Property and casualty (P&C) insurance agencies that expand into benefits are finding that the new business line not only increases total revenue, it brings the agency into a tighter relationship with its clients.

Through the sale of benefit packages, insurance agencies are deepening ties to customers.

“The benefits business is becoming a profit center for a lot of agencies,” said Rick Morgan, senior vice president of marketing and strategic services at Applied Systems, and a long-time industry watcher.

Selling benefits is a good way for agencies to insulate themselves from the swings in P&C, he added. Back in the old days, P&C agencies would just write P&C.

“Now the leaders make a concerted effort to handle all the insurance-related business for their clients, including financial services in some cases. They don’t leave anything on the table,” he said.

“In the last five to six years benefits have started to grow really fast,” explained Kurt M. de Grosz, senior vice president of sales at BenefitPoint, a software vendor that specializes in benefits. That growth attracted the attention of agencies, but they found that their P&C agency management systems weren’t designed for benefits coverage, except for the accounting piece.

BenefitPoint developed an application called Aptus that is designed to integrate with agency management systems and provide revenue tracking and management and commission tracking. It integrates with systems from Applied and AMS. The company provides reporting through Microsoft Excel and Access and is working on a business intelligence platform built on Microsoft .NET.

Morgan said the benefits software packages and the general agency management systems do overlap somewhat, but he added that agencies that want extensive benefits functionality will add Zywave or BenefitPoint to their infrastructure.

Property and casualty insurance operates under a different set of rules from benefits providers, said Earl Horton, executive vice president at Roger Bouchard Insurance, which has offices in Florida.

A P&C agency needs to have an established contract with a carrier before it can submit an application, while in the benefits world, anyone with a license can write benefits; they don’t need to work through an agency.

That presented a problem to agencies – why invest in a benefits producer who could leave any time she felt like it?

“Any time you had a good producer, she could go out on her own,” explained Horton. “All she had to do was call on accounts and send a submission to the carrier, and the carrier would write it.” The agencies that did stay in the benefits business usually did so because the principal was the producer.

Now specialist software companies such as Zywave and BenefitPoint are offering new services, dependent on software that gives the agencies that buy them a way to attract and hold producers.

Zywave, said Debbie Schmiddal, account manager and technical support for benefits at Bouchard Insurance, offers the agency services – such as Web-based resources for members enrolled in the benefits plan – that the subscribing companies can offer as their own resource.

A Web site with full plan details can take a huge load of work off a company’s human resources department.

Bouchard Insurance uses Zywave’s HR Connect, which provides a 24x7 employee handbook to companies, and BrokerageBuilder, an agency management tool.

After all, said Horton, most of the agencies that work with Zywave and BenefitPoint were P&C firms that ran software designed to insure buildings, cars, and fleets of trucks.

“The software packages they had bought for their agency management didn’t accommodate benefits – they didn’t have templates in there for benefit plans and didn’t have ways for accounting for the commission, which is generally done on a variable rate,” said Horton.

His agency uses Applied, the agency management system, for P&C and accounting; it synchronizes with Zywave, so whether a policy is written for P&C or benefits, the accounting and commissions can be calculated in one spot.

Beyond accounting, though, integration of the systems means that producers can be better at cross-selling because they can tap into a comprehensive view of the business a client already has with the agency.

The Scott Agency in Lynchburg, VA, got into benefits about 13 years ago when P&C customers asked for help.

“Then about seven or eight years ago, benefits really began to take off,” said Teresa Vaughn, who is on the multi-state agency’s development team. “We have grown from one benefits producer to eight.” Now Scott P&C agents refer clients to the benefits producers who reciprocate.

“When clients can look to us for everything it produces a tighter relationship,” she explained.

To make that tighter relationship work, however, agency employees have to know it exists, and that requires integrating benefits and agency management systems, explained Applied’s Morgan. An agency wouldn’t want a benefits producer to threaten to cancel a client who lagged in his health premiums while on the P&C side he was a highly profitable customer. Only if the systems are working together will producers in both areas be able to understand a client’s total value to the agency.

www.appliedsystems.com

www.benefitpoint.com

www.bouchardinsurance.com

www.scottins.com

www.zywave.com