Selling P&C and sellingemployee benefits are two very different disciplines, yet marketfactors have created cross-selling opportunities.

|

The consolidation of the brokerage industrycontinues, and with that comes a trend that brings two distincttypes of coverage under one roof: employee benefits and property and casualty insurance.

|

The two areas have different issues and different costs. P&Cpremium rates have been mostly steady or even decreased in recentyears, while rising health care costs have continued todrive up premiums for employers.

|

This cost issue is playing a role in merging the two areas,according to industry experts. “Due to turmoil in the benefitsenvironment from the cost standpoint, people are taking a muchharder look at how to address those costs,” says Josh Fragoso, vicepresident and director of sales at Oswald Companies. “Even in thelarger companies, you're seeing more of a collaborative approachbecause of the financial impact that benefits have as a risk to theprofits and losses of an organization.”

|

Related: 3 ways P&C and benefits brokers can setthemselves apart

|

Craig Hasday, president of EPIC Northeast Benefits and FrenkelBenefits, agrees that rising health care costs have played a rolein brokerages' decision to offer products in both areas. “It's avery different discipline selling employee benefits than it isselling P&C,” he says. “You need a completely different skillset. In the past, it was difficult to bridge that gap. Butrecently, because the costs have grown so exponentially, theC-suite has started to move on the employee benefit space, and thefinancial sophistication that has existed in the P&C side isspilling over to the employee benefits side because health carefinancing is different than it used to be.”

|

A turbulent market

Consolidation of brokerages as an industry trend is leading totwo types of agencies, says Dave Evans, senior vice president atIndependent Insurance Agents and Brokers of America. “What we'reseeing are agencies that are either very good at a niche market, orthey have really leveraged a holistic approach between the P&Cand the benefits world,” he says.

|

Hasday notes that P&C, while profitable, has not seen thekind of growth that the benefits side has seen—partly as a resultof grappling with cost issues. “We've had a sustained, soft P&Cmarket for many years,” he says. “At the same time, brokers see thegrowth of benefits revenue has by far outstripped the P&Crevenue and they say, 'Hey, I want a piece of that!'”

|

“The fact is that there's been more disruption in the benefitsfield, and that has driven that field to evolve very rapidly,” saysFragoso. “When health care reform came, there were a lot of firmsthat said, 'We're just not going to deal with it.' Most of thefirms we've acquired have been on the benefits side.”

|

Trust and communication

So what's the secret to success in a business that requires twodifferent skill sets? According to Fragoso, good communication iskey. “It's crucial to have an understanding of how clients digestinformation, according to the culture of their company. Thatunderstanding can lead our teams to really jump-start therelationship and ensure that we're communicating and working in away that supports what's unique about that client,” he says.

|

That includes meetings between the two shops to coordinate theirwork. “We'll have the teams meet and we'll talk about observationswe have and challenges that the client may face in their industry,”Fragoso says. “It helps us to better understand the needs of thatclient and where we could execute value. The communication betweenboth sides is absolutely critical.”

|

Fragoso adds that without communication, the dual approach isunlikely to work for clients. “If a brokerage doesn't have acollaborative environment, we'll see a redundancy of informationbeing communicated, we'll see areas that are missed, inaccuraciesin information. You can tell they're just not communicating.”

|

“They key for the brokers is trust,” says Hasday. “Theconfidence that your colleagues on the other side are going to beas diligent and resourceful and client-focused as you are,” hesays. “If you're confident that the other side of the house is justas good and just as diligent as you are, there's no reason why youwouldn't cross-sell.”

|

“There's tremendous opportunity in cross-selling,” he adds.“There are more revenue opportunities; there is better 'stickiness'with clients; it's one less relationship to foster. But you have tobe confident it's the right answer.”

|

Breaking down silos

According to Hasday, there can be territoriality among bothbrokers and clients. “There's definitely a desire among the HRpeople to have control of their domain, and they don't necessarilywelcome the encroachment of the risk force into the mix,” he says.But the high costs of health care makes doing it the old way moreand more difficult, he adds.

|

On the other hand, clients often welcome cross-selling becauseit can simplify things. “If they can find a firm that has expertisein benefits and in P&C, they'll welcome the cross-disciplines;that's one less relationship they have to manage,” Hasday says.“There is risk with expanding the relationship, but the rewardsoutweigh it.”

|

Fragoso says some companies are fearful of putting too many eggsin one basket. “They ask, 'Are we dealing with a jack-of-all tradesinstead of an expert in each field?' But overall, we've seen areception that's positive, because they have a firm where there'sexpertise in both areas, and they can leverage that for the bestoutcomes. There's a lot to be said for efficiency.”

|

More business management ideas forbrokers:

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.