Guest Blog by Kevin Curran of EBSME, LLC

There is an interesting trend emerging in the employee benefits industry. Highly skilled and tenured employee benefit consultants are leaving large “reputable” agencies to launch new agencies.


While mergers and acquisitions dominate industry headlines, agency start-ups have seen an uptick and are an intriguing symptom of the times. With larger agencies intent on growth and creating agency scale, many firms have become too bloated and overly bureaucratic to allow for disruptive innovation. Feeling stifled, many innovators are walking away.


Their reasons often include but are not limited to:


  • Their agency’s status quo response to healthcare cost inflation.
  • Prioritizing agency bonus compensation over their client’s well-being.
  • Weak leadership and lack of process continuity.

The market is ripe for these start-ups, and many of these small regional agencies are having outsized success competing against larger regional agencies and the national consulting houses. Their secret strength is a combination of their passion, innovation, and the recognition of their prime limitation; they are small. Simply put, these agencies cannot be all things to all clients.


We have entered the age of the decentralized agency. Thank you project management software and video conferencing services for your important contributions!


Instead of only looking internally for expertise and resources, decentralized agencies are sharing the responsibility of client stewardship with external experts. The decentralized agency’s primary objective is delivering clients exceptional consultation and service.


Example: Decentralized Agency Partner, Subject Matter Expert


I am the founding partner of a benefits agency that specializes in group life and disability insurance. We partner with decentralized benefit agencies to help them bring a diagnostic and analytical consultation to their clients.


If you are an executive involved in your company’s benefits purchasing decisions, answer this question:


“Under or over 3 minutes?”


In thinking back over the past five years’ worth of benefit consultations, did you spend more or less than 3-minutes with your current broker discussing their prepared group life & disability analysis? Kindly remove any time spent discussing claims/billing/administrative issues or reviewing their pricing grid spreadsheet. Analysis might include:


  • determining if the plan maximums are correct
  • discussing whether policy provisions and limitations match those of your culture
  • measuring how your population has changed since initial policy install, etc.

If under 3 minutes of actual consultation, do you find this concerning? If so, understand that this is the industry norm. Since healthcare cost inflation, compliance, and technology dominate your concerns, they have consumed all of your broker’s resources and time.


Client Example


A few years ago, we met with an 80-employee engineering firm that was represented by one of the largest consulting houses in the nation. Their plans were ill fitted to their population and the organization’s compensation objectives. Together, we spent 90 minutes reviewing their diagnostic analysis so they understood how their policy would function at claim time, where they were wasting premium, and getting them to an informed position to make empowered plan decisions.


Together, the CEO and CFO decided to increase the maximums on all plans, enhance several key benefit provisions, and tweak a few others to eliminate wasted spend. All in, the plans were substantially improved with a small increase to current costs. Satisfied with the results, the CEO and CFO said something I will never forget:


CEO to CFO: “How long has it been since we last analyzed these plans like this?”
CFO to CEO: “Well, I’ve been here 19 years. So, it’s been at least 19 years.”


I have had many interactions with this sentiment. Several within the last month, but this exchange has always stuck with me. 19 years of recycling a previous broker’s old thought for the lowest available rate! It is not consulting. Such a service would barely be worth a small subscription fee. Much less the substantial commissions that are baked into these coverages.

Bigger Is Not Better, Smaller Is Not inferior


In my travels, I have worked with many agencies of many sizes. The core team assigned to servicing your account rarely change size. If you work with a large agency, you likely work with a small team within that large agency and your level of consultation is most often limited to how much that team knows or can source internally. Unless you are a top 20% revenue generating client, do not expect to get an overly seasoned team or to see their touted subject matter experts.


Conversely, your business is important to a small agency. You will be consulted and serviced by their most tenured staff. If they operate a decentralized agency, you can gain access to some of the best experts our industry has to offer. Not just those down the hall.


When the choice is between a small agency with a decentralized team of experts and a larger/branded firm, I would say size doesn’t matter. It is all in how you use it.