BENEFITS AGENCY

Benefits business provides depth & leverage

LBW builds client ties with P-C, benefits, HR support, tech training,
retirement services

By Len Strazewski

Employee benefits do not have to dominate an agency's book of business to be that glue that holds together success. Even a relatively minor contribution in revenues can represent a high level of expertise that builds customer confidence.

At LBW Insurance and Financial Services in Valencia, California, property/casualty insurance is the agency's biggest money-maker, generating about 65% of revenues, says Chief Executive Officer and Managing Partner Mitzi Like. But employee benefits, which generate about 25% of revenues, give the firm depth and leverage that opens doors and stimulates a steady flow of new business from an expanding client base.

Once executives are pleased with the benefits solutions, they are likely to think about LBW for their personal financial services, Like says. Life insurance and financial service contribute about 10% of revenues.

The agency also provides human resources support and training and technology risk management under its Tech Secure division. The Tech Secure program identifies information technology risks and helps employers guard against accidental disclosure, deal with data breaches, and recover from electronic attacks. As part of Tech Secure, the agency also consults on some of the newest technology-related issues, assisting employers with the development of a social media policy that covers Facebook, Twitter and other popular new communications tools.

"We are a full-service agency," Like explains. "Our ability to manage all aspects of our clients' needs enhances our reputation and gives us the opportunity to interact with local clients at several levels within their organizations."

Cross-selling is part of the agency's culture, she notes. "It's relatively easy to move our property/ casualty insurance clients over to our employee benefits operations. They are already confident in our service and expertise. Once we begin working with the client as a human resource account, we also create opportunities to work with the client in other ways with other lines of coverage."

The firm

LBW is located in the Santa Clarita Valley north of Los Angeles, in a community of about 250,000. The local economy is driven by education, including the giant community college, College of the Canyons, and the Disney-supported four-year college, California Institute of the Arts. Real estate and nonprofit organizations are also leading employers in the area.

The agency has 34 employees, including two employee benefits producers and six benefits staff.

Employee benefits expertise also offers the agency stability, Like says. Property/casualty insurance rate competition keeps every client's eye on the bottom line, as rates continue in a multi-year soft market.

Group health insurance rates, however, steadily increase, she says, making steady contributions to agency revenues. Moreover, the recognition of quality service across lines of coverage helps keep clients committed to the agency despite the ups and downs of the marketplace.

"Employee benefits are part of our overall commitment to service", Like says. "By maintaining multiple profit centers across lines of coverage, we create opportunities to meet with our clients regularly and be an important part of their business."

Like says LBW staff members are in their clients' offices often, responding to the various needs. Risk management, group health benefits, human resources, technology issues and financial services all provide points of contact with organizations that make the agency a business partner as well as a vendor.

LBW employees are also committed to the community, giving the agency high visibility among local leaders, Like says. LBW executives serve on the boards of many of the local nonprofit service organizations and are active in community services, maintaining the agency's professional image.

Addressing health care

Valencia area employers face many of the same problems that other employers in other areas of the country face, adds Haley Wiener, vice president of employee benefits. Health care costs remain a challenge, she says, and the agency works with clients to refine their group health programs to contain cost increases and improve their rating.

For many small employer clients, restrictive community rating makes shifting more costs to employees one of the few options, but the agency has had some success in negotiating better terms and rating position from health plans.

In one case, Wiener says, the agency was able to move a local employer from a carrier's small business program to less restrictive rating reserved for employers with 50 or more employees. The move saved the client about $40,000 in annual premium.

However, some local employers also have the advantage of more health plan competition than many others around the country. Many agencies in the Midwest and East Coast regions say competition is usually limited to fewer than three or four group health plans, but Wiener reports that at least seven large group health plans are active in the area.

Leaders include BlueCross/ BlueShield of California, Healthnet, Kaiser Health and PacifiCare/ United Healthcare. Aetna Health and Cigna are also active, usually working with national employers with local employees.

"Of course we always do extensive marketing." Wiener says. "But we are not just shopping for the lowest price. We try to look at the big picture, the advantages and disadvantages, before we recommend a change."

California health plans are also leading providers of wellness services, and LBW works with the carriers and their clients to match employer needs with appropriate wellness services. More employers are conducting health screening and biometric testing programs for early identification of health risks, she says.

The agency provides open enrollment services to small business clients, managing workplace presentations, health fairs and other events, she says. And they are using their open enrollment periods and health fairs to introduce employees to smoking cessation, weight reduction and other lifestyle health improvement programs.

Wiener says the agency benefits experts also try to identify employee benefit needs that are not covered by employer-paid group health plans. "We always try to round out each account by looking for the missing piece, the benefit the employer is not providing but one that fits into a comprehensive benefits program."

Voluntary benefit programs can fill many of the gaps with affordable long-term disability and short-term disability insurance, supplemental life insurance and long-term care insurance, among other products. The agency has voluntary benefit relationships with industry leaders AFLAC and Colonial Life.

Participation varies by employer and by product, Wiener says, "But as often as we can, we encourage employers to contribute to the cost of voluntary benefits. That always improves participation rates."

Other services

For the past several years, human resource services has been an additional component of the agency's service package that fits in with its employee benefits services. Wiener, who has worked for both insurers and brokers, has also worked on the employer side as an employee benefits manager and human resources generalist. She provides leadership in human resources support such as state and federal regulatory compliance, sexual harassment training and day-to-day personnel management.

Earlier this year, for example, the agency sponsored a health reform and employment law update seminar, partnering with two local employment law firms and an expert from the California Association of Health Underwriters.

The support, however, is not restricted to occasional events, says CEO Like. "Our clients call us directly if they are having a problem. Many agencies provide online databases with hundreds of pages of documents about compliance and human resources, but, frankly, our clients don't have time for a lot of reading when they are facing an issue.

"They call us directly and talk to a real person with some real insights," Like notes.

Retirement services and individual financial services are also important to the agency's reputation as a full-service agency says Donald L. Like, chief financial officer, partner and father of the CEO.

A registered securities principal and investment advisor representative, Donald oversees the agency's retirement plan practice as well as individual estate and wealth management services.

While some agencies refer retirement benefits issues to outside firms, LBW maintains a thriving practice in qualified retirement plans, including 401(k) defined contribution plans for for-profit employers and 403(b) defined contribution plans for nonprofits, he says.

The agency has also been an active plan consultant, guiding employers through changes wrought by the recent recession and struggles with profitability. During the recession, many employers suspended matching contributions to employee savings, he notes, but as the economy has rebounded, employers have come back seeking innovative ways to sweeten the benefit.

For example, several employers have established profit-sharing models as a new vehicle for their contributions. The profit-sharing plans allow flexibility to modify contributions based on the success of the company. The agency has guided some of its clients into "safe harbor" testing to maximize contributions for executives and highly compensated employees.

LBW also provides consulting in non-qualified deferred compensation retirement plans that allow C-level executives to build benefits that provide retirement income more consistent with their career earnings.

Not only does the retirement practice support the commercial full-service operations, it supports what Donald calls, "the whole client concept." Executives responsible for employee benefits decisions often have special personal needs, such as estate planning, wealth management and business ownership succession. Donald notes.

"By employing best practices with our employee benefits services, we establish our reputation and leadership in allied fields, and that includes their own personal financial needs."