From the January 2011 issue of Benefits Selling Magazine •Subscribe!

The Great Escape

They say Las Vegas is the city of second chances - however slim they might be. Rebecca Purdy can back that up.

It wasn't that long ago that she found herself unemployed; the airline she worked for shut down. Like most of us, she stumbled into the insurance business.

It's a familiar story, one we've all heard hundreds of times. I mean, do any of us really plan to get into insurance?

But how many of you jumped in while the economy crashed? In what is arguably the hardest-hit state in the union?

"I got into the business in 2002," Purdy recalls. "When the [regional] airline industry here in Las Vegas I worked for went bankrupt I wondered, 'What am I going to do?' And as I was shopping for my health insurance, I talked to a local broker who asked, 'Well, have you ever thought about insurance?' And I blurted out, 'Insurance? No...who thinks about insurance?'"

After the initial shock, Purdy realized it wasn't so far-fetched. She loved a flexible schedule, being able to help and work with lots of different people. "So I got my license, and two weeks later I went back into his office and said, 'OK, I have my license, now what?"

She started off doing admin, knocking out a couple of policies here and there - mostly in the individual market. And it grew from there.

"I went on to work for that particular agent for about four to four-and-a-half years," she says. "Then I started my own agency, the Onyx Group. I did my own thing for about two-and-a half years and I got kind of tired being independent. When the health care reform writing was on the wall I thought, 'I'm going to need to hire people and try to grow and do more volume,' which I didn't really want to do all by myself."

She'd been friends with the partners at Distinctive Insurance already, so she approached them about a merger. They finalized the deal in July, which made her vice president of business development.

Benefits Selling: So you were hired not only as a broker but to promote your business in the community?
Rebecca Purdy: Yeah. I'm getting some recognition within the community as well as developing some strategies internally to streamline processes and make us a little bit more efficient [as an agency].

BS: OK, so how's business?
RP: Well, because Las Vegas is one of the harder-hit economies in the United States -- highest foreclosure rates, highest job losses and unemployment rates -- it's made things pretty tough. And the group market definitely had a lot of larger companies downsize.

We went from hundred-man groups, in some situations, down to eight to 20 people. So a lot of downsizing -- especially in industries such as construction, architects, landscaping, things like that -- means we've definitely seen some drop off.

BS: Does that make up the bulk of your agency's group business?
RP: No. Absolutely not. I mean, we're pretty well diversified. But it's an interesting city. You have really large groups, such as casinos, hotels, big cab companies, things like that. But the majority of the business here is all small business. It's (normally) a really good state to do business in -- so it attracts a lot of these small businesses. But the catch is that all these small businesses all depend on each other. When the construction industry fell, we dealt with people out of work and not spending money, so you see that trickle-down effect.

We've seen a lot of strip malls close up, a lot of empty buildings sitting around and the smaller employers just basically hanging on trying to survive. The real estate industry, of course, also was ridiculously hit so, yeah, we had a lot of people unemployed around here.

BS: So what has your agency done to address this change in the market? Have you adopted a new strategy or rolled out new products or portfolio options? What has been your strategy that has enabled you to counteract and survive?
RP: We've been a little more strategic. Health care reform is making that a little bit difficult but gone are the days that we're selling the $500 deductible plans with the wonderful doctor visit co-pays. I mean that is just out -- it's unaffordable now. So we've definitely seen employers go to the higher deductibles.

Companies have gotten more creative as far as adding in things -- such as a deductible on an HMO plan, for example, which is kind of interesting. Just to help offset some of the costs to keep the premiums down. So it's a matter of offering different products and trying to be up front and honest with our employer groups as far as what we see coming so they can adequately prepare when they are making their benefit selections.

BS: And have you seen the economic downturn reflected in the enrollment process?
RP: I think fewer family enrollments. We're seeing a lot less participation on the family and children side [of enrollments]. I don't know if this has happened everywhere but in Nevada we no longer have carriers that write child-only policies. So it's gotten pretty messy. You've got an employee plus family coverage running somewhere at maybe $800 a month, whereas before maybe we put the employee on that plan and then pull the kids off and then insure them separately for $100 or $150 a month.

And we're not able to do that anymore. So it's getting really sticky. I think the state will probably see a huge influx on the Medicaid system. I don't know the numbers on that, but that would be my assumption. People just can't afford it.

BS: What else is unique about Nevada, and Las Vegas in particular, that you don't see elsewhere?
RP: We kind of joke here that people think other companies can come in from Arizona or California and think, "Oh we're huge here; we'll just rock it in Las Vegas." Las Vegas is a very "good-old-boy" network, and it's very relationship-driven. You've got people who've golfed with the same person for the last 30 years and they're not going to switch their business.

I don't care what amount of money you say you're going to save them. So the relationships are really tight here. I've talked to a number of other brokers who've moved into the area and they are floored, flabbergasted, they just can't make inroads. The big businesses are tied up so it's almost like you've got a certain number of brokers all fighting after the same accounts and you know they're just not switching.

BS: So what is your strategy for trolling for new business?
RP: Distinctive Insurance is managed by a very young group of people. And I would say right now we run up against brokers who've been in town for 30 to 40 years. And businesses are starting to look elsewhere. So we're getting traction there, little by little, winning cases over brokerages that have been around forever just because we're more flexible. We're more strategic I think sometimes in the way that we put things together. We use a lot of supplemental products.

We're very HSA-driven. We like a lot of the high-deductible consumer products and our agency really tries to educate our clients on how to use them versus just throwing it at them as a premium savings solution without any customer service on the backside to help them run it, implement it and teach the employees how to use it. So we're really education-driven. The team I work with is just outstanding in the level of customer service they offer.

BS: Have you seen reform impact your market yet?
RP: Yeah. Absolutely. But it's been more in the individual markets where it seems like the changes are coming so much faster. We've seen a lot of the big agencies gobbling up the little guys because the little guys are kind of like, "Oh my gosh I can't take my commissions being dropped 20 percent first year to 8 percent."

That's probably one of the biggest things, obviously: the commission change. But outside of that it's also for the groups, especially with the grandfathering provision that has everybody talking to themselves, because companies want to save money. I would say employers so far are frustrated because they're so confused. But we don't want to alarm anyone too quickly.

It's almost like, what can we do to hold on right now and sort of wait and see what happens? That is probably at the top of my mind even in our agency. We really want to separate ourselves from the pack and be the leaders in health care reform but at the same time we don't want to be calling meetings every month to update our clients. It's almost like people are just holding on and are not really sure what to do because we don't have a clear direction.

BS: So what would you say to brokers who are feeling frustrated or stuck in a holding pattern? How do you get them motivated again?
RP: This too shall pass. I truly believe if you're consistent, dedicated and you do the right thing day in and day out and look for opportunities, there is huge growth potential. If you can be flexible and grab those opportunities as they come up then I think you'll survive.

But there's going to be a lot of patience and a lot of faith involved. If this is what you want to do then be patient, have faith and work hard. I was blown away when I realized how much work it takes to be made in this industry. But for me it didn't feel like work because it's always been something I enjoyed so much.

BS: So what would you say to someone who was in your shoes just a few years ago?
RP: I'd tell them to start in property and casualty.

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