Benefits, Creativity Needed By Agencies to Retain Employees

Today, health and benefit plans have become so regional that it is not possible to set up one program for all, she said. Programs change so often that buyers need to reassess their benefit packages each year, Borowski noted.

"What is purchased today may not be the best option a couple of years from now," Borowski observed.

Adding to the agencys dilemma are changing requirements by states and the federal government over benefits required within a plan. The result, Borowski said, are altered costs that can cause providers to leave markets.

Agency heads, however, say there is much more to benefits than costs and health care.

"As a general statement, my definition of benefits is broader than others," remarked Scott Hauge, president of CAL Insurance and Associates in San Francisco.

While the agency provides its 30 employees with health care, pension, vision and dental benefits, there are also the "little things" that make employees want to stay, Hauge said.

Some of the non-traditional benefits his agency offers employees include time off for community service, payment for continuing education, and celebrating employees birthdays each month, he said.

But coming up with effective benefit plans didnt happen overnight, said Hauge, who has been in the agency business since 1977. He admits his plans are the result of "a lot of trial and error."

Agents need to be creative when deciding on benefit packages, he observed. Some options, though inexpensive, can have "a big impact on the employee" he said.

Hauge said the average CAL Insurance and Associates employee has 13 years of service in the agency, "and many have never worked anywhere else," he said.

In order to compete with corporations for employees in the insurance industry, agencies need a comprehensive benefits plan, said Dave Bauer, president of Bauer Insurance in Albany, N.Y.

Agents also may feel the need to provide a solid benefits package because many agencies are family owned and there remains a "paternal instinct to care for employees," observed Don Cullen, director of benefit operations with the Young Agency in Syracuse, N.Y.

Agents, however, increasingly voice frustration over rising costs, he said. Cullen explained that medical costs have averaged an increase of 10 percent in each of the past three years.

Clients in New York benefit from community rating, making purchasing a little easier and premium rating universal. Under this system, however, Bauer observed there is little room for leveraging better rates.

Providing benefits grows more difficult for smaller agencies, Cullen noted. An agency with fewer than 10 employees no longer qualifies for group benefits. As a result, the agency can find itself in a situation where requirements for benefits become more stringent, if not impossible, should someone in that group prove to be a liability, Cullen observed.

A small agency operation of two employees can find it impossible to find coverage, and most likely would need to purchase individual insurance, he said.

The stress of providing benefits is driving some small agencies out of business, observed Mike Markris, vice president and owner of Williams-Manny, Inc. in Rockford, Ill.

In Illinois, small agencies can see increases of 30 to almost 50 percent on their health benefit premiums. A small group sees higher premium increases when an applicant becomes severely ill, eating up the companys premium, Markris said.

This reality is causing some agents to sell out their practice well before retirement age, partly because they cannot keep up the escalating costs of providing benefits for employees, Markris noted.

A small state in terms of population, Nevada agencies have their own set of problems, said Jennifer Fryer, administrator of insurance programs for the Carson City-based Nevada Independent Insurance Agents.

On average, health benefits are rising at the rate of about 15 percent a year in Nevada, she said. This is reflective of the states insurance market, which is experiencing increases in pricing across all lines. Despite dwindling capacity, however, health benefits remain available to agencies, Fryer said.

Florida is beset with its own set of problems, noted Jacqueline Wier, president of Premier Insurance, a life-health and p-c independent agency in Cape Coral, Fla.

Increases are averaging 20 percent in Florida. While agencies may mitigate their increases by taking on higher deductibles and co-payments, at this point no one is dropping coverage, she explained.

"When someone says theyre thinking about dropping the coverage, I say, You may want to think about that. The competition [for employees] is still out there," Wier said, adding that health benefits are something employees have come to expect from employers.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 8, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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