Capitalizing on Benefits
At USI Southeast it's all about crossover
Agency offers a consultative approach and a wide range of P-C, benefits and HR services
By Len Strazewski
Submit the renewal proposal to the group health plans, then start biting your nails and thinking about how to explain the premium increase to your clients. It’s not pretty, but that’s the way many agents and brokers handle the annual battle to contain the rising cost of group health insurance. They meet once or twice a year with a client’s chief financial officer, get the latest employee head count and fill out the bundle of applications that go into the submission process.
If the numbers come back too high, they suggest routine changes in plan design, such as higher deductibles and employee co-payments—or nothing at all.
“That’s not much of a strategic model,” says Anthony C. Gruppo, executive vice president of USI’s Southeast Region based in Fort Lauderdale, Florida. “And it’s not a business practice we subscribe to. We’re not a once-a-year kind of company. We think our clients deserve more than that.
“Our benefits producers are in perpetual communication with our clients, meeting three months or six months before renewals to anticipate changes in the marketplace, compliance issues and plan design possibilities.”
Mike Karp, also an executive vice president in the Fort Lauderdale office, agrees. “Our focus is not on where our clients are today in terms of their employee benefit costs and plan designs but, rather, where they want to be in the future with their human resources management strategy and the resources we can provide to help them enable that strategy.
“We want to prepare the client as much as possible for a market that has been unrelenting in its cost increases over time and provide them with the tools they need to manage their futures within that kind of market pattern.”
Few employers are looking forward to adding benefits or spending more on their present employee benefits package, but they are concerned about retaining their best employees, Gruppo says. “Employers are concerned about reducing their benefits until they are no longer competitive within their industries. They realize that without quality benefits, they will lose their best workers.
“But who will pay for those benefits? This has to be a strategic decision that can’t be made once a year during renewals,” he says.
USI Holdings, headquartered in Briarcliff Manor, New York, is a Goldman Sachs Capital Partner company and one of the 10 largest insurance agency/brokerages in the United States with more than 4,000 employees in 66 locations in 18 states. About one-fourth of employees work in employee benefits services, and about 40% of revenues are derived from employee benefits sales and services.
Since its founding as a public company in 1994 and its acquisition by Goldman Sachs in May 2007, USI has focused on building a balanced book of property/casualty insurance and employee benefits business and aggressive cross-selling between the two often-exclusive categories of business and clients.
The Southeast Region operation is typical of the company as a whole, providing a wide range of property/casualty insurance, employee benefits, and related consulting and service capabilities.
“The business model actually comes from Johnson & Higgins (once the nation’s largest privately held insurance brokerage until its merger with Marsh & McLennan in 1997),” notes Dick Leonard, senior vice president of employee benefits services. “In many agencies—even those with significant property/casualty and employee benefits divisions—producers from both sides of the house rarely talk to each other. They meet separately with their client contacts and rarely discuss the outcomes of those conversations in terms of a unified client strategy.”
USI, however, was designed to work across the usual “silos” of insurance and benefits, its executives say, not only to better serve clients but also to bring to the agency the advantages of the stable growth inherent in employee benefits. The structure also made the agency attractive to Goldman Sachs, which facilitates referrals among its portfolio of financial service companies.
“There has never been a soft market in employee benefits. Due to the consistently increasing costs of health care, premiums continually trend upward, balancing the cyclical ups and downs of the property/casualty insurance market,” Leonard says.
While the company has yet to achieve the perfect balance its founders originally intended, USI’s evolution in its employee benefits business has led to consistent growth and diversification into executive compensation, compliance consulting, human resources and employee benefits outsourcing, and wellness education.
“Most property/casualty insurance agents are often unwilling to develop the expertise and the services that must go into a successful employee benefits practice,” Gruppo says. “Employee benefits is not just about managing insurance policies that are acquired, filed and renewed once a year. It is about bringing to the table a wide range of resources and services.”
USI’s group employee benefits operation offers products and services for life, health and dental insurance, disability insurance and retirement plan design; but employer needs often cross over into areas that are less traditional for many agents, such as executive compensation, estate planning, business succession and annuity sales, Gruppo notes.
The agency also administers workplace enrollment for group and voluntary benefit programs and provides national administration for association programs that include life, health and disability insurance for association members.
USI has also expanded into employee benefits consulting, regulatory compliance consulting and human resources administration services.
“As we look deeply into our clients’ needs, there is almost inevitable crossover into regulatory compliance issues, such as meeting the standards of the Health Insurance Portability and Accountability Act for employee health information privacy and ERISA fiduciary responsibilities,” Gruppo says. “If an agency is going to provide full service in employee benefits, it must offer compliance advice as well as insurance services.”
Nearly every client engagement is a consulting project, USI executives say, examining a range of benefit plan designs, service packages and individual executive needs. Many engagements begin with an actuarial survey and analysis of health claims and their impact on rates.
This consulting project leads to a discussion of the appropriateness of a client’s existing employee benefits plan design in terms of corporate human resource strategy and cost concerns, a discussion of traditional or alternative funding mechanisms, predictive modeling of costs and claims in the future, and benchmarking against industry competition.
New options such as Health Savings Accounts (HSAs) and Health Reimbursement Accounts (HRAs) are increasingly included in USI client proposals, Karp notes, although the consumer-directed health plans with high deductible coverages are still far from standard for most employers.
“Consumer-directed health plans require about a year of employer education to get clients ready to make a decision to initiate these plans,” Karp says. “Then, they will not be successful without continuing employee education in wellness and health consumerism.”
Karp emphasizes the need to provide a portfolio of wellness education and services that prepare employees for making the right decisions within the confines of their consumer-directed health plans. Building the capabilities to provide wellness education and partnerships with providers that can provide health management services was a critical component of USI’s service development.
The brokerage can now provide customized wellness programming, off-the-shelf education programs and health fairs for employees, “whatever the employer wants to provide to employees to support their health plans,” Karp says.
The firm has also partnered with health and wellness service companies such as Wellspring Healthcare in McKinney, Texas, that provides wellness education and health screening and coaching. Local on-site medical service providers can conduct blood tests, x-rays and other screening procedures that are consistent with a wellness strategy.
Clients can also choose to add health advocacy services from Health Advocate, Inc., in Plymouth Meeting, Pennsylvania, which provides personal support services to employees and helps them navigate health plan and hospital services, the claims process and provider networks.
Wellness and medical management also crosses over into workers compensation management, Karp adds, one more reason USI requires crossover consideration of employee benefits and property/casualty insurance strategy. “Wellness and health education are key components of workers compensation cost control, return-to-work activities and disability management,” he notes.
“We try to view all of our services holistically,” Leonard says. “From the standpoint of corporate strategy, everything is connected. There are clear links between workers compensation and benefits, disability management, fiduciary liability, directors and officers liability and general risk management.”
Who coordinates all these services with an employer’s organization? Usually the human resources department at USI tries to be an ally and a resource to the overworked human resource professionals at the client company, Gruppo says.
The increasing complexity of human resource and employee benefits management has led the brokerage to broaden its human resources services as well as its insurance and actuarial expertise.
USI also assists with analysis of information technology platforms for employee benefits enrollment and delivery, including customized Web tools, and can provide employee communication resources for employee benefits as well as general human resource management tools such as newsletters, employee handbooks and satisfaction surveys, executives say.
With all that, how can a once-a-year visit suffice? *