It never gets any easier. Competitive health insurers are getting fewer and fewer. Employee benefit programs are more complicated than ever. And the Affordable Care Act, with more than 1,000 pages of regulations, has challenged even the most proactive property/casualty agents and brokers to develop new levels of technical benefits expertise, new layers of customer service and the latest cutting-edge technology.

Some agents and brokers make the big investments, hiring new employees and building a new base of benefits resources; others seek out strategic partners that already have benefit specialists and the latest technology.

The Powers® Group, a St. Louis, Missouri-based property/casualty insurance specialist, found its strategic partner in Caravus®, another hometown agency that specializes in employee benefits and recently introduced a groundbreaking benefits and human resources management technology platform.

"We are a family-owned business, providing full service to our commercial customers," explains Pierce Powers Jr., Powers Group chief executive officer. "We have long-term relationships with our customers and want to provide them with the best service and strategies to ensure the well-being of their employees."

Moreover, Powers saw the need to retain property/casualty insurance clients who are often solicited by agents and brokers that provide both benefits and P/C products and services. For many years, Powers managed employee benefits services for its P/C customers, but as benefits administration and strategies grew increasingly complex, the agency began to look for additional resources.

The Affordable Care Act was the clincher, Powers recalls, with its myriad of compliance requirements and the new regulations that created new strategic self-funding opportunities for small to medium-sized employers. "The ACA made it so complicated to advise on employee benefit issues that we felt we should seek out a partnership that would provide the highest levels of guidance for our clients. Caravus has the systems, the people and the expertise to provide leadership in those areas."

Caravus was founded in 1978 as part of The Todd Organization, providing executive benefits and nonqualified plans as well as health benefits. The two sides of the company split into two separate limited liability corporations (LLCs), each representing an area of expertise. Caravus retained the employee benefits business, recalls Chairman Paul E. Flotken, working at first with its self-generated commercial clients as well as personal lines agencies and financial planners on its individual and small business benefits business.

The agency then expanded its relationships to property/casualty agencies that need to provide benefits services to their customers. Today Caravus has 23 employees serving more than 120 referral partners with about 30,000 plan participants.

The agency provides a wide range of traditional benefits products and services, including insurance and self-insured health coverage, dental insurance, short- and long-term disability insurance, vision care, group and individual life insurance, long-term care insurance and voluntary insurance sold at the worksite.

Leading group health insurers in the region include Anthem Blue Cross/Blue Shield, United Healthcare, Aetna Health/Coventry Health, Cigna Health and level-funded plans for small groups. The firm serves individuals, families and seniors with individual health insurance, international travel insurance and Medicare supplement coverage.

"We make the complicated simple. That's our mission statement. ?We believe in educating our clients, not just selling products." -Paul E. Flotken Chairman Caravus

The agency boasts a 98% retention rate, Flotken says, and brings a strategic approach to the management of small and middle market employers, ranging in size from two to 500 employees. "We make the complicated simple. That's our mission statement. We believe in educating our clients, not just selling products." Flotken says the agency manages both costs and compliance by establishing multi-year customized programs to govern benefits over the long term rather than just reacting to annual rate increases.

Managing Partner J.J. Flotken, RHU, says that "having a singular focus really helps us. We have the ability to bring expertise and experience to each client and work with them individually to meet their specific needs. Our culture also contributes to our value proposition." He says Caravus has a strong service orientation that helps build trust and confidence. "Our clients become very comfortable in picking up the phone and asking us questions at any time," he says.

Health reform rules and regulations, however, have resulted in a tiered approach to strategy, depending on employer size, he says. Small employers with two to 10 employees have limited health options, he explains. Caravus works with them to develop alternative models for small group coverage, such as professional employment organizations (PEOs) that aggregate groups into larger buying pools or direct employees to individual health coverage.

Employers with 10 to 49 employees are eligible for small group markets but are not penalized for not offering coverage. They may be guaranteed coverage and can receive tax credits, however, although they are subject to underwriting standards that may make the coverage somewhat inflexible and costly.

Larger employers with more than 50 employees have better choices, and J.J. Flotken says Caravus can provide a wide range of tactics, including market analysis for more targeted purchasing, claims analysis, wellness programs including biometric screening, and automation systems that can improve efficiency. Employers large enough to self-fund employee benefits have some freedom from ACA restrictions and can work with Caravus to design programs that are sensitive to changes in claims experience, he notes.

Employee Benefit Consultant Tammy Jasiek works directly with many Powers Group clients, from initial contact to program executive. "Most of the early interactions begin with a Powers Group introduction. They have a conversation with us and help us understand the general background of the customer and its business. Then we meet and address the client's needs from a general risk perspective. Typically, the prospective client asks us to review their present benefit plan and suggest some direction that would be in the scope of their industry competition and compliant with health reform but give them more control over costs and results."

Self-funding techniques and private exchange designs are hot topics, and Caravus is prepared to lead employers in those directions-if they're ready for the responsibilities of the new techniques. "Employers that are prepared for some risk-taking do better with self-funded plans," Jasiek explains, "and their willingness to adopt wellness and health management plans can contribute to their success."

Caravus Connect, a benefits administration and human resources management software system, is the firm's latest innovation-and one of the more powerful lures for property/casualty agents and brokers.

The system was introduced in April and combines private exchange and employee benefits administration with other human resources management functions, including employee onboarding, payroll integration, COBRA administration, employee hour tracking and ACA compliance functions. The firm introduced the system with a three-minute video that described its advantages to employers in managing enrollment, compliance and record-keeping as well as administration of new defined contribution employee benefit models.

Paul Flotken says the system is an important addition to the Caravus value proposition, supporting not only employee benefits programs but also employers' growing needs for compliance management in related fields.
"In recent years, human resource departments have become completely overburdened by the paperwork associated with all of their responsibilities," he explains. The new system combines management of the processes into a single system. He adds, "Employers have an immediate need to simplify and automate these demands, and Caravus Connect is a strong selling point for our firm."

Paul Flotken foresees rapid growth as employers turn to defined contribution benefit structures managed through private exchanges facilitated by the ACA. As the defined contribution model becomes a standard of plan design, managing enrollment and employee choice options will become an important role for benefits agencies.

Powers agrees. The property/casualty agency leader says that the system is a valuable differentiator for his firm because it allows the agency to introduce a new range of services to its customers that can be managed by Caravus with Powers' participation. "We will work with the whole platform. The whole platform has immense value to our clients-everything from the more sophisticated compliance record-keeping to the generation of individualized benefits statements."

Although the relationship between the two agencies has been in place for more than two years, Powers says the two firms are continuing to learn more about applying their respective expertise to areas of mutual interest. "We need to identify more areas in which we can work together in a partnership to explore more value for our customers," he says.

"There are more crossover relationships in our mutual areas of expertise than many people realize. Workers compensation, for example, has obvious crossovers with health benefits. Think of safety and wellness management: they are clearly related in areas of medical management and claims management. Carpal tunnel disease, for example, is both a workers compensation issue and a health benefits issue, and it is difficult to place those treatments and costs in any single area. With our workers compensation expertise and Caravus's health management expertise, we can explore new ways to manage those related claims."

Powers says the two agencies could work more closely together in developing economic efficiencies that identify issues in workers compensation and health management, and manage strategies through a single technological platform.

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.