Playing to its strengths
California agency's benefits division leverages P-C relationships to spur growth
By Len Strazewski
Cavignac employee benefits executives, from top, are: Matthew Noonan, RHU, CIC, Risk Advisor; Patrick Casinelli, RHU, REBC, vice president; and Linda O'Hara, Account Manager.
Employers are always concerned with costs, but when group health plans restrict rates and plan designs for small employers, just looking for the lowest premium among a handful of health plans is not likely to make much of a competitive difference.
Attentive, personal service can be an important differentiator, according to executives at Cavignac & Associates in San Diego, California. Founded in 1992 as a one-person commercial property/casualty insurance broker by President Jeffrey W. Cavignac, the company has grown into a local leader in insurance and risk management with 40 employees, specializing in small to mid-sized employers in Southern California.
The firm's employee benefits practice, a more recent addition to the brokerage's services, has been one of its fastest growing areas of new business, and it now accounts for about 17% of revenues—about $1.4 million—generated by five full-time employees.
Principal and Vice President of Employee Benefits Patrick Casinelli, RHU, REBC, established the agency's employee benefits practice in 2002, starting with a few years of agency sales experience and a mandate to provide employee benefits services to the existing roster of commercial property/casualty insurance customers.
The agency principals, including Executive Vice President James P. Schabarum II and Managing Director Scott A. Bedingfield, "had been looking for someone to round out their accounts," Casinelli recalls.
Cold-calling for employee benefits is rarely effective, Casinelli says, and his early experimental attempts at generating new business on his own weren't very successful. But the firm's property/casualty insurance relationships were strong.
Cavignac had built its reputation on a strategic, risk management approach to insurance, Casinelli says, and needed someone "who would join arms with the property/casualty producers" and share client engagements, participating in comprehensive discussions about the financial and human capital risks of their businesses.
Casinelli targeted clients that were not receiving committed employee benefits service from other agencies or integrating employee benefits in their financial strategies. The strategy was a solid success.
He says that Cavignac recognizes employee benefits as an employer's second largest expense, just after payroll, and requires more than simplistic insurance purchasing to protect its investment in employees and their productivity. "We are all risk managers. It was a natural fit. There's no other place I'd rather be," Casinelli says.
Today, the firm follows a marketing approach developed by Sitkins International in Ft. Myers, Florida, pursuing broker-of-record letters that allow the brokerage to take the lead in developing strategies and designing funding and insurance programs that meet the overall business needs of their clients.
Clients range in size from very small to 500 employees, but executives say their target employee benefits market includes employers with 25 to 150 employees that are just big enough to make some strategic choices and decisions about their benefits plans. The firm also specializes in professional service firms, including third-party administrators, law firms, and Certified Public Accountants.
Leading group health plans in the region include Aetna, Anthem Blue Cross/Blue Shield of California, Cigna, Health Net, and UnitedHealthcare. The brokerage also can provide health insurance for employers with employees based in Mexico through the Sistemas Medicos International S.A. C.V (SIMNSA), the leading HMO in northern Mexico.
Matt Noonan, RHU, CIC, risk advisor in employee benefits, is the brokerage's second benefits producer and consultant. "Most of our clients in the 25 to 50 employee range have the same access to coverage and the same rates from the same group of health plans. Employers tend to offer the same options: Health Maintenance Organizations (HMOs), which are still popular in California, high-deductible health plans with Health Savings Accounts (HSAs), and Preferred Provider Organizations (PPOs).
"Our challenge is to help our clients make the best use of their benefits in recruiting and retaining the best employees and help employees make the most efficient use of their benefits value," he says. "In most cases, the key is not the insurance plans themselves, but the way the plans are managed and delivered—and the support services that accompany the insurance." Noonan says the brokerage surveys client employees every two to three years to track how well the firm is meeting their needs and identify new opportunities for service and programs.
Account manager Linda O'Hara is the day-to-day service provider, supporting the two producers. Her purview ranges from open enrollment management to claims troubleshooting and policyholder advocacy.
