Insurance Agencies – Winds of Change are Blowing It’s time for agents to prepare for the storm

FOR IMMEDIATE RELEASE
Bradenton, Florida, United States of America (Free-Press-Release.com) November 14, 2011 -- Winds of Change


The major industry change for agents and brokers who derive income from business related to health care is the Patient Protection and Affordable Care Act. Since this bill has passed it has been challenged in multiple courts, struck down in two and upheld in one. It looks now as if it will get a hearing with the US Supreme Court in spring of 2012. No matter the outcome, most employers do not understand their compliance requirements. For small businesses meeting these new obligations will be a formidable task.

The bill proposes on-line insurance “exchanges” that identify another risk to agencies regarding the impact of direct, on-line quoting of insurance that eliminates insurance intermediaries and agents. With the continued comfort and efficiency of web based products, some are saying that insurance agencies and brokers could lose significant amounts of revenue. What happens to the “exchanges” and legislation remains to be seen, regardless, insurance consumers will be seeking and expecting on-line insurance purchasing.

Large payroll companies also present a significant threat to agents and brokers that serve small businesses. Increasingly the large payroll and Human Resources companies are recognizing that payroll and client billing is excellent vehicle for offering pay as you go workers compensation and collecting health insurance premiums. Some are now offering direct writing of P&C insurance and benefits and cutting out the agent in the process. And if that wasn’t bad enough, they already have a relationship with your clients. Large payroll companies want your turf and its revenue.

Checking the Radar
A strategic review can help your agency understand the issues and threats to your current book of businesses. Your review should access your position in the market, sales and marketing strategies and your true competitiveness in your core market segments. The goal should be to evaluate where your business is threatened, where there are opportunities and how you will compete. You need to ask some tough questions of your agency:

Threats and Risks

As mentioned, many agencies will be assailed from trends in health care reform and individual exchanges, large payroll company market intrusion and on-line shopping expectations. Are there other general risks to retention of your existing clients or your target market prospects?

Value for Clients
What value do you now bring to your clients and can you deliver that value in the future. Does your revenue mainly accrue from client renewals or do your clients relay on you to help them navigate through the complexities of the new health care reform? Are your continually looking for products that bring value to your clients?

Beating the Other Guys

Can you identify things that make your agency stand out from the crowd? How can you separate yourself from the pack and be he agency of choice for your area? Do you have a plan for reaching your target markets effectively? Do you have a product suite that delivers innovative solutions that your potential clients need?

When you complete your strategic review you will probably identify some areas that are at risk and need to be shored up. It should also identify new areas of opportunity that you should consider targeting with new products and marketing efforts.

Finding Strategic Partners – Considering PEOs

For insurance agencies and brokers, partnering with a Professional Employer Organization (PEO) can offer an excellent way to maintain their book of business while mitigating some of the risks to the agency. Companies hire PEOs to provide payroll, human resources, benefits, workers’ comp insurance and general regulatory compliance. PEOs are partners in helping businesses lower labor costs, lower their regulatory risks and gives them time to grow their businesses. Being an employer is a mine field of labor and HR related risks. PEOs allow business owners to outsource the administrative aspects of compliance and ensure it is done correctly. So how can a PEO help your agency? Partnering with a PEO can be a powerful way to protect your agency revenue and to hedge against competitive threats. In addition, partnering with a PEO may offer a way to expand your value to clients with an expanded product platform.

How can a PEO help your agency? Most of your small business clients probably do not have the HR expertise to understand and implement the complexities and impacts caused by health care reform. If you or your agents cannot navigate the clients through these issues you are not providing adequate guidance to your clients and may be even be liable for errors. Partnering with a PEO who understand the complexities brings a new and valuable addition to your suite of services and may help retain at risk clients.

This can also be an excellent way to protect your clients from being picked off by the large payroll companies. If your clients use any of the large payroll companies, it is only a matter of time until they attempt to take over all the benefits and human resources products and eliminate the role of the agency or broker. Since PEOs also handle payroll, partnering with a PEO reduces the threat from the large payroll providers and maintains your agencies role with the client.

Payroll giants also are a significant threat to your property and casualty book of business. As with health insurance, they are set up with national work comp programs that are done on a pay as you go bases for calculating and remitting work comp premiums. PEOs have been doing this for 25 years, but PEOs have been honoring the relationship with their partners and maintained their partners compensation. Agents are made whole while providing an expanded service offering to their client. In turn their clients are much less assailable by the major payroll companies. Partnering with a PEO allows agents to maintain the revenue and reduce the threats. While work comp revenue may not be significant, why allow the camel’s nose under the tent?



Expanding Your Role with Clients

Another way to reduce your storm exposure is to expand your role with clients and potential clients. An agent who views their role as that of just offering quotes and access to insurance products may not be considering the changes that are coming. Providing just rates and quotes may well be done directly by insurance companies or by others agency on the web. Redefining your role to a health insurance consultant keeps your value to the client unique and valuable. As discussed, advising and assisting clients navigate complex health care reform can be a valuable service that partnering with a PEO can help you deliver to your clients.

Diversification

Considering the growing ways that agents and brokers are being circumvented in the insurance buying process, it makes sense to diversify your product offerings. Diversification allows your agency to expand to a valued role as advisor targeting the best insurance, human resources and risk management solutions for your clients. When you conduct your strategic review planning, you should be able to identify the existing product areas that are most vulnerable to on-line direct selling and the insurance lines that are best suited for an consultative approach from a valued agent or broker. Personal lines agents that have relied on health care insurance products are likely to see a significant reduction in revenue due to health care reform. These agents should be expanding their products to include supplemental products, long term care insurance, life insurance and Medicare supplements. P&C agents may also be well served to review their insurance appointments for additional products that can provide revenue to the agent and value to the client.

Prepare for the Storm – Stay Standing When it Comes
The major changes in the insurance industry demand that agencies access their threats and opportunities by performing a strategic review and plan for their futures. Agents who hedge their bets and diversify their product offerings with expanded products and advisory consulting may be the only ones standing when the winds subside. HR Outsourcing partnerships with a Professional Employer Organization offer an excellent way for agents and brokers to prepare for the storm.

Contact Chris Dodson at StaffMarket.com for more information about how partnering with a PEO can help your agency thrive!

Chris Dodson
941-750-9450 x 204
chris@staffmarket.com

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