Trying to quote small group health insurance to trucking co in Mobile,AL

[mobilegent]

I am quoting small group health insurance to a trucking co in Mobile AL. The co has about 30 employees. The best rate that I have seen is All Savers Ins Co (partially self funded plan). The trucking co has been recently contacted by ADPIA (Automatic Data Processing Insurance Agency,Inc) for assistance with quoting their group health insurance. ADPIA is a subsiduary of ADP (Automatic Data Processing ).Has anyone ever been against ADPIA in competition ? Is ADPIA have any markets for group health insurance in AL ? Looking for suggestions or advice . Thanks.

 

[somarco]

ADP offers a PEO. They have been doing this for several years.

Professional Employer Organization | PEO Services | ADP

 

[mobilegent]

Thanks for your message. I have been doing research on PEOs.As an independent insurance agent do u think I will be competitive selling a group health insurance product against a PEO offered by ADP ? Tell me what u know about being in competition with PEO,if anything. Do u know if an independent agent can broker a PEO product ? Any suggestions or help u could give me would be helpful.

 

[somarco]

Thanks for your message. I have been doing research on PEOs.As an independent insurance agent do u think I will be competitive selling a group health insurance product against a PEO offered by ADP ? Tell me what u know about being in competition with PEO,if anything. Do u know if an independent agent can broker a PEO product ? Any suggestions or help u could give me would be helpful.

I spent about 30 years in the group health insurance business before switching to Medicare.

PEO's have been around at least 15 years, maybe longer. I have never tried to go head to head with them even though I could probably offer a group insurance package with better value.

What I can't do is offer the full HR package with payroll, WC and whatever else is included in today's PEO offering.

This is JUST my opinion, others who are still active in the group insurance market may feel differently, but I would consider it a waste of my time to try to disrupt the PEO package by carving out some portion of the employee benefit offering.

Some PEO's allowed independent agents to market their program in the past. I don't know if those situations still exist or not.

Even if they do, unless you understand and know how to pitch WC, payroll services, etc you are wasting your time and your prospect.

Pitching a PEO is like an agent who is proficient in small group plans trying to sell a 401(k), WC, CGL, etc at the same time. Most who try that will miss a lot of other sales that are in their wheel house while trying to compete against someone who sells a PEO every day.

We had an agent not too long ago that had an "in" with a whale . . . could have been a large group or an association . . . don't recall which. Several folks tried to tell him to walk away and let someone who knows what they were doing to help, or set up an agreement to let the expert handle everything once Mr. Greenagent made the intro, and be willing to take a small (10% or 20%) cut in exchange for learning the ropes.

As I recall, he was not willing to set aside his ego and ended up arguing with agents who were trying to help.

Don't be that guy.

 

[scagnt83]

If a PEO makes "sense" for a business just depends on the situation. Most PEOs are a completely bundled solution, with no room for outside insurance solutions. The ones that do allow clients to pick and choose services, still charge the same fees regardless.

The workerscomp rates are often where the PEO is able to be ultra competitive with blue collar businesses. But it often sacrifices truly competitive rates on group insurance.

Dont try to compete against what the PEO offers as a whole, unless the owner asks you about it. Then just explain why it makes sense to have the ability to have control over what benefits are offered vs. not having a say with the PEO. Then offer to refer a P&C agent and payroll service to him if he is in need of competing quotes. Paylocity is an agent friendly payroll service.

Just offer what you do at the best rates possible. Going with a PEO is much more than just the group benefits. No sense in trying to compete against what you dont do. But do explain the pros/cons of not having control over your own benefits.

 

[somarco]

Thanks for joining in, Tyler. Lee Vena usually chimes in but since he retired I don't see him around much.

PEO's were reasonably new when I was winding down my group health business. There was a local one that actively solicited agent participation. It was intriguing but I figured they would "use" us to get them in the door and then would wedge us out of the relationship. So I never pursued anything with them.

I understood enough about the concept to know they could steamroll an agent almost anytime they wanted.

 

[scagnt83]

Thanks for joining in, Tyler. Lee Vena usually chimes in but since he retired I don't see him around much.

PEO's were reasonably new when I was winding down my group health business. There was a local one that actively solicited agent participation. It was intriguing but I figured they would "use" us to get them in the door and then would wedge us out of the relationship. So I never pursued anything with them.

I understood enough about the concept to know they could steamroll an agent almost anytime they wanted.

I tried working with some PEOs early in my career. I found that most do not really care about competitive employee benefits. They win clients with the WorkersComp & Payroll.

They also are shady AF!! with their chosen broker relationships.

