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Benefits Agency

Integration of broad services fuels growth

Benefits business totals 40% of revenues for
North Carolina's largest private P-C firm

By Len Strazewski


Henry Ford sold his Model T with one caveat: "You can have any color—so long as it's black."

Health benefit programs weren't that much different a generation ago. Agencies shopped health insurers for the best price for major medical insurance. Employers had minimal choice in plan design and very few ways to control their costs.

Times have changed and so have independent agencies that help employers manage employee benefits, says Tim Templeton, chief operating officer of Senn Dunn Insurance, Inc., in Greensboro, North Carolina. "Today we spend a lot of time asking our clients how they want their employee benefit plans. And what they want to achieve."

The employee benefits business is about strategic design, Templeton says, and not so much about product sales. Employee benefit producers interview their clients about their business needs and help them design an approach to benefits that supports their human resources goals.

Senn Dunn, which was founded in 1927 as a property/casualty agency in Greensboro, North Carolina, has become the largest independent agency in the state. The agency also has offices in Raleigh, High Point and Wilmington.

Employee benefits services contribute about 40% of total revenue, commercial property/casualty insurance about 50% and personal lines about 10%. Templeton says the agency is growing at a rate of about 10% annually but, as a percentage of revenues, employee benefits is likely to remain stable, tracking the steady growth. "We do a great job cross-selling," he says. About two-thirds of the agency property/casualty customers also use the firm's employee benefit services.

The agency has 144 employees, including about 50 in employee benefits services. Templeton says the firm wants to add eight to 10 new employees in the new year. Employee benefits is one of its newest divisions, established about 14 years ago, the beginning of a series of new services that include health and wellness consulting and human resources and communications. Clients range in size from about two to several thousand employees, but the agency specializes in companies with 100 to 2,500 employees that have a broader range of funding options.

Joe Hughes, executive vice president and employee benefits practice leader, joined Senn Dunn in 1999, bringing with him a book of employee benefits accounts that seeded what has become the agency's burgeoning benefits practice.

The agency provides consulting on a wide range of traditional insured benefits products that can be integrated into a broader strategic design, including employer-paid group health and consumer-directed health plans, dental and vision plans, group life insurance, accidental death and dismemberment insurance, long- and short-term disability insurance, employee assistance programs, long-term care insurance and employee-paid voluntary insurance products.

But today the agency has about two account managers for every producer and assists clients in much more than buying coverage, Hughes explains. Plan designs can include self-funding options, consumer-directed health plans, and prescription drug plan management; related services include claims management and analysis and benefits advocacy.

Service is one of the agency's key differentiators, he says. "Because of our volume, we are able to have a powerful impact relative to our clients and their health insurers. We are able to help them navigate benefits issues more effectively on a day-to-day basis."

The agency also provides human resource outsourcing and consulting, employee communications services and state and federal regulatory compliance services.

Hughes says the agency is also helping educate clients about the developing implications of the Patient Protection and Affordable Care Act. North Carolina has opted for a hybrid state and federal health insurance exchange, but the operational rules are still unclear.

"We are still not sure how it will operate or what each agency's role will be. But we are certain there will be a positive role for independent agents and we are developing a package of services that can support employers that are using the services of the exchange."

The agency continues to expand its employee benefit resources—and its national reach. Last November, the agency joined the Benefit Advisors Network, a Solon, Ohio-based national network of progressive and independently owned employee benefits brokers and consultants. BAN members collaborate on developing service strategies and share expertise and best practices.

"We see our involvement in BAN as an excellent opportunity to enhance the value we bring to clients and to accelerate our firm's growth," Hughes says. "We are committed to providing national scope, and our relationship with the BAN members throughout the country underscores this commitment. The sharing of tools, resources, and intellectual knowledge between the members is a true rarity within our industry."

Executive Vice President Randall Taylor is the agency's top employee benefits producer. He says helping clients manage their costs remains one of the biggest challenges, even though health plans have become particularly price competitive in the current year renewals. But the way agents approach the cost challenge has changed.

Every benefits program has fixed costs, he explains, but outside of those costs, employers have opportunities to affect cost trends. How they manage claims and how they influence employees is within their control in more ways than ever before.

"Every plan is tailored to each client," Taylor says. "Our goal is not just to get the client the best value for their premium dollar, but to develop a long-term sustainable plan that helps employers manage their costs over time."

Taylor says the agency is also moving toward a fee-for-service model of compensation to represent the diverse set of skills it brings to each client company. "More of our clients are likely to be headed into a fee arrangement as we bring them more sophisticated services and continue to document our service to them."

Wellness has become an important internal and external aspect of Senn Dunn employee benefits service. In July, the agency was named a Golden Apple Winner in Nutrition by the North Carolina Prevention Partners, a nonprofit wellness organization that sponsors the WorkHealthy America initiative.

This initiative is a health and disease prevention program based on four areas of focus: Culture of Wellness, Tobacco environment, Nutrition, and Physical Activity policies and practices. Other recipients of the award include the Carolinas Medical Center, Mission Hospital, YMCA of Greensboro and Banner Pharmacaps, Inc.

Bobbie Victory, one of three health and wellness consultants at the agency, works with about 100 agency clients. During her three and a half years at the firm, she has watched wellness programs grow in number and sophistication, and employers have come to recognize the value of a healthier, more productive workforce.

She says that at least one-fourth of Senn Dunn employee benefit clients now offer employees comprehensive wellness programs. Last year, the agency conducted 27 health fairs; 55 "lunch and learn" and "Wellness Fun Day" programs; 14 wellness activity challenges; and 27 flu shot events.

Senn Dunn usually begins its wellness program development by directing clients to resources available for little or no cost from their health plans, Victory says. Leading health plans in the region include Aetna, United Heath, Cigna, BlueCross/Blue Shield and Coventry Health. The most popular Wellness programs include the United Healthcare "Simply Engaged," and the BlueCross/Blue Shield "Blue Points" Health Outcomes program.

The agency researches other strategic opportunities and ways to focus wellness programs. Preparation can include a wellness survey, claims survey and biometric screenings.

The WorkHealthy initiative and the Senn Dunn agency health and wellness program is a model for many of the client programs. The program, Victory notes, involves a three-phase comprehensive approach:

• Focus on providing leadership support, a wellness team and a needs and interest survey.

• Be intentional, with developed action plans and communication plans.

• Be transformational, evaluate with annual biometric screenings, measured participation, and the development of a wellness playbook and documentation of challenge events.

Employers can expect positive results, Victory says, and many are pretty obvious. "Taking care of yourself is hard," she says, "but individuals can make improvements in their lifestyle—by eating a healthier diet, getting more physical activity, getting 7-8 hours of sleep each night, and eliminating tobacco products.

"We learned it in 4th grade," Victory quips.

Templeton says the agency's wellness commitment is also helping the commercial property/casualty insurance practice to evolve. Senn Dunn strategists are beginning to explore the link between safety and workers compensation medical costs and general health and wellness.

"Although our teams work together well, we are probably more separated than we should be. Property/casualty teams tend to talk to chief financial officers; benefit teams tend to talk to human resources." But corporate risk doesn't recognize boundaries and neither should the agency in developing comprehensive risk management strategy, he says.

"There's a lot of connection between workers compensation, for example, and general health and wellness. Both lead to health-related costs and productivity management concerns," he says. "We need to explore those links and develop more integrated approaches."

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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