Capitalizing on Benefits
Listen to clients
Responding to client problems led Brennan & Stuart into employee benefits
By Len Strazewski
If you want to know what’s troubling your commercial clients, the best way to learn is to ask, says Mark Stuart, president of Brennan & Stuart, Inc. (BSI), in LaSalle, Illinois. Their answers will guide you into your future—and most likely, into the world of employee benefits.
Founded in 1956, BSI has been operated now by four generations of the founding families, Stuart says, and specialized in small to medium-sized industrial risks in the Midwest.
However, the agency launched an employee benefits division in 1985 after conducting a survey of the senior executives of client companies and discovering that property/casualty insurance costs were not the key concern of local executives. It wasn’t the machines that had them worried, or the marketing of their products. It was their growing number of employees and the costs related to their management
“What we discovered was that employee-related expenses were identified as the single biggest category of challenges our customers faced in their future, notably workers compensation costs and employee benefits,” he recalls.
The discovery led the agency to develop new resources that targeted these categories of risk, Stuart says, and rethink its commitment to customer service. “Our customer retention has always been high, and we have always had a reputation for good, personal service. But we realized that if we could develop techniques and resources that helped our client base to control their employee-related costs in a specific and organized way, we would have true value-added services and a much stronger relationship with our customers.”
Stuart says the agency focused on adding a series of consulting and auditing services that helped its commercial clients quantify their employee-related risks and analyze the opportunities provided by various plan designs. For example, in the workers compensation area, the agency adopted the AcuCompSM system from National Insurance Application Systems to help clients review loss reserves and establish more accurate experience modifiers.
“Our philosophy was that no customer should have to move to a higher rating position until they took control of their historical data and made sure that they received the rates and modifiers that they deserved,” he says. “We helped them use their claims information effectively to reduce their modifier and then helped them develop a safety program to control their future costs.”
The agency wanted to apply the same approach to employee benefits, but the group benefits and retirement issues provided a more complicated challenge, Stuart says. However, employee benefits also a provided a greater opportunity for the agency to develop new business relationships.
To meet the needs of its client base, the agency expanded its expertise in legal and employee benefits compliance, health and wellness information and employee communications and began to build an infrastructure that could deliver a broader range of services and information that could meet the needs identified by their customers.
The results were even better than expected, Stuart says. Not only did the agency begin to attract group benefits business from its existing client base, but the audits and consulting services opened new doors to Midwest employers that had begun to reach out for solutions to their rising health care costs.
“We expected to focus on small to medium-sized companies, about 25 to 200 employees, but the interest was much greater than we anticipated from larger employers. Our customers now include companies with as many as 700 employees,” Stuart says.
The agency now has 25 employees of whom six are assigned to employee benefits consulting and service. Benefits account for about 30% of total revenue, but the relationships developed by the employee benefits team continue to help the agency build property/casualty revenues as well, Stuart says.
BSI works with 18 health plans, including the area’s leaders, such as BlueCross/BlueShield, Humana, United Healthcare and American Community Health; it can offer indemnity plans, Preferred Provider Organization (PPO) plans and Health Maintenance Organizations (HMOs). The agency also can provide administrative services and stop-loss coverage for self-insurers.
In addition to group health plans, the agency can also provide long- and short-term disability insurance, dental indemnity and managed care plans, vision care and employee assistance plans (EAPs). The agency also has a financial services division that provides asset management, retirement planning, and pension and profit-sharing plan services.
At a recent National Insurance Application Systems annual users group conference, Stuart presented how his agency has used its employee benefits expertise to increase property/casualty insurance revenues.
He says that the more consultative approach to sales has done more than build benefits revenues; it has strengthened relationships with customers and opened up opportunities to work on the whole of customers’ insurance and employee benefit needs.
“What we have done is position ourselves as a trusted advisor to our clients, not just a vendor competing with other vendors for their service needs,” he says.
Tim Edstrom, senior consultant in the BSI benefits division, agrees. “We believe that the best way to serve our clients is to partner with them and become another professional consultant and advisor, like a legal counsel or an accountant. So it’s not just our role to provide them with carrier and renewal quotes, but rather to guide them through the employee benefits process and help them understand all of the management issues that are involved in their decisions—not just help them get a price,” he says.
As a result, Edstrom says the agency provides compliance audits and consultation on a wide range of issues, including compliance with COBRA, Health Insurance Portability & Protection Act standards and Family and Medical Leave Act administration, among other human resource management activities.
The agency also conducts both employer and employee education programs, introducing executives to the latest issues in employee benefits and human resource management, as well as educating employees about their employee benefit plan decisions and related health and wellness services.
When it all comes together, the results are strong client/customer relationships and solid agency revenues, Edstrom says.
For example, Crest Foods Co., Inc., in Ashton, Illinois, has been a BSI client for more than 20 years and has come to rely on the agency, not only to manage annual benefits renewals, but also to keep management updated on any benefits-related issues that could affect the company or its employees.
Cheri Kemp, benefits manager at the dried food packaging company, says the agency has helped the employer manage its growth from 250 to more than 700 employees in that period, helping to shape an employee benefits plan that meets employee needs and reflects the philosophy of the company.
“Brennan & Stuart has always kept us abreast of legal issues, health care issues and any opportunities that benefits changes could offer us,” she explains. “As the company and its employee benefits spending grew, the agency took the employer from full-insured, to partially self-funded and finally to a fully self-insured health care program to help contain costs and give the employer greater control over plan design.
When Congress enacted the Medicare Part D prescription drug plan for Medicare-eligible seniors, the new law included subsidies for employers that already provided retiree medical insurance that was equal to or better than the government plan. Kemp says BSI prepared the employer with a Medicare Part D briefing before the final regulations and decision deadlines.
“We weren’t just ready—we are ahead of the game,” she says.
The agency continues to serve as a trusted advisor, suggesting and explaining some of the latest employee benefit plan designs, including Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs).
“We’ve gone through all the steps in analyzing how HSAs work and how they could fit into our benefits plan,” Kemp says. “I’m not sure we are ready for that kind of program. I’m not sure we will ever be ready, since our company has always been somewhat paternal on its desire to take care of its employees.
“But when and if we do decide to make changes, we are certain that we are working with an agency that understands our company and its employees and will help us make the decision that is right for us,” she says.
As employee benefits issues become increasingly complicated, the agency has had to continue to expand it employee benefits services to encompass a wider range of human resources and education, notes BSI Account Executive Debra Michael.
The agency recently began to provide employee communication consulting, advising employers about their communication such as employee manuals and the link between wellness education and workforce productivity.
“As employers start to examine some of their new options, such as HSAs, they need to learn about how wellness and employee health relate to their costs and the successful execution of these plans,” she says. “We’re not just their broker; we are their consultant and advisor. It’s up to us to provide that information.
“We are truly living in an information age and our clients need more information than ever before to make their decisions about their business. That’s what it’s all about,” she says. *