or employee benefits manager and can benefit from the agency's management as well as its insurance marketing expertise, Smith says.

Quality control is an important component of the Smith Brothers approach, Smith says. The agency has developed a comprehensive internal quality control system that incorporates Six Sigma and ISO 9000 standards into its own comprehensive quality control scheme.

The approach is particularly important in managing the firm's employee benefits operations where continuous quality customer service helps differentiate the agency from less sophisticated competition, he notes.

"Our clients know that when they deal with us, they are being treated with a consistent service standard that cuts across all of our service areas. It's a real differentiator," Smith says.

Dave Hollenbaugh, director of sales and marketing, agrees. "We take a team approach to all of our client appointments. With this united front we are able to demonstrate the agency's value across the range of the client's needs."

Hollenbaugh says the agency reaches out to client decision makers, including chief executive officers and chief financial officers. For employee benefits services, the client leadership most often involves the chief financial officer and human resource and employee benefits manager who can address both the financial parameters of the client needs as well as the employee service needs.

"It's important that we communicate our value as an ongoing consultant to our clients as well as our expertise as an insurance broker. We expect that in years to come, our consulting role will provide continuing value, even as the marketplace changes," he says. "What we have to sell is how we will help the client overall, not just how we market insurance."

With steadily rising health care costs, employee benefits have become an important driver of new business, he adds. "We have been making great inroads in employee benefits with new and existing customers, and our approach to employee benefits has opened many new doors for us."

About 80% of employee benefits revenue comes from cross selling commercial property/casualty insurance customers, but nearly one-third of new business overall comes from cross selling new employee benefits clients.

"Clients continue to feel pain as health care costs continue to rise and as a result, they are open to new ideas and approaches to containing their costs," Hollenbaugh points out. "With our Total Asset Protection approach to their business, we can introduce new understanding of their expenses and approaches to managing those risks."

"What we are doing as an organization is actually bringing risk management into employee benefits," explains Frank Zurlo, practice leader in employee benefits and director of risk management for employee benefits. "We begin with our clients by assessing their employee benefits costs as we would any other risk and examining techniques that can help them take control of those risks—before we look to insurance."

After reviewing utilization and claims under the group health plan and workers compensation, the agency can develop a profile of the comprehensive health risks facing the company and guide the clients through potential control measures, which could include plan design changes such as consumer-driven health plans as well as external approaches such as wellness and health improvement plans.

The agency creates a three-year plan that allows clients to implement strategic changes to plan design, track claims results and measure their impact on total healthcare costs.

Zurlo says clients with 150 or more employees generally have more options available to them, including some degree of self-funding that makes them more sensitive to the value of reducing health risks and improving employee wellness.

Most of the agency's medium to large-size clients now offer employees consumer-directed health plans using health savings accounts (HSAs) or health reimbursement accounts (HRAs) as at least one of several plan options.

Smaller employers have fewer options and generally rely on community rating of health plan premiums, which is more difficult to influence, Zurlo notes. But the agency can still guide these clients in making the best use of resources available from their health plans, most of which provide wellness and health improvement programs.

Largest health plans in their region include Aetna, Anthem Blue Cross/Blue Shield of Connecticut, United Healthcare, CIGNA and Connecticare.

The agency is also helping its clients prepare for changes in the way health benefits and health care in general is delivered under federal health reform legislation. Though health reform still faces judicial challenges, Zurlo says he expects employers will still have decisions to make about how they will comply with new regulations and how they will continue to shape employee benefits that support their company strategies.

"A couple clients have contacted us about re-examining whether they should continue to offer medical benefits under health reform. How serious they are, it's hard to tell at this time. We continue to keep our clients informed about the evolution of health reform regulations and the options they represent. And we are staying on top of the health exchanges developments. Whether employers want to continue group plans or ask employees to seek personal coverage through the exchanges, we will be there to provide consulting and expertise," he says.

Smith says health reform is likely to have an impact on agency operations as the regulations erode brokerage margins, but despite uncertainty about the way group health benefits will evolve under health reform, he sees opportunities for firms that are consultative, and he anticipates continued growth.

The agency's consultative approach continues to make it valuable to its clients, even as group health products may change, he says. "Health reform will make substantial changes, both in the broker's role and the employer's role in providing and delivering health benefits. But we are staying on top of the changes and we are certain that employers and employees will continue to need guidance and advice on their options. And we are certain they will remain willing to pay for that guidance."

 The agency continues to diversify its employee benefits products and services. Voluntary and ancillary benefits, for example, are also important services, Zurlo notes. Regardless of the status of group medical benefits, group dental insurance, vision care benefits, group life insurance and short- and long-term disability insurance are likely to continue to be components of employee benefits packages, he says.

The agency also offers access to retirement plan services for defined contribution employer plans and individual retirement strategies for clients' executives and individual financial planning.

Zurlo also notes that the agency has continued to increase its support services for employee benefits managers and human resource managers, with its compliance research and support and administrative support for enrollment and claims management. The agency supports online enrollment and other data-driven services for employees, and HRA and 5500 form filings for companies, among other services.

"We look to be an extension of each client's human resource function," Zurlo says. "And in that role we have begun guiding clients into human resource optimization, getting them out of clerical functions with automation and new business systems."


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