Podcast | Choosing Your Broker

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Risk Management Consultant
+1 605 339 3874
Employee Health & Benefits Consultant
+1 605 339 3874
August 2, 2019

Risk management consultant Allen Schlenker and employee benefits consultant Rachel Gackle join host Greg Guse on MMA's Business Link podcast to discuss what you should look for in an insurance broker, and the challenges agribusinesses specifically face when dealing with insurance.

Listen and subscribe to the podcast at Apple Podcasts or Stitcher. Below is a transcript of the episode, edited for readability.


Greg Guse:

Welcome to Marsh and McLennan Agency's podcast, Business Link. I'm your host, Greg Guse. Before we begin this edition of Business Link, I encourage you to subscribe to this podcast on iTunes or Stitcher as well as on our website at marshmma.com.

Today's topic is the role and importance of risk management as part of the overall go-to market strategy for any agricultural business or organization. As we all know, there are many variables to address and managing and building a successful agribusiness or agriproduction enterprise. And knowing those variables and managing the associated risks is extremely important.

We have two very knowledgeable and experienced members of the MMA team with us today based out of our Sioux Falls, South Dakota office. Allen Schlenker is a Risk Management Consultant with MMA. And Rachel Gackle is an Employee Health and Benefits Consultant with the firm.

So before we begin our discussion, Rachel and Allen, please tell us about your background and the role you play at MMA.

Rachel Gackle:

All right. So I have been in some sort of consultant or sales role for the last almost 15 years. Specifically, with Marsh and McLennan Agency for about a year and a half now. And my role is really to partner with employers to craft a sustainable, competitive employee benefits offering for their employees.

We also assist with strategies for recruiting and retaining employees. And really just take on that consultative role and an extension of their HR team.

Greg:

Excellent. And, Allen, tell us about your experience and role at MMA.

Allen Schlenker:

You bet. Well, I'm a Producer or Sales Rep on the business insurance side. And I specialize and focus a lot on the agricultural world in terms of dairies and the agricultural co-ops all over the upper Midwest. I've been with MMA a little over five years now. We're here to consult with people and to help them understand their business and the risk associated with those businesses and I help prepare for them and make good business decisions.

Greg:

Okay. Very good. So, to begin, what role do you believe , risk management should play in an overall go-to market strategy for an ag- enterprise. Allen, your thoughts?

Allen:

That's a great question, Greg. And we get that question a lot. You know, in terms of why should I even look at insurance. And insurance changes a lot and it changes very, very quickly. Your exposure changes, the coverage changes, the carriers change, and it's very, very important to stay on top of that.

So, as a good risk manager, it's very important for the managers of the businesses to understand where their gaps are and how the gaps might be changing as society and the business changes.

Greg:

Rachel, what would you add to that?

Rachel:

So, really, insurance is one of those things that people really don't like to talk about. However, as one of your top line items for expenses, it's obviously very important that you have the right partner to help you be smart with your money and really get the best bang for your buck.

Allen:

And really, Greg, Rachel makes a great point right there in that, you know, a lot of people don't want to talk about insurance but it is such a dynamic part of their business. Done right, insurance is the last thing you worry about. Done wrong, it can be your worst nightmare. So it's really important to have a good partner like MMA to help you, kind of guide through those financial pitfalls that are out or could be out there.

Greg:

Good point. So how often should an ag-cooperative or an ag-business review its risk coverage and seek quotes?

Rachel:

As far as the employee benefits side, quoting and going to market with different carriers is something that we talk about all throughout the year. It's just part of the process. It doesn't make sense to quote just to quote. We would recommend quoting if you're having a tough year and maybe your renewal isn't looking so great. Maybe you're not happy with the carriers that you're with. Here's other carriers coming into the market place that we think are worth evaluating.

That's kind of our job. And where we shine is that we're talking multiple times throughout the year about it, checking in with them to make sure that they're happy with their carriers

Allen:

Right. And from the business insurance side, it's a little bit different in that we normally recommend companies go out to market every two to three maybe four years, depending on what they have out there. And what that does is by being loyal to your carrier to a certain extent, they're more likely to be loyal to you and give you the best possible price upfront.

If they know that you're going to stick with them two or three years, they're probably going be pretty aggressive with the pricing. If they don't, if you're the kind of company that changes, carriers every year, most underwriters are going to go, "Why do I want to write this company for only a year?" And they won't put their best foot forward.

So they're as loyal to you as you can be to them and that helps when it comes to maybe a questionable claim or something that might happen so you really want to build that relationship. But you've got to be open enough, and you've got to be responsive enough to say, "You know, we haven't look at this for a while. Let's see what we can do out there."

