Doug Snowman's from up north. So far north, in fact, that another step takes you into Canada.
Snowman grew up in Medway, Maine, a microcosym blue-collar America. His dad earned his living as a "tin knocker," a sheet metal worker. His grandfather? A logger and woodsman, of course. He got his hands dirty feeding pulpwood to the Great Northern Paper Co., at one time the largest paper mill in the world.
In 1982, an athletic scholarship took him away from small-town life and into Gordon Brown College in Wenham, Mass., (on Boston's the North Shore). It was there he stumbled onto the business.
"During college I worked for Commercial Union Insurance Co. in their training and education department, which gave me my first exposure to the insurance industry," he recalls. "Although most of what I did was sort mail and provide gopher services for everyone from the vice president to the weekend receptionist, the experience was very formative."
The recession smacked us all just as Snowman graduated Gordon in 1987. Needless to say, jobs were scarce (like bank loans, now). But that's not to say Snowman didn't have options.
"I had my own construction business called Asbury Construction," Snowman explains. "My system for finding business was to go to wealthier neighborhoods and knock on the doors of homes with peeling paint and ask if I could provide a quote. It worked well enough to keep a crew of three to four guys busy."
But it was Snowman's closing technique that took him from porches to premiums.
"I met a customer who took an interest in me," he explains. "I provided him an incredibly low quote and, without him accepting it, I started to unload equipment from my truck as if the job was mine. He laughed at my 'assumptive close' and told me to go ahead and get started. As it turns out, he was a sales manager for Colonial Life and we quickly became personal friends and colleagues in the business."
This budding mentor introduced Snowman to the sales side of the business. He hung up the tool belt and spent the next seven years working for him as a career agent, learning the voluntary benefits business. It wasn't always smooth sailing.
"Working on straight commission made for some tough times; you really have to question your career choices when you're rinsing out peanut butter jars for that day's sandwich," Snowman laughs. "But I also knew I didn't want to cold call for new construction business or work in the paper mills back home."
But, as they often do, things eventually turned Snowman's way. He moved over into an insurance brokerage position and business just started taking off.
"But my greatest achievement, by far, was somehow convincing a smart, beautiful southern lady to marry me. We've got three great boys who make us very proud," he says. "Maybe it's the strength of a good woman or the responsibility of being a father, but from then on I never looked back or questioned my career choices again. I knew the voluntary benefits business thoroughly, my grasp of group insurance markets was strong, and my book of business was getting consistently larger - life was good. But the words of a mentor always stayed with me: 'you're either growin' or you're dyin'.'"
Snowman's now the founder, owner and president of PayPlans & Benefits Inc., a payroll processing and HR services firm in Falmouth, Mass.
"Working exclusively with agents and brokers throughout the country, our firm provides a single service platform for payroll processing, employee benefits administration and HRIS services," Snowman explains. "We are growing rapidly and collect and remit about $22 million in deductions annually."
In January 2002, Snowman and his crew decided to expand the business and began offering payroll processing and human resource services. See, Snowman was looking ahead and grew concerned over the future of group health insurance. What would happen to his company's revenue if that business just went away?
He grew equally concerned about the fact that banks and payroll companies were bargin' into the insurance business, as well.
"I actually had my ADP payroll representative call on me, in my office, with her insurance partner, asking if they could review my employee benefit plans for me - wha wha what?" he recalls.
Not long after that office visit, he lost a longtime client to a large bank who'd also jumped into insurance brokerage services.
"It didn't take a genius to recognize a seismic shift was happening. I felt I had no option; it was time to restructure to compete and to also prepare for the day when health insurance commissions may disappear," he explains.
The business owners and HR professionals from small- and medium-sized businesses he talked to after that shared a thread of common needs: They wanted a single-service platform to process their payroll, manage their benefits and maintain employee files. But most employers couldn't afford it.
"We moved aggressively to fill this need in order to compete against the encroaching banks and payroll companies," he says. "We designed a cutting-edge system that met needs and we made our service available for less money than a traditional payroll company might charge. This enabled us to block out competitors and increase revenues from the associated payroll and HR fees, all while saving the employer money. It's pretty cool."
Benefits Selling: So what makes you successful?
Doug Snowman: Honestly, it's really just because we listened. It's the simplest of ideas. We listen to needs and create solutions. I say "we" because many have been instrumental to our success. My friend and colleague Andrew Rodgers has helped devise various products, such as our 'reverse direct deposit' service. And none of what we do could be done without my dedicated staff, which is headed up by Susan Schmidt. We have a total team effort going.
