Business Spotlight: Finding their Footing

Last edited at 12:42 p.m. March 7.

A changing health care industry has made it challenging for insurance brokers to find their footing.

Jeff Broyles, owner of Medical Benefits Group, a Nixa-based insurance broker agency that sold Mercy Health Plans products, says one change he didn’t see was the acquisition of Mercy Health Plans by Coventry Health Care. He was further surprised by Coventry’s intentions to close its Springfield call center and lay off up to 85 employees.

“I don’t want to comment on that, because we really don’t know anything yet,” Broyles says. “It has created some fear, and we’re just hoping it doesn’t affect our customers, period.”

Broyles did see the changes coming with health care reform. His company began diversifying four years ago, expanding services from mostly individual and small group health insurance plans to include gap insurance, senior services such as supplemental insurance for Medicare enrollees and financial services.    

Since 2009, the company has more than doubled the number of agents and tripled its client roster to 3,000.

The nine-year-old agency also is driving up revenues, reaching $1 million in 2011, up from $600,000 in 2010. Broyles is projecting $2 million in 2012 revenue.

The agency’s performance also has led to three national awards including the 2011 Most Valuable Partner award from Anthem Blue Cross Blue Shield, the 2012 Agency Award for Outstanding Performance by Coventry and an individual agent award for Richard Wu for being one of the Top 3 Agents from Coventry.

Wu has worked in the insurance industry for five years, the last 18 months with Medical Benefits Group, and he’s sold an estimated 400 policies in the past year, 275 through Coventry. He says evaluating a client’s needs is a first priority.

“If a person is on a retiree group plan, it may not be best for them to switch to another health plan,” Wu says. “Many times, I will advise them to stay where they’re at and tell them to call if anything changes.”  

Broyles says the awards help boost employee morale, but they have other benefits.

“When we need to have stuff done through an insurance company that we have written many policies for, we have contacts and can get things done,” he says.

Broyles purchased an acre of land and a 2,000-square-foot office one year ago for $225,000 on State Highway CC in Nixa, moving from rented space in a nearby strip mall.

Medical Benefits Group opened with three agents, first writing health care policies for the self-employed and expanding to provide policies for small groups of 10 to 12 people.

The agency has contracts with 28 companies – including Humana and United Healthcare – offering health, life and financial services.

He says 60 percent of Medical Benefits Group is currently individual and senior related policies, and the group and financial divides the rest of the business evenly.

With health care reform looming, Broyles knew he was going to have to make some changes in his health plan business model.

One of the biggest changes is the Medical Loss Ratio provision that mandates 80 percent of premiums go into claims. Broyles says the MLR provision dropped his agents’ average commissions to 10 percent of sales from 25 percent.

Broyles took a look at expanding his business to include more Medicare supplemental insurance, as well as offering a variety of products in the senior market such as critical illness, long-term care and disability, all of which didn’t have a change in commission rates.  

Joe Perry, broker and sales director for Medicare products for Anthem Blue Cross Blue Shield, says Medical Benefits Group is approaching 1,000 enrollments since expanding into the Medicare market.

“I think there are two main factors driving their success in the Medicare supplement insurance market,” says Perry. “The first is the health care reform law, and the second is the large number of seniors and baby boomers hitting that age.”

A study by the University of Missouri Office of Social and Economic Data Analysis concluded that Missouri’s population age 65 and older had grown by 14 percent in 2010. That age group grew between 15 percent and 22 percent in southwest Missouri counties, and Greene County recorded nearly 13 percent growth.

In addition to the senior market, Broyles, who also previously worked for Principal Financial Group, expanded his company into providing financial services in the form of fixed annuities.

Another expanding market for Medical Benefits Group is selling gap insurance, which allows groups to offset the rising costs of health insurance by covering the gap in deductibles.

T-Haul Tank Lines LLC in Springfield signed up for gap insurance in November, allowing the company to secure health insurance with a $5,000 deductible for its seven employees. The American Public Life policy covers the gap that exists between the higher deductible, allowing for just a $1,000 deductible, making major medical more affordable for the company and for its employees.

Broyles says the company could have taken a $1,000 deductible policy, but it would have cost $900 per month more than providing a higher deductible policy with gap insurance. “This was exactly what we needed,” says Padgett Smith, controller for T-Haul.