'Cause the pricing models do change between carriers over the course of the year. So a carrier today might have a really great price but in three to five years, maybe their pricing isn't so good. So it's good to go out and check it again. And you don't need to leave any money on the table.

Rachel:

And to Allen's point, your carriers are going to be loyal to you if you're loyal to them. That's a really great point.

Especially as it relates to medical insurance. As you know, one catastrophic claim could throw your whole year and really being with a carrier for a good amount of time is that they've seen your history. They've seen your claims the last two, three years. And, so, if you have a tough year, they're more likely to show you grace versus, a carrier that you've only been with for a year and you're going to jump ship the next year.

Greg:

Okay. And is there a better time of year than another to seek these competitive, proposals?

Allen:

Not really. Most of the business insurance policies are written on the renewal, and that's generally when you're going to see the most activity is at renewal time. Generally, between 60 to 90 days out, the renewal quoting process starts. And I really am not a big fan of the word quote. I would talk about a business proposal or a partnership proposal because that's really what we're trying to establish is a partnership between the agency, the carrier and the insurer.

But most people tend to think about their insurance at renewal time. Whereas on the MMA model, we're kind of talking insurance with our clients all year long. We're not just a we'll see you at renewal, shake their hand, and move along. We're going to be their partner throughout the year and talk to them about what's going on. And, you know, try to advise as to whether or not it is a good time to go to market or not a good time to go to market.

Greg:

Okay. Rachel, from the employee benefits perspective, is there a better time of year than another?

Rachel:

No, similar to Allen, people think that they should be talking about benefits a couple of months before their renewal. But, really, we like to get out in front of it. We like to learn about your business. You know, what changes in your business have happened in the last year? What do you see for growth? Where do you want to be three to five years from now? And really just getting a good feel for what they have going on for their claims. We're, every quarter, evaluating their claims data, and determining if this is a good year to go to market or not move forward.

Greg:

Very good. We all acknowledge that, in the ag industry, great value and importance is placed on personal relationships. So if I have a long term relationship with a broker, are you suggesting that I seek quotes from other brokers? Allen, what are your thoughts on that?

Allen:

You know, that's a great question, Greg. And we certainly do appreciate loyalty. We want to earn the loyalty of every customer that we have out there as an insurer. But to some point or to some extent, loyalty can be a fault.

What we've seen especially, like in the dairy world or the ag world is that you might have a broker that you've been with for 15 years. You love the guy. But, unfortunately, he's limited to what he can bring to the table in terms of resources. So that's where we like to entertain that conversation to say, "Really, what does your agent or your broker do for you beyond the policy and the price?"

It's easy for anybody with an insurance license and within an agency to bring a policy and a price. What we try to do is say, "Hey, look, you gotta pay a premium. What value are you getting for that dollar that's out there?" And it's not a bad idea to get a fresh set of eyes on the policy.

Having a relationship and loyalty to a broker is a great thing, and that's what we're trying to do with every insurer that we have is develop a long term relationship. But we want to do what's in the best interest of the insured.

What we've seen in the dairy world, for example, is a dairy may have started out with a broker 15 years ago, and they've been with that guy. And they may have been a small family farm but they've continued to add cows, they've continued to expand their operation, they've continued to add employees.

Now, all of a sudden, they've jumped from a one-million dollar revenue company to, let's say, a 10 million dollar revenue company. They have all the same exposures as a 10-million dollar manufacturing company but they aren't covered like they should be. They're covered like a small family farm. And, that, sometimes is the disconnect.

And you want to make sure that by putting a fresh set of eyes on the insurance program that the coverage has kept pace with the exposure. You think it's all right until you have a loss. And that's not the time to find out that you're not covered correctly is at the time of loss. You definitely want to make sure that you're ahead of that game before something catastrophic happens.

Greg:

Rachel, anything you'd like to add to that?

Rachel:

Yeah. I think, specifically, in the ag industry is these are very close tight knit communities where, often times, you go to church with your agent or they're a personal friend. You grew up with them. And, really, you know, personal relationships and overcoming them are just part of the process.

I get it, you have this relationship but do you realize you're paying them thousands of dollars in commissions and you could potentially be underprotected or you're not getting the resources that you could with a larger agency.

And a lot of times, we're finding out with all of the mergers and acquisitions going on in the ag industry that they're outgrowing their local broker. But, if anything, meeting with us initially is just going to confirm one of two things.

Either, A, I'm paying a lot of money, and I'm not necessarily getting the coverages or the support or the service that I'm looking for. Or, B, I'm in the right spot, and my broker is doing a great job and I'm not ready to look at this time.

