Agents Who Stick to a Plan Will Be Very Successful

In our continuing column on employee benefits, Insurance Journal senior writer Dave Thomas recently spoke with John Nelson, vice president of California-based Warner Pacific Insurance Services. John’s responses are based primarily on his experiences in the California small group marketplace.

Dave Thomas: What are the latest trends we’re seeing with employee benefits in general as it relates to today’s economy?
John Nelson: In California, rates are continuing to go up. Carriers that have increases more than once in a year are holding their increases to single digits; those that have increases every 12 months or so are coming back with a mixture of single and double digit increases, depending upon the geographic area. Many carriers are coming out with products that are designed to shift more of the financial burden to the consumer, rather than increasing premiums as dramatically as they have in prior years.

Dave Thomas: Are we seeing more companies adding or cutting back on employee benefits in general with today’s economic conditions?
John Nelson: Small employers are cutting back, but not to the extent that some would believe. When faced with a rate increase, most small group employers downgrade their coverage by only one level. In other words, we rarely see employers downgrading their coverage to the lowest-priced product that a carrier has available. This is a function of many industries, whose job markets are still very competitive, not wanting to risk losing key employees and therefore maintaining a competitive level of benefits. Employers and their employees perceive benefits as a very real part of their compensation. Extreme downgrades of coverage could be easily perceived by employees as a pretty sharp decrease in compensation.

Dave Thomas: What are the challenges facing agents in selling employee benefits?
John Nelson: Despite the competitive nature of certain job markets, employers are always looking for ways to save money on their benefit packages. As carriers strive to meet the demand for more innovative products, agents need to keep abreast of all of the options and endeavor to keep their clients informed of the multitude of new plans and financing options. Unfamiliarity with new products, not to mention lack of knowledge about such legislative topics as HIPAA privacy, COBRA and other regulations, could put an agent at a competitive disadvantage.

Dave Thomas: How does an agent go about setting up a good employee benefits book of business?
John Nelson: Stick with the fundamentals. Keep informed, and stay in touch with your clients. When you need help and have to hire people, don’t ever settle for second best. Good staff people are hard to find. Once you find them, they may be expensive but are almost always worth every penny. Don’t ever stop marketing your services. Telemarket-ing and print advertising are proven ways to get new business. Finally, stay the course. I’ve seen agents who decide that they want to reinvent the wheel and change the systems that brought them to where they are today, and it usually is a mistake. What you’re doing may seem monotonous, but if what you’re doing is working, keep doing it.

Dave Thomas: Are employee benefits easier to sell now with all the information available to agents, i.e. Internet, etc.?
John Nelson: Easy access to information is both a benefit and a challenge for agents. Sheer volume of information presents the greatest challenge as agents sift through, and try to guide their clients through, the myriad of details. In addition to keeping abreast of the latest sales techniques and insurance regulations, successful agents also need to know about the state and federal laws that pertain to our business. HIPAA privacy alone is a very cumbersome issue but one that is critical to agents and their clients. So, despite the advent of the Internet and the fact that there are fewer carriers to sell, in many ways, it is tougher to be an agent today than it was years ago when there were many more carriers in the California marketplace. This is one of the reasons why the agent population is shrinking. The good news is that agents who remain in this business and do their jobs well will be very successful.

John J. Nelson is vice president of Warner Pacific Insurance Services, a California-based and California-focused General Agency that has been serving agents and their clients since 1982. Headquartered in the Los Angeles area, Warner Pacific is one of California’s largest general agencies and is a top-producing general agency for several of the state’s largest insurance carriers. Nelson is also a member of the board of trustees for the National Association of Health Underwriters (NAHU) and is the NAHU liason to the National Association of Insurance Commissioners (NAIC).

Topics California Carriers Agencies