Agents and brokers who deal primarily in P&C coverage, particularly independents, have long sought to expand their books by branching out into new areas, with some venturing into the realm of Employee Benefits and other Life & Health lines.

While P&C agents with experience in selling Life insurance say the exam for obtaining a license to sell Life policies is not as intensive as the test to obtain a P&C license, they'll also admit that selling Life insurance is hardly as simple as finding a quote and issuing a policy.

So those agencies looking to break into writing Life & Health business would do well to bring on a dedicated expert to handle those sales.

"Health Care is complicated. There are different levels of Life insurance—from simple Term Life to much more complicated products," says Steven Spiro, principal of The Excelsior Group in Valley Stream, N.Y., an agency that offers the full spectrum of insurance products to both individuals and businesses. "Knowledge is power, and agents have to be knowledgeable in what they are selling."

For example, Spiro says agents need to realize E&O consequences await if they do not know their product and fail to identify their clients' exposures, such as not putting a Disability policy in place for a small-business owner to protect his assets and business if he becomes sick.

"It does take a lot of work" in learning the Life & Health ropes, confides Spiro, who advises that it would be much wiser to bring someone into the agency to lead the Life insurance program rather than appointing a P&C veteran to try to learn to juggle both types of portfolios.

When it comes to selling benefits, "carriers will give any [licensed agent] a quote, but it is what the agent does with that quote—and the work they do to figure out what the employer's goals are—that really matters," says Brannon Brooke, principal of New Braunfels, Texas-based TCOR Insurance Agency Ltd.

"Someone bright enough can certainly figure out selling Employee Benefits, but having some experience helps quite a bit," he adds.

TCOR, which traces its roots back to 1898, started its Employee Benefits practice in 1986; Brooke took over the division in 1990. The agency began selling Life insurance with a small amount of Health insurance, and in the years since, Health insurance has come to dominate the agency's Employee Benefit book—which today accounts for about 25 percent of the firm's total revenues.

Timothy Russell, principal of The Russell Agency LLC in Southport, Conn., and John Ambrusco, the firm's Life & Health expert, agree that hiring an individual focused on Employee Benefits is absolutely essential for a P&C agency wanting to expand its offerings.

The Russell Agency, primarily a Personal Lines agency with Commercial accounting for 20 percent of revenues and Life & Health 10 percent, does not rely on Health insurance as its sole Employee Benefits program. Concentrating on businesses with 50 or fewer employees, the agency also sells Life, Long-Term Care and Disability insurance to small groups and individuals. Most recently, it has gotten involved in the Medicare Advantage plans, says Ambrusco.

"There is nothing on the spectrum we can't write," he adds.

However, that business has been garnered as a result of the agency's ability to authoritatively advise on such business—and Russell cautions fellow P&C producers looking to replicate his success to bring in a specialist rather than spending an inordinate amount of time absorbing the ins-and-outs of Life & Health coverage on their own.

"It's not worth going into it blind," says Russell. "The agency has to hire someone with product and market knowledge to hit the ground running."

PPACA: POTENTIAL GAME-CHANGER

This need for experience is only intensified by the complexities that accompany the Patient Protection and Affordable Care Act (PPACA), popularly known as Obamacare.

"With the health-care act and the direction it is going in, a small agency that doesn't have someone focused on it, and working on staying in compliance with it, will find it difficult to hang on," says Coby Rod, director of sales at Texas Insurance and Financial Services Inc., which offers both Commercial and Health insurance.

Rod is no stranger to the Life & Health business. A decade ago, he led the agency into individual and family coverages and eventually formed an Employee Benefits division capable of covering businesses ranging in size from two employees to as many as 2,000.

The agency's focus today is on small to medium-size groups of up to around 300 lives, working with niche businesses such as beekeepers, nurseries and landscapers, along with smaller oil and gas companies.

Staying in compliance under PPACA demands a lot of reading and research, Rod notes, and for agencies like his that requires having one individual focused on that task.

Those agencies simply issuing quotes and not offering additional insight are doomed, he says. "They will not only have to show clients how to save money but also advise them on all the regulation and laws to keep them out of trouble in the future."

One major concern that agents have about PPACA's implementation is the potential for less compensation. Because Health Care companies under the new law are mandated to spend up to 85 percent of their collected premium on patient care, carriers are reducing marketing and administrative spending, including commissions.

The mandated spend, or medical-loss ratio (MLR), is starting to have a negative impact on pocketbooks, with some brokers saying they are already experiencing cuts in their commissions. And the fear is that those cuts may eventually go so deep that it may no longer be feasible for some agents to stay in the business of selling Health insurance.

Agent associations have been battling in Congress for changes to the MLR calculations to exempt agent commissions. So far, the efforts have gained some ground with passage of a bill by the House Energy and Commerce Committee (HR 1206) last month. However, the bill has not come to a floor vote and the odds for action on it this year appear to be dim.

Russell, for one, believes there is plenty to be concerned about when it comes to compensation. "Our core clients see the value of the agent relationship," he says. "But I worry about compensation getting cut to where it is no longer a viable business for an insurance agency."

Yet for all the uncertainty PPACA raises for P&C agents who also deal in Employee Benefits, some experts say it may present a big opportunity for them as clients try to navigate the daunting new health-care-benefits landscape.

Producers who do even just a limited amount of Life & Health business can differentiate themselves from the pack by educating themselves on the new laws and interpreting them clearly for clients.

Eileen Sorabella, an attorney with Clyde & Co., a law firm specializing in insurance, points out that implementation of PPACA could have the effect of leveling the playing field among insurance brokers and agents—because everyone is starting from scratch and scrambling to acquire the expertise they need to explain the new federal guidelines to clients and sell them the appropriate coverage.

Right now, she says, for the most part "no one is an expert" on the finer points of PPACA. "With the new structure and new ways to access products, it is an opportunity for agents to educate themselves on the regulations and become experts" who can really provide a valuable service to clients.

Special Reports /

Knowledge Is Power for P&C Agencies Looking to Take On Life, Health and Employee-Benefits Business

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