Allen:

And there have been times, Greg and Rachel, where we've actually walked in and the client said, "You know there's not a doggone thing I can do for you." Congratulations. And I'm more than happy to have that conversation. But, in a lot of cases, like I said, the exposures really have outgrown the capabilities of the existing agency and you have to make a strategic business decision. As hard as that can be on the heart, you got a business to run. You have to do what's best in your best interest to your business. Not necessarily what's in the best interest of your neighbor and what they're doing.

Greg:

Those are good points. And, Rachel, you mentioned there's been a great deal of consolidation from mergers and acquisitions in the ag industry. How does this trend affect a company’s risk management insurance coverage?

Rachel:

Well, when you're taking, you know, several different businesses and merging them into one, there's complexities with the employee benefits side of things because you have to figure out if the common ownership makes sense bringing [that group–all] those groups together, you know, under one insurance plan if it's, one, feasible, and, two, if it makes sense.

In our world, if you're under 50 employees, you're in the small group space. If you're 20 years old, you pay this premium. If you're 65, you pay this premium. And there's really not a lot of negotiations involved.

So, really, where we're focusing is, you know, is your plan set up to be now one large employer? Or are you still operating and are your benefits structured as a small employer?

Greg:

Very good. Allen?

Allen:

Yeah. That's a lot of great points on that. And from the business insurance side, it's a little more straightforward in that you're going to have combined sales, you're going to have combined facilities that need to be insured, your workman's comp is going to change a little bit more. Maybe you're going to be more cash rich. So you might be able to entertain higher deductibles.

But to the extent of the business insurance, you know, it really doesn't change a whole lot except that, anybody who's merging will probably want to look at tail coverage to make sure that the entities that are merging together protect you against anything that may not be known in the past, say, three to five years.

So from a recommendation standpoint is if you're going to be merging with somebody, investigate tail coverage because that's something that could come up to bite the new, entity in the behind if it's not known. There might be a pending claim out there somewhere.

Greg:

Beyond mergers and acquisitions, what other trends in agribusiness are you seeing today and what's been their impact?

Allen:

I think probably the number one impact that every agribusiness entity out there is seeing right now is the lack of human capital. There just aren't a lot of people out there willing to do the work that needs to be done in the agricultural space.

And any human resource professional will tell you, in a healthy economy, 2% are unemployable so you're really dealing with a finite group of people, and you've really got to figure out ways to make your business more attractive to work for than anybody else. Rachel mentioned it a little bit earlier. Benefits is one way. Having a good, safe work environment and a work culture is another way. So that's probably one of the biggest things that we've seen impacting the ag businesses and the dairy industry, again, we'll talk about it.

Robotics are becoming a huge issue because they just don't have the bodies to milk the cows anymore. And that changes the dynamics of their insurance. You go more from a workman's comp based exposure to a property based exposure. You know? And the rates are different, and it impacts things dramatically so.

Rachel:

Yeah. The low unemployment rate is definitely a challenge for everybody but especially agribusinesses. People don't want to go in and scoop manure. You know?

Allen:

Yeah.

Rachel:

Employers are having to get really creative and fight for employees. People are leaving for a 25 cent raise and not looking really at the big picture.

Now we're starting to see groups offering paid short term disability, paid life insurance, you know, a 15 or a $25,000 policy so that employees have that stability should something happen. You know, We're seeing tuition reimbursement. We're seeing all sorts of different benefits that, historically, have not been offered. And as a result of all these mergers and the fight for employees, we're seeing people really increase on, enhancing their benefit offering. The other thing that we're really starting to see for coverage is identity theft protection as well as legal protection.

I would say, too, at the end of the day, if you don't like the people you work for, you don't believe in their mission, um, it's something that you don't take pride in, employees are going to be leaving continuously.

And, so, employers are really having to get a grip on their culture and the overall feel when you step into that job.

Greg:

Very good. So, Rachel, is it fair to say that the ag industry now must deal with many of the HR issues that are common to more general businesses such as discrimination, harassment, offensive work environment?

Rachel:

Yeah. Absolutely. People really need to make sure that they're crossing their Ts and dotting their Is as it relates to HR issues.

Allen:

Right. And in the agribusiness space, too, you know, a lot of employers in years past that wouldn't have thought they had an exposure. It's sexual harassment, offensive work environment.

They may not have thought I needed covered, you know, back in the day and now we can't be a naïve society anymore. We have to understand that anybody at anytime, given the culture that the United States is evolving into, can file a suit.

