Armed with information
Biennial survey equips this South Carolina agency
with local employee benefits trends
By Len Strazewski
As group health plan premiums continue their steady rise, many agents and brokers struggle to expand their books of employee benefits business—not only to capture the revenue they generate, but also to provide health care cost containment tools to long-time property/casualty insurance clients.
At Rosenfeld Einstein Insurance in Greenville, South Carolina, employee benefits has always been the cornerstone of the agency, its largest source of revenue, and its most important business niche. And cost management techniques, including self-funding, high-deductible health plans, and wellness programs are agency service mainstays.
Over the years, the agency's benefits expertise has also driven growth in property/casualty insurance revenue.
Founded in 1933 as a life and health insurance agency, the agency first accommodated its commercial clients' need for property/casualty insurance by farming the coverage out to other brokers, says principal Howard Einstein, grandson of founder William Rosenfeld.
"But quality wasn't easy to maintain when the business was out of our control. So the agency soon decided to acquire its own property/casualty expertise and become a full-service broker."
Today the agency generates about 55% of its revenue from employee benefits and about 45% from commercial and personal lines. "I am told that the national average for agents is about 30% of revenue from employee benefits, and many agents target a closer balance to offset the soft P-C market," Einstein says.
"But finding the right balance isn't so easy. While it is true that property/casualty rates have been flat for years while health rates have been rising, health insurance premiums are based on enrollment and the recession has driven employee numbers down. To be successful, you have to do a good job at both."
About 30 of the agency's 62 employees provide employee benefits-related sales and services, but producers also sell across lines. Commercial clients range in size from 50 to 2,000 employees and include manufacturing, distribution, and construction companies, financial institutions, and government bodies.
"We definitely do a good job of cross-selling. That's how we built our property/casualty insurance business," Einstein says. "We provide incentive compensation to producers for bringing in referrals," he says, and many of the referrals come from sources other than employee benefit clients. "We have several European companies with local operations that come to us exclusively for property/casualty insurance needs but they can become new employee benefits clients."
Employee benefits—and health benefits in particular—still pose the greatest challenges. The Greenville region has more health issues than other parts of the country, Einstein says.
In the heart of tobacco country and known for its high-fat diet, the South has a higher obesity rate and a higher rate of smoking than most of the nation, he notes. "Every state is different, but in the South our medical claims are high and influenced highly by behavior."
Local employers rank benefits as the second most important aspect of job satisfaction and the second greatest expense after payroll, Einstein says.
Employers seeking to reduce health risks and costs have some obstacles, but they are trying and succeeding, he says.
Health benefits survey
Last year Rosenfeld Einstein released the results of its biennial employer survey on employee benefits. The "2010 South Carolina Employer Benefits Survey" polled about 100 organizations around the state to assess benefit costs and provide benchmarking comparisons for its participating companies.
The study revealed that employers are attacking rising costs by expanding high-deductible health plans, starting wellness programs, providing health risk assessments, and banning tobacco from the worksite.
Premiums in South Carolina are actually a little lower on average for preferred provider organization (PPO) coverage compared with a national average. And premiums for high-deductible health plans, now offered by almost half of local employers, also average slightly less compared to national levels.
However, employee contributions are higher, both for single PPO coverage and HDHP single coverage.
The study also revealed that in South Carolina, wellness programs are gaining ground among employers. More than 38% offer personal health risk assessments, up from 25% in the 2008 survey; nearly 20% provide discounts to employees who do not use tobacco, up from 6%; and nearly 44% ban tobacco from worksites.
The state has also become a leader in providing on-site health services. Nearly 14% of employers have nurse practitioners on site to provide basic health services and reduce emergency room visits.
Local employers also provide a wide range of employee benefits. About 57% offer employees three or more health plan options, 91% provide a defined contribution retirement plan (about 65% with an employer match), more than 89% offer long-term disability insurance, 81% offer short-term disability insurance, and about 19% offer long-term care insurance.
The agency does not sell the survey data; rather it uses the trend reports "as part of our conversation with clients," Einstein says. "Employee benefits cost is a big number for our clients, and it is essential that they have data upon which to base their decisions."
The agency's own experience tracks to the survey findings. Most Rosenfeld Einstein clients offer employees plan design options, and just under half provide health savings accounts (HSAs) or health reimbursement accounts (HRAs) with high-deductible health plans.
About 40% of clients provide some sort of wellness program—ranging from education services and online personal risk assessments to comprehensive biometric screening and behavior modification. Growing numbers provide on-site health service staffed by nurse practitioners.
Abby Russell, worksite wellness consultant, says wellness is no longer a hard sell. While employer programs vary, they usually receive support from senior executives.
"In most cases, the leadership comes to us. The chief financial officers and the human resource managers understand the need for a healthier workforce and its role in both reducing medical claims and improving productivity," she says.
"Lots of clients want to push the limits" in terms of linking wellness to employee contributions and providing both incentives for healthful lifestyles and disincentives for risky behavior. State regulation limits the options, she says, but does allow employers to offer discounts to employees who do not use tobacco, for example.
Employers can also provide incentive rewards for individual health challenges, including weight loss programs, exercise programs, and other behavior modification. The agency can often calculate a wellness return on investment for its self-funded clients for whom the agency tracks claims data, executives say, but many employers are still fully insured and must rely on their health plans' estimates.
Clients must also be fully engaged in wellness programs for at least three years before the agency can develop reasonable trend calculations, Russell says.
The calculations are still difficult, Einstein says. "There are lots of gray areas. We can show claims cost reductions over time, but there is additional value in productivity and presenteeism improvements that are difficult to quantify."
Attentive service is critical to client relationships, notes Gina Dill, vice president of operations at Rosenfeld Einstein. Agency operations include account management teams, a technology team, a shared services team, and retirement plan services.
Shared services include benefit call center operations, employee enrollment services, and employee benefit communications. The agency also conducts regular customer satisfaction surveys and prepares twice-yearly client stewardship reports to document agency value and service.
The agency divides employee benefits services by client size. Small accounts with 50 or fewer employees are primarily fully insured, commission-based accounts. Leading group health plans in the region include BlueCross/BlueShield of South Carolina, United Healthcare and, more recently, Wellpath, a division of Coventry Health.
Large accounts range in size from 50 to 2,000 employees and are mostly fee-based because of the higher level of service they require. Employers with 150 or more employees are most likely to self-fund all or part of their group health risks and require claims administration, claims analysis, and other services.
Einstein and Dill say that growing numbers of clients are fee-based, representing both the depth of service they require and their interest in careful accounting of their benefits costs. "Our services have become increasingly consultative," Einstein says.
Human resource services are an important part of the agency's expertise. Einstein says the firm prefers to hire producers with human resource experience rather than insurance experience. Producers who have an HR background can provide immediate advice and counsel whenever they meet with clients.
Clients also have more concerns than ever, Dill adds. As employee benefits becomes increasingly regulated and complicated, the agency responds with training and education on topics such as administering new plan designs, determining eligibility, and reconciling claims and bills.
Employers also have many questions about health reform as the legislation slowly comes into play. "Am I grandfathered? Will I be grandfathered? What do I need to do or change to comply with new regulations?" Dill says.
Einstein says the agency tries to be ready with answers, but there are still plenty of unknowns. As states introduce health insurance exchanges by 2014, many small employers may choose not to provide health benefits, driving a flood of formerly insured employees into the individual health insurance market.
"We will need to be ready for whatever comes," he says.