In the final analysis, our success boils down to planning, smart strategy, focus and execution, with a healthy dose of hard work, teamwork and personal relationships.
BS: What are your favorite products?
DS: A by-product of our payroll administration capabilities has been a service we refer to as 'reverse direct deposit.' This gives us the ability to deduct weekly premiums from employees without the need for a traditional payroll deduction slot. This service has been very popular with our brokers and has seen explosive growth over the last 12 months. This service has helped many of our brokers gain access to unions, associations and employer groups that formerly could not offer traditional voluntary payroll products because no deduction capability existed. In the right circumstances, reverse direct deposit coupled with [short-term disability], life, accident and cancer has been exceptionally popular and we expect to see tremendous growth in this area during 2010.
BS: What about this business drives you?
DS: Primarily, I love that our industry's products help individuals and families when they need it most. The competition can be a grind but it's also really motivating. Ultimately, though, it's the relationships that are most satisfying. There are people I was in the trenches with 22 years ago as a rookie agent and they are still some of my closest friends to this day.
BS: Speaking of which, can you talk a little bit how you see the broker-carrier relationship?
DS: Brokers and carriers obviously have in common the constant need for new premium. From a carrier's perspective I would think the quality of a broker relationship is directly related to the amount of premium that broker provides. How can it be otherwise? The home office folks need to hit their number or it's rough going.
From a broker perspective, how we judge our relationship with a particular carrier is often determined by the quality of the local rep. It's invaluable to have a strong local rep who can advocate for you on a day-to-day basis by running interference with the home office, returning phone calls promptly, acquiring aggressive underwriting concessions and addressing service issues quickly. Sounds pretty straightforward, but we've had scenarios where we had great relations with a carrier until the local rep changed. Almost overnight, our relationship with that carrier ceased. We received no welcome call or visit from the new rep, only road blocks when trying to place a new case or get a service issue addressed. This was the exact opposite of our experience with the previous rep for the same carrier. Eventually, we had no choice but to place our business elsewhere.
At the end of the day, generating new premium is what keeps us all employed, and that is also the best ingredient for good broker-carrier relations.
BS: What is your take on where the industry stands right now?
DS: Group health insurance is broken and relying on these products for long-term success is a mistake.
I'm very optimistic about our industry's future, but I feel strongly that brokers and agents need to begin to adapt now for the big changes that are coming. It will be tough for brokers who are well established and don't begin to plan now for the future. Trying to develop new lines of revenue after group health commissions go away, or are reduced, will be very difficult. I wouldn't bet my house and business existence on group health commissions remaining at present levels for very long.
Here in Massachusetts we've had health care reform since 2006 and we've seen commissions reduced incrementally over the last few years. Slowly the carriers are replacing 3 percent to 5 percent commission rates with flat dollar amounts per head. One carrier has even started charging interest on premium bills if payment is not paid by its due date.
BS: What are your thoughts on the health care bill stalled out in Congress?
DS: I'm certain some type of health care reform bill will come out of Washington at some point, but what it will look like is anybody's guess. Solutions to problems like health care reform tend to turn out not as bad as feared but also not as good as hoped.
Of course, this is an issue we all need to pay attention to, serving as advocates for our industry and our clients. But I think spending too much time worrying about what might happen is non-productive. I refuse to let some squirrelly legislators control my business destiny. I've written my representatives, cast my vote and spent a lot of time discussing what should be done with health care. But I'm focusing on the things I can control so that whatever these nutty legislators decide to do I'll be ready.
BS: How's the health care situation in your own state? How has it been (besides expensive)?
DS: We have a unique perspective here in Massachusetts regarding health care reform. The Reform Act has been in place now for several years, requiring each resident to have health insurance coverage or face certain penalties. I believe the last statistic released estimated 96 percent of Massachusetts residents had health coverage. While I do believe the Health Care Reform Act was enacted with all the best intentions, the unintended consequences are astounding. In Massachusetts, in 2010, employers with 50 or fewer employees are experiencing average rate increases between 25 percent to 30 percent. Prior to reform the average increases we experienced were 12 percent to 15 percent. I read in the Boston Globe [recently] the Health Care Reform Act will cost the state $2 billion this year.
BS: And Scott Brown?
DS: For Massachusetts to send a Republican to the U.S. Senate is just incredible. To send a Republican to fill the seat Ted Kennedy held for so long is nothing short of miraculous. Sen.-elect Brown exposed a real thread of discontent in the electorate. I'm not sure if people were voting for Scott Brown the candidate, or if they were looking to send a message to Washington revoking the current thinking on spending and health care reform. Either way, I think he's a good man and deserves to be given a chance to perform.
