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I have a small commercial lines P&C agency and looking to expand our benfits department. Currently we have a small amount (group health, dental, etc) on the books and know there is huge potential for increasing this business. The problem is we don't have a "benfits only" producer and know this is something we need to invest in.

Has anyone had any experierience outsourcing this to another firm? If so, is there anyone you would recommend?

Thanks for your input.

http://www.digitalinsurance.com They outsource small group for some of the largest brokers in the country. Very professional shop.

BusDevGuy,

Thanks for the recommendation. I did contact them a while back and due to our (benefits) volume they could not accomidate us at this time.

Any other recommendations?

Digital is the only true outsourcer of which I am aware. Otherwise you might look for a GA in your region who has feet on the street who can help with the sale. An outfit like BenefitMall out of Texas, for example can be very helpful to a smaller shop.

Why not bring in a benefits producer? There seem to be a ton of sole prop benefits guys out there that would like to come into an established P&C agency to cross sell your accounts and get paid on any of his accounts that you cross sell the P&C. Interview a few until you find the right fit.

Well, this is actually an issue that cuts across a number of layers - so let me try to do your question some justice because I think it's really important.

I outsourced nearly $850,000 of commission business to Digital when I was the Regional CEO for USI Holdings in Northern California. We sent them our accounts generating less than $5k/yr of commissions because they didn't fit into our model and we were losing a lot of money servicing them. I think Digital is a great fit for this kind of thing - not what I believe you are looking for in an ongoing business partnership, be it internally or externally.

As it relates to expectations, industry data suggests that, at maturity, a P/C operation can/should have an EBEN practice generating about 22%-28% of overall revenues. So, for example, for every $1,000,000 of PC revs you CAN have $220,000 to $280,000 of EBEN revenues STRICTLY from cross selling! That's a nice number! Now, that depends upon a lot of things, specifically, if you are bootstrapping an EBEN practice, if most of the PC clients are under 50 lives you'll be at the higher percentage range. However, if you are doing D&O for large companies, or construction, etc., it will be tougher on a fledgling EBEN practice to cross sell and the percentage will be lower, much lower.

On the issue of outsourcing vs internal. You can go lot's of ways here - for reasons driven by metrics, or reasons of personal comfort level. If you go external, look for an EBEN only practice....work up a contract (I have templates, by the way if you want) that take into account all the crazy things that happen in this world- if they sell their business, if they hire or acquire a PC practice, etc., etc so you are protected no matter what happens. If you go internal, there are TONS of producers whose books you can purchase on an earn out basis (no up front cash) or hire producers by promising (and delivering) an 'earn-in' equity for the book, and have a really great internal business partner that will not only cross sell for you but bring business AND develop there own business.

Food for thought. If you want to bat this around a bit more let me know....am happy to help if I can. I think (actually I know) you are on the right track, just 'measure twice and cut once!'