How to Get into Groups...

[ABC]

Bruce,
You make an excellent point!

It's funny you post this. I just picked up a couple new groups that I am going to use this strategy with in their zip codes.

Thanks

I think the paragraph I bolded is important. The two sentences/statements seem to run against each other.

I think a decent approach with a 30 EE business owner is to first understand that there are only 4 things that matter to him/her when making business decisions (like hiring you) and to make certain your conversation/pitch is always framed by them:

1. How do I improve service to my customers?
2. How can I increase my sales?
3. How do I lower my expenses?
4. How can I increase my profitability?

Nearly every agent who calls Mr X Company on the phone (or sees him in person) will lead with:

"Mr, X, I have saved some firms in your area a lot of money and I'd like to do the same for you..."

One different, attention-getting pitch might be:

"Mr X, as a small business owner myself, I understand delivering outstanding service to a growing client base on a cost-effective, profitable basis is your objective.I'd like to ask you just one question..... What is your biggest problem with your health plan?"

Whatever the response, your reply is, "I understand. Help is on the way."

Make the appointment.
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[TwiLight]

I perferably go through PEOs that offer a PEO rate or leveraged buying model. You can normally achieve a better rate, most carriers that offer PEO rates, will geo target areas around the state where they want to obtain a greater market share, of course you target your efforts in those markets where you beat the pants off competition using standard rates, of course the incumbent.

In Michigan is Blue Cross Blue Shield, teachers union contracts state that benefits must be identical to BCBS plans, well every seasoned and not so seasoned agent knows that BCBS does not own the physician network, and any benefit plan can be design and configured based on the client need.

So of course we're using PPO plans, with leveraged buying power through the PEO, If you're not familiar with PEOs, it may take some getting used to. I believe personally that it will be the next wave of income growth for independent L/H agents if you know how to measure up PEO's they are not created equal, but the right partnership, can catapult an agents income in the stratosphere.

At it's basics PEO's combine all of their employer groups volume of business through select carriers to achieve a better premium rate, the more volume of business can actually leverage more discounts based on the number of business pushed through that carrier. If you have a PEO that understands the theory and strategy of claims and risk management you got a winner. Some agents fear PEOs because they do own the book of business, in a sense your partnerships, make it where you almost work for the PEO.

Truth of the matter there is strength in numbers and will make a small agency, gain the strength and power of a large scale organization, that can now go after large employer groups, including government entities, and schools, as long as your clients remain active, your are still the agent of record for the account, even though it goes through a PEO.

Last but not least, I have not had any dealing with Gallagher schools, but there are about 15 districts endorsing the consortium today. We're off to a pretty good start.

Let me know if you have any other questions.

Eric

Dude What planet are you on.....The PEO model is antiquated and your assumptions are completely false. First PEO's have been outlawed from using any form of self-funding since the ERISA reforms from 2003 and must be fully insured. This was a direct response to rampant fraud in the PEO industry from the late 90's to the many large PEO's in Bankruptcy after 9/11.

Second, the tired group purchasing model for large groups is BS because not even UHC or Aetna do this any longer for PEO's. BCBS of MI has not done it since the mid 90's. BCBS of MI will underwrite each group on it's own merit (size, location, underwriting factors).

I am the guy who wrote the underwriting regs for BCBS of MI. There are no PEO group plans in MI for BCBS only common effective dates with sub-group plan numbers for BCBS of MI. All plans are issued and rated for the groups on their own merit and published rates. Any group saying different is committing a fraudulent act to their carrier.

PEO's have been the largest declining books of business for a decade and hold less than 3% market share nationally. All carriers know that PEO groups are Adverse Underwriting risks and usually rate them with a higher risk factor (especially in Michigan). Aetna and UHC are prime examples for underwritten plans (in Michigan and Nationally).

PEO/insurance fraud in MI has been very high and insurers know it. They only are advanced by complicit or unwitting agents and ultimately go out of business. Very few PEO's have been in Michigan for more than 4 years.

 

[PepDaddy]

Dude What planet are you on.....The PEO model is antiquated and your assumptions are completely false. First PEO's have been outlawed from using any form of self-funding since the ERISA reforms from 2003 and must be fully insured. This was a direct response to rampant fraud in the PEO industry from the late 90's to the many large PEO's in Bankruptcy after 9/11.

Second, the tired group purchasing model for large groups is BS because not even UHC or Aetna do this any longer for PEO's. BCBS of MI has not done it since the mid 90's. BCBS of MI will underwrite each group on it's own merit (size, location, underwriting factors).

