C.R. Ekern & Company - P-C Agents Find Benefits Golden

P-C Agents Find Benefits Golden
By Rob Ekern
National Underwriter, February 28, 2000
© C.R. Ekern & Company, 2000

Across the United States, property-casualty agents and brokers are discovering the same thing—there is pure gold in employee benefits.

Virtually every p-c agency that starts selling benefits finds it to be the fastest-growing part of their business.

There are several reasons why employee benefits has become a huge area of emphasis in traditional p-c brokerage firms. Here are some of them:

• The cost of benefits coverage is a direct result of health care costs. For the past decade the cost of health care has increased dramatically each year. Therefore, the revenues from benefits programs have risen proportionately.

• Benefits have become a major portion of many employers' overhead. Employers are very interested in learning innovative ways to reduce these costs.

• There are several issues that are shared by workers' compensation and benefits programs. Many brokers have discovered that there is a natural tie between these lines of coverage.

For a traditional p-c brokerage to effectively solicit benefits, it is critical that they understand the one major difference in the transaction—employee benefits brokers cannot use the carrier to differentiate themselves.

In most cases the carrier will provide the same or similar quote to several firms working on the account. Therefore, unlike p-c transactions, the carrier is not a differentiating factor between brokers!

For a broker to be successful selling employee benefits, a cross-selling campaign should be adopted. This must include the principles of consultative brokerage. Remember, because of the higher emphasis on cost issues and the inability to differentiate by carrier, successful benefits brokers value the importance of being a consultant.

Here are ways to implement and manage a successful benefits cross-selling program.

Profile your top 25 opportunities. Before embarking on your journey, make a map. Discover the top prospects in your book of business. Ask yourself and your staff these questions:

• Which clients have significant workers' comp issues?

• Who are the fastest-growing clients in employee size and geographic issues?

• Which of your clients have had significant changes in their balance sheets?

• Which clients have recently changed chief financial officers or human resource personnel?

• Who are your clients that have a large base of employees?

Analyze the opportunity. In addition to the above, you must ask one other question. If you create an opportunity, is the account a good benefits prospect? There are some accounts that might be quality p-c accounts but difficult benefits transactions. Your analysis should include the following questions:

• Who is the client contact for benefits coverage?

• What information will you require?

• Have you created a perception of benefits expertise?

• How will you initiate the opportunity?

Adopt a consultative role. As mentioned earlier, employee benefits brokers cannot differentiate by carrier. Therefore, they must establish a superior perception as a consultant.

There is a huge difference in the way buyers perceive consultants as opposed to insurance sales people. Failure to understand this cultural difference will lead to low hit ratios.

Demonstrate your value. Many cross-selling opportunities fail because the broker assumed they would be slam-dunks.

The successful firms approach every cross-sale with the same attitude as a new client. They strive to find ways that will demonstrate and prove their value in the new transaction. This is particularly true in benefits cross-sales. Here are some of the questions which successful firms provide answers to:

• How will you reduce and contain client costs?

• What is your unique value proposition?

• What commitments will you make?

• How will your representation of both p-c and benefits bring client value?

Don’t surrender your leverage. If your firm already represents the p-c program, you have a tremendous advantage. Don’t surrender it easily. It is imperative that you shift the discussion to "total cost of risk."

The "total cost of risk" includes factors made up of p-c and benefits programs. Once you move the buyer to an understanding of their "total cost of risk," you can demonstrate how your firm will advise them universally. This is a powerful strategic position.

Based upon recent estimates, the cost of health care will increase dramatically in 2000. This increase in health care costs will translate into gigantic opportunities for brokers who master the above cross-selling techniques.

Rob Ekern is Chief Executive Officer of C.R. Ekern & Company, a Phoenix-based consulting business.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 28, 2000. Copyright © 2000 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.

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