Last week I had the pleasure of speaking at the third annualWorkComp AdvisoryGroup's “Knowledge and Networking” event. The group works withindependent agencies to develop sales strategies, centered on butnot exclusively targeted to workers' comp.

I spoke on the challenges faced by both the publishing industryand independent insurance agents. Suffice it to say that I draggedboth Ben Hecht and Perez Hilton into the discussion and got a laughwhen I used the term “whacked” (yes, I'm from Chicago).

Click here to see a PDF of my PowerPointpresentation.

But although my presentation was no doubt scintillating to theattendees (irony alert!), they were probably moreinterested in what WorkComp co-founders Frank Pennachio and SusanToussaint had to say about upcoming industry trends and strategies.They focused on three: the producer performance gap, the influenceof big data and healthcare reform.

From the attendees' perspective, probably the most disturbingtrend is the last.

Most WorkComp Advisory clients are midsized agencies that servesmall to midsized customers. Pennachio is concerned about thegradual creep of multinational brokers into the employee benefitsand healthcare arena — beginning with the large buyer. Buttechnology, buyer need and economy of scale could soon enable bigbrokers to target the 50-employees-and-under businesses — the breadand butter of the independent agent.

Using health insurance exchange administration as theenticement, the biggest brokers could soon be “buying their wayinto your clients' offices,” Pennachio said.

Pennacchio noted that both Aon Hewitt and Arthur J. Gallagher are getting into the health insurance exchangebusiness. Aon Hewitt announced it will assist employees withquestions they have about the plans offered and will be compensatedby fees and commissions paid by insurers that participate in theprogram. “There is a lot of work employers no longer will have todo,” according to Mike Christie, senior vice president, exchangesfor Aon Hewitt.

This is great for companies, especially because under thecurrent model of an employer-sponsored defined-contribution plan,tax law still allows deductibility if the company works with aprivate exchange, such as those run by Aon Hewitt and Gallagher. Ifan employee goes to a state exchange for an individual policy, theemployer loses this deductibility. Additionally, by working with abig broker's private health insurance exchange, employees can justto go a website and have the broker administer their coverage, andthey can call a 1-800 number if there's ever an issue.

It's not so great for independent agents whose businessrelationships might be compromised if the big brokers get intosmaller business.

“Some midmarket agencies think that healthcare reform won'taffect them, but this trend will,” Pennachio said. “Instead ofwringing their hands about healthcare reform, the big brokers areleveraging it as a business strategy. With technology, healthcarereform and their power, they'll be able to engage with employers ofall sizes — and you'll have them in your shops.”

Big brokers are also acquiring employee benefits-only agencies.According to MarshBerry, employee benefit deals so far this yearhave accounted for 50 percent of the transactions completed by thetop three brokers. This means they're buying access to accountsthey would have never gone after in the past, Pennachio said.

The situation could develop along the lines of ADP and Paychex's emergence into the workers'compensation insurance business, he said. Fifteen years ago, whenthese payroll companies began referring customers to a 1-800 numberfor workers' compensation quotes, agents considered them “anklebiters.” Today, they're opening agencies of their own and gettingcontracts with the same carriers as independent agents.

So what can independent agents do to respond to this wakeupcall? “Get out of the transactional approach to business and proveyour value to your clients,” Pennachio said. “Transactionalbusiness is threatened by technology. It's happened to travelagents and stockbrokers; independent insurance agents are nodifferent. The message is, if you're playing the transactional gameand it worked, it was only because the big brand-name brokersdidn't want your business. Now they can be in the doorelectronically.”