I am the guy who wrote the underwriting regs for BCBS of MI. There are no PEO group plans in MI for BCBS only common effective dates with sub-group plan numbers for BCBS of MI. All plans are issued and rated for the groups on their own merit and published rates. Any group saying different is committing a fraudulent act to their carrier.

PEO's have been the largest declining books of business for a decade and hold less than 3% market share nationally. All carriers know that PEO groups are Adverse Underwriting risks and usually rate them with a higher risk factor (especially in Michigan). Aetna and UHC are prime examples for underwritten plans (in Michigan and Nationally).

PEO/insurance fraud in MI has been very high and insurers know it. They only are advanced by complicit or unwitting agents and ultimately go out of business. Very few PEO's have been in Michigan for more than 4 years.

First thing you don't have to get on here and be negative. This is a forum, for exchange of information whether you agree or not, if you have nothing postive to contribute, please remain quiet as the rest of us maybe open to explore new and other options.

First you need to get your facts straight, as I mentioned earlier all PEOs are not created equal, there are some good and some not so good. You have to do your homework, it is not illegal for a carrier to offer a PEO rate. I know because I have enrolled several companies, and I've yet to be reprimanded by the State.

There are an incline in busines for bigger PEO's, which can become an external resource, PEO that are set up as Third Party Administrators can offer self funded perfectly legal, because majority of self funded plans are administered through TPAs.

You're absolutely right, BCBS does not offer any negotiated rate, in 2010 they requested the State for a 22% increase, and in 2011 they asked for another 15%, and still reported a loss of income, they are now under scrutiny by the State of Michigan. I'm talking about other carriers, that are solvent not operating at a loss, (there is a such a thing) that provide a collective buying model, that you mentioned is inferior.

There are two types of agents in the world, the type that look at all the ways that don't work, and the ones that find the way that does, which one are you? Agents like you, keeps me in business. You can continue to do your thing, and I will do mine, all the way to the bank. Best of luck to you.

 

[ABC]

Twilight & PepDaddy

Great exchange boys!

I personally have been taking business away from the PEO models.

I have yet to hear anything positive from them.

We have local PEO whose employees were not even licensed for health insurance. The admin fee where off of the charts.

I took a 17 life group and saved them over $30,000. They were paying about $17k a year in admin.

 

[PepDaddy]

Twilight & PepDaddy

Great exchange boys!

I personally have been taking business away from the PEO models.

I have yet to hear anything positive from them.

We have local PEO whose employees were not even licensed for health insurance. The admin fee where off of the charts.

I took a 17 life group and saved them over $30,000. They were paying about $17k a year in admin.

I can understand his reaction to my post, there are alot of bad apples in the PEO industry, that is why there are new regulatory compliance coming down the pike for the PEO industry, that will change the landscape.

There are too many advantages to name them all here for a properly run PEO, my agency is a mixed bag, I have several means to meet my customers needs the PEO is one aspect.

I congratulate your success on winning business away from a PEO. I have several PEO accounts and have not shrunk any of my clientele to competition to this date, and even if it were the case, I have so many streams of income in one account it wouldn't be missed.

My point is, there are so many things that work, we have to find them, and know when to apply them to the customer situation.

I wish all agents out there great success, its enough for all of us.

Good Luck, and Godspeed!

Eric

 

[ABC]

So what PEO do you represent?


QUOTE=PepDaddy;553454]I can understand his reaction to my post, there are alot of bad apples in the PEO industry, that is why there are new regulatory compliance coming down the pike for the PEO industry, that will change the landscape.

There are too many advantages to name them all here for a properly run PEO, my agency is a mixed bag, I have several means to meet my customers needs the PEO is one aspect.

I congratulate your success on winning business away from a PEO. I have several PEO accounts and have not shrunk any of my clientele to competition to this date, and even if it were the case, I have so many streams of income in one account it wouldn't be missed.

My point is, there are so many things that work, we have to find them, and know when to apply them to the customer situation.

I wish all agents out there great success, its enough for all of us.

Good Luck, and Godspeed!

Eric[/QUOTE]

 

[PepDaddy]

So what PEO do you represent?

Human-Capital out of Rochester Hills, MI. I wouldn't consider any other PEO, they operate on so many other levels besides doing co-employment for companies in a PEO like model.

They are part of the Trillium Group of Companies fortune 500, and what I like about them they are light years ahead in their strategies and state compliances.

The market is so soft here in Michigan for PEO's, obviously because all the bad press, and mind-set here, we do not approach companies as a PEO, but as a resource center for their business.

I go after larger accounts 50 employee groups and much larger, smaller account under 50 are not a good fit for this type of model, but beleive me when I tell you can rival the biggest competitors with a partnership like the one I have with HC.