"The insurance plans and rates are all the same," she agrees. "That's why the broker-of-record relationship is so important. Bidding out coverage to insurers provides no differentiation, but by partnering with our clients, we demonstrate the value of our relationship." O'Hara says the brokerage may use a rate quotation engine to submit and compare quotes from carriers but builds a unique presentation for each client to demonstrate the combination of services and programs the firm provides.
O'Hara takes her job personally, preparing the client presentations used by the producers, along with customized employee benefits education materials and enrollment packages and developing PowerPoint presentations for open enrollment meetings and educational seminars.
She is also the brokerage's claims specialist. "When our clients have claims issues, we want them to call us," she says. "We want to be their advocate. We have relationships with the carriers and can assist employees in managing their claims and in understanding the responses from their health plan."
O'Hara says clients and their employees have her telephone number and e-mail address and are encouraged to seek her assistance directly when a claims problem gets beyond their control.
Benefit programs are not limited to group medical plans, O'Hara adds. Ancillary benefits, such as long-term and short-term disability insurance, dental insurance, and vision are still popular and generally employer-paid. Excess health insurance plans and "gross up" executive benefits that fill in deductibles and co-pays are also popular with professional service firms and senior executives.
"As the Affordable Care Act pre-empts what some employers can do to customize their benefits, the issue becomes, 'What else can I bring to the table?'" she notes. "This is creating renewed interest in worksite-marketed, employee-paid benefits such as term life insurance, travel and accident insurance, long-term care insurance, catastrophic illness insurance and other products from the specialty insurers, such as AFLAC, Colonial Life and UNUM."
Wellness has become a key feature of employee benefits, Cavignac executives say. Benefits producers Casinelli and Noonan say they are "passionate about wellness" and present a case for preventive biometric screenings and incented premium plans for all of their clients. Their target: commitment from C-level executives who are willing to support programs that can work with the health plans to promote healthful activity.
"It's a major culture shift for employers," Noonan says. "And the research shows that wellness programs are most effective when they are supported from the top down."
Not all clients, however, are ready to make a deep commitment to wellness programs and services for employees, Noonan says. "No one solution fits all," he explains. "We like to start out with a wellness needs survey of employees and use its results to help develop a unique program to respond to each client's needs," he says.
Programs, however, generally fall into three categories:
• No-cost education and on-site promotion. The firm can provide flyers and posters that help employees make better health choices and can recommend healthful vending machine options to employers, for example.
• Low-cost "turn-key" services that can host online health assessment programs and allow employees to track their progress toward health goals, such as weight reduction and smoking cessation. The services can also provide Internet or toll-free telephone coaching.
• "High return on investment" programs that provide biometric screenings, including blood pressure, blood glucose, and Body Mass Index testing, followed by health coaching and on-site consultations.
"Many employers start by dipping a toe in the water. Since most health plans now provide an annual preventive physical exam free from insurance co-pays, some employers offer simple financial incentives such as a gym membership or a gift card that can be applied to healthful dining or physical activity programs upon completion of the annual exam," Noonan says.
However, he admits that Cavignac's client base has come to need advanced wellness consulting and experience on a regular basis. As a result, the firm is seeking a full-time wellness director.
Human resource consulting is also a growing adjunct to the employee benefits practice, Casinelli says. Regulatory compliance has become increasingly complicated for many employers, and new challenges related to the Affordable Care Act and the Employee Retirement Income Security Act (ERISA) have employers seeking guidance.
The firm's own director of human resources also provides human resource services and compliance consulting to clients and conducts about six human resource management-related seminars for clients each year.
Casinelli says about 60% of the human resource director's time involves client consulting, and the brokerage can refer its clients to third-party administrators and other benefits service providers from a network of recommended companies.
"We always like to ask our clients about their other trusted advisors and build a network of resources that we can refer to our clients as we identify their needs," Noonan says.
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.