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Capitalizing on Benefits A Hands-On Approach Well-established benefits division provides its niches a strategic planning process By Len Strazewski Build up an employee benefits practice to support a property/casualty insurance specialty. Develop better customer service. Hire a human resources expert to offer some guidance and support for customers struggling with regulatory compliance and management issues.
That's the 2014 wish list for many small to medium-sized independent agents—but at Austin & Co. Inc., in Albany, New York, the competitors' wishes are already the reality and the cornerstone of a comprehensive package of benefits consulting, brokerage and HR management services. Austin & Co. is practically its own chapter in New York history. The agency was founded in 1853, notes President James A. Sidford, providing property/casualty insurance to personal and commercial clients in New York City and the state capital. In the mid-1970s, management created an Employee Stock Ownership Plan (ESOP) that made employees participants in agency ownership.
And more than 20 years ago, the agency leapt ahead of other agencies by initiating employee benefits operations, targeting middle market organizations in the Albany area and New York City and specializing in employers ranging in size from 80 to 500 employees. Clients include private and charter schools, law firms, physician practices and other professional service firms. About 10 years ago, Sidford, an employee benefits producer and also the director of employee benefits as well as agency president, led the firm into a new era and strategic style, focusing on service and consulting in addition to brokerage and insurance product marketing. "The employee benefits business has changed dramatically in the past 10 years," he says. "There are fewer health plans in the business and much less product differentiation among them. Provider networks have grown in significance as part of the drive for lower costs by employers and their desire for more control over their cost drivers." Employers also hunt for broader lists of providers, better preferred provider discounts and stronger assurances of quality, he notes. Renewal prices still matter, but "whereas marketing coverage to carriers used to be 80% of the value we provided, currently it is about 60%, with the strongest differentiators being service and strategic advising."
Today, employee benefits contributes about half of agency revenues—a milestone that is the envy of agency competition. About 22 of the firm's 49 employees work primarily in employee benefits services, but cross-selling is so consistent across product lines that it is difficult to separate roles, Sidford says. Austin is also an Independent Insurance Agents & Brokers of America (IIABA) Best Practices agency—and has been since 1995. "The ESOP made a huge difference in the way we do business," Sidford says. "Our employee owners focus on shared effort and value. Cross-selling is our standard and our producers work as a team to identify opportunities based on our client needs." Employee benefits account executive Martha A. Mabeus agrees. "Our most important differentiator is our leadership. A lot of agencies are run by the property/casualty side of the business and employee benefits is an afterthought. But because we are employee owned, everyone has a stake in our success and everything we do is an important part of our agency strategy." The agency boasts a 98% client retention rate and attributes the powerful retention rate to a commitment of superior customer service. Mabeus says, "Service is number one with us—our top priority. Everyone participates in providing the best possible customer service and our clients are our family. We are the problem-solvers and we do a lot of consulting on a day-to-day basis. We have made clear to our clients that we are not a commodity, but are more of a trusted business adviser." However, she notes that Austin service has more than a folksy commitment to responsiveness. The agency provides its clients with serious and detailed information about best industry practices, allowing them to benchmark against peers and defines the highest standards of performance. "We are a niche-driven agency. We specialize, and all of our specialties require strategies that meet their very specific requirements. We provide the data that drives those strategies." The agency provides a wide range of employee benefits products and support services. Group benefit plans include health, dental, statutory disability, long- and short-term disability insurance, long-term care insurance, vision care and employee assistance programs (EAPs). In New York City, leading health plans include Aetna Health, Oxford Health Plans and Blue Cross of New York. In the Albany area, Empire Blue Cross Blue Shield and Capital District Physicians' Health Plan are leading competitors. Group plans can be designed with account-based options, including Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs), Sidford notes. HSAs and HRAs have not grown as quickly as many employee benefits experts predicted, he says, but have become important options in contemporary benefits strategies. "When we begin working with new clients, our first step involves analyzing their needs and developing an initial three-year plan. "That plan includes a contribution strategy that describes how the employer and the employees will contribute to the cost of their coverage. Within that contribution strategy, account-based plan designs may become part of a double or triple option plan design." Wellness programs have become important companions to group medical coverage, Mabeus says. "There is a huge push for health and wellness and employers are investing with a wide range of programs that encourage healthy lifestyles."
Biometric screenings and health risk assessments are more common than ever among employers, but the most popular programs are health incentives, she says. They include health club discounts, points accumulation and cash-back bonuses, health education and nutrition programs. She also encourages employers to take advantage of value-added services such as EAP hotlines and travel assistance programs. Benefits communication is important to the success of these programs, she adds, and employee meetings and benefit education is a major part of the agency's value-added. "We do a good job of presenting to employees. They appreciate anything we can do that helps them get the most out of their benefits," she says. Austin also offers education clients a health care purchasing consortium. The New York State Association of Independent Schools Healthcare Consortium provides discounts and strategies for cost containment and employee retention, executives say. The consortium program requires participants to commit to a long-term strategic plan and cost control strategy. The agency also provides access to voluntary benefit plans, including travel accident insurance, critical illness insurance, hospital indemnity insurance, individual long-term care insurance, life insurance and personal disability insurance. Human resource management consulting is also a key additional service, executives say. The agency provides both benefits and compliance management advice related to group benefits plans and fee-based project contracts. Hope DeRocha, director of human resource consulting, joined the agency nine years ago as an employee benefits account executive but five years ago undertook management of the agency's newest service, which provides wide-ranging support for human resource management. President Sidford says the department has become one of the agency's most popular and valuable client services, but DeRocha says, "I feel like we are still gearing up. Human resources and compliance issues have changed so much and become so important that we are always developing new resources and programs to help us inform and educate our clients." DeRocha says client needs have evolved dramatically in the past 10 years, creating both challenges and opportunities for Austin. "Regulatory compliance—both federal and state—has become a bigger than ever challenge to employers. At the federal level, COBRA administration and ERISA regulations are being joined by hundreds of pages of health reform regulations with which our clients must comply. "And New York City itself has pretty heavy regulation—particularly in the education fields where we specialize." Many schools, in particular, have limited human resource departments limiting their ability to respond quickly to regulatory compliance without some assistance, she says. "Schools are unique in their needs and their level of regulation," she says. "Large schools may have a human resources department but many small schools have only a single human resource specialist—or none at all—just a business manager who has HR as one of many responsibilities. However, we can bring to them the specialized knowledge of their field and can work with both our employee benefits and property/casualty insurance experts to help them create policies and practices that can support their risk management and benefits programs." HR-related support for benefits is part of the agency's value-added services and can include enrollment and benefits communication, Medicare coordination and health reform compliance. The agency also provides online employee benefits portals for employer and employee access to benefits program information and benefits administration software that helps automate enrollment and record-keeping. The department also provides fee-based project services that can include benefit and human resource management audits, human resource policy development, employee handbook creation and training programs that support employment practices including anti-harassment and anti-discrimination policies. "Whatever the client needs, we provide a solution," DeRocha says. The author 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.
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