On the 401k side, I showed a local PEO how they could save $50k a year in fees (50% decrease) on the Plan... with Owner couldnt have cared less....

Found out a few months later, he is golfing buddies with the 401k advisor, we play at the same club. Then a buddy of mine in the pro shop mentioned one day how "generous" the 401k advisor is.... apparently pays for the PEO owners membership to the club!!

So the PEO owner was fleecing his clients 401k accounts to get free golf.

It was most certainly a "pay to play" situation if you were an outside broker of any kind. With the only goal being maximizing comp. A plan that size should have had half that comp level. And they pitch the 401k plan as a "low fee plan, leveraging a large asset pool of all the PEO clients". I meant it when I said he was fleecing his clients 401k accounts.

Obviously all are not like that. But its a very obfuscated situation no matter what. Especially if the PEO charges a service fee. Sometimes they charge a service fee in leu of comp on certain P&C products.

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@mobilegent just remember the PEO sale is about a turnkey payroll/P&C/Benefits/Retirement package. The only way to "sell against it" is to show why a package with limited choices or even no choices in what carriers and plans are provided, can end up being a bad thing. Show the expense, lack of competition, extreme difficulty moving out of it (have to find new payroll/P&C/benefits all at the same time), etc. Even if its a net savings for the employer, show the negative aspects in the long run of being locked in and not having control over your own companies benefits. Ive spoken to a number of companies over the years that wanted out of their PEO, but just didnt have the time to completely redo all of their P&C, all of their group benefits, and all of their Payroll. Its a monumental task for a small business to do all of that at once.

 

[somarco]

@scagnt83 early on in my career, during the last century, I did a fair amount of work with mostly small, but a few large, alphabet houses. Didn't take me long to figure out they get paid regardless of the advice they put forth.

Along with an agent (I was a carrier rep at the time) we visited a somewhat large (1,000 lives or so) national employer in the Nashville area. "My agent" supposedly had an in with the CFO who also happened to be a former next door neighbor.

Based on information the agent gathered I put together a somewhat informal presentation to break out the group life and health lines and place them with separate carriers. The savings to the company was significant.

The CFO handed me a bound 180 page report prepared by their long time consultant (this was before PEO days). The report was beautiful including a leather-like binder, numerous charts and graphs (which only an actuary could understand and love). The CFO asked me to explain it to him.

I flipped to the back, took about 5 minutes to scan it, and said the report offers nothing useful.

He was incredulous.

"What do you mean, nothing useful? We paid $30,000 for that report.". (This was late 70's when $30,000 was a lot of money . . .)

All you got for your money was a summary of half a dozen or so different plan but lacking a critical side x side analysis and recommendation. It is essentially "If you choose plan A you get this. Plan B get's you that and plan C is similar to A or B".

I would have analyzed your benefits for $0 and made recommendations that would save you more than any of the scenario's in your report.

The CFO was furious (not with me). He was resigned to stay with the consultant and do nothing partly because of the long standing relationship between the company president and the consultant but also because he didn't want to tell the president they blew $30k on a worthless report.

Agents think saving $$$ is the key to the sale. Most of the time $$ do not trump relationships. Too many politics in the benefits market, especially when you are planning on being a giant slayer.

 

[scagnt83]

Agents think saving $$$ is the key to the sale. Most of the time $$ do not trump relationships. Too many politics in the benefits market, especially when you are planning on being a giant slayer.

Very true words there Bob. When you have a CEO, VP, CFO, CHRO, all involved in the decision making, things get sticky quick.

I want know how to break into the market of charging $30k to analyze health plans... I will take that in today's dollars even!! LOL. What a scam

 

[somarco]

I want know how to break into the market of charging $30k to analyze health plans... I will take that in today's dollars even!! LOL. What a scam

The guy that owned that firm was an actuary for one of the local insurance carriers. He left and started his own "consulting" firm and took along his former secretary and an associate actuary. I met with him a few times in his office. A cavernous space to match his ego. About the size of a corporate boardroom.

He had a massive desk and very little furniture in the room. Two chairs in front of his desk, probably 10 ft away. Bookshelves lined the walls.

When you entered his office he did not get up to greet you. Instead, he motioned for you to enter but said nothing. He had books and files on his desk, pretending (or actually working) on something. You were allowed to approach his desk but not speak or sit until he looked at you and told you to sit.

So you did . . .

Conversations were short and direct. He asked questions while never answering any of yours. After a few minutes of verbal badminton he would get up and leave through a side door.

A few minutes later his secretary would step in to tell you it was OK to leave . . . so you did.

He had a racket and no one dared challenge him.