And the suit may be totally without merit but you have to defend the claim, and that's where the expense is. And that's why having a good insurance program that can look at that and say, "Look, you've got 14 employees here in somewhere, South Dakota." Whereas 15 years ago or 20 years ago, you would've thought I would never have to worry about them filing a suit for offensive work environment, sexual harassment or whatever the case might be.

Today, that should be on the mind of every general manager out there. Is what happens if? And do I want to take that risk? Roll the dice. Either pay the money for the defense out of my pocket. And we all know that lawyers are not inexpensive when it comes to defending a claim. Or do you insure for it and pick up a, employment practices policy?

So those are kind of some of the things that we're seeing out there just changing the business world from an insurance standpoint.

Rachel:

Well, and, frankly, um, everybody now has a phone with recording capabilities, picture taking capabilities. We've seen a lot of stuff in the news about, you know, harsh working conditions, harassment, animal abuse, different things like that where, employers cannot afford to have an unhealthy culture that harassment, offensive language or actions go unnoticed.

And, so, the pressure is really on for employers now to up their game and start putting things in place. You know, like, safety training, harassment training, different things like that. Again, as it all goes back to the low employment and really taking care of people, making them feel safe at work, making them comfortable and happy at work.

Because, at the end of the day, if you take care of them, they're going to take care of you and your business.

Greg:

In agriculture, we employ a lot of immigrant workers. So what are the ins and outs of providing coverage?

Rachel:

As it relates to employee benefits, you, as the employer, are not obligated to provide benefits to your H2A employees. You, obviously, are required to provide housing, transportation, things like that. But benefits are not a part of that. However, we do see employers, adding H2A employees, because they're making U.S. wages, to their benefits.

And the reason they're doing that is to try and retain talent. So employees that are, offered benefits feel like they're part of the company overall and, this specific population of employees, are your best recruiters that you'll have by word of mouth telling their friends and such that this employer takes care of us, they're offering us the following benefits in addition to wages.

Allen:

Right. And from a work comp standpoint, the immigrant workers are covered under all the same benefits of work comp as any other employee that's out there. So if they're injured on the job, they're entitled to the same benefits as any other worker. It's mandatory. If you've got workman's comp, you cannot discriminate against that employee based on their immigration status. If they're working for you and they get injured, they're entitled to the benefits.

Greg:

That sounds like very good advice. So if I'm the manager of a growing agribusiness or an ag production enterprise, why should I take a look at MMA? What can you do for me that my current provider or others can't?

Allen:

That's a great question and that's one of those questions that you get asked a lot is why should I even talk to you? And the real answer is insurer resources. Resources and analytics.

Kind of like we said at the beginning of the show. In that we want to deliver real value. So whatever is going to impact your business down the road whether it be human resources questions, safety questions, changing trends and exposures. We want to be out there ahead of it.

We have a whole team nationwide that's dedicated to straight agribusiness out there. Um, and we live, breathe, eat, sleep agribusiness every single day. So when it comes to what's happening in the world in the agribusiness world, we're out ahead of everybody else and we've got the resources nationwide to pull in to answer any question that might arise out there.

Rachel:

Yeah. I think to piggyback on that, you know, our passion in our office is with agribusiness. And, really, I think where we also shine is the depth of our team. So we very much take a team approach where I may be coming in to talk to you about benefits but I may uncover that you really need help with safety or maybe you need help with your business insurance side.

We're kind of a one stop shop. Maybe you need help with your personal lines. That's something we can refer as well. When you work with us, it's not going to be just a one-person team. You're going to have account executives that handle claims resolution, billing problems, different things like that. You're going to have HR support.

And then, all of the benchmarking capabilities that we have and the data analytics portion is really where we shine. Especially on the employee benefits side.

The other thing is the national depth that we have. So let's say that you're a co-op, and you have locations in six different states. While I may not be the expert in Oklahoma, there are offices all over the country where we can tap into them and say, "Hey, what carriers make sense in your area? Or what are some of the trends you're seeing in your area?" And really look at the overall picture so that we can support their entire business. Not just maybe one location that's within our state.

Allen:

Yeah. There's not much more to add to that.

That was a great-great comment, Rachel. And I guess, you know, what I would encourage people to do is don't be afraid of your insurance. You know? Be a part of it. Be an active, aggressive person that's willing to look at it. Don't just get your policy and put it on a binder or put it in a shelf somewhere. Understand what your coverages are.

And if you don't understand or if your agent can't explain it to you, it might be time for a different agent. You know? And that's a lot of part of what we do is just teach. What does this mean? What does general liability mean? What does auto mean? What does uninsured? Underinsured? There's a whole lot of jargon out there that I spend a lot of time teaching people about what it is and how it can impact.

20 years ago, distracted driving wasn't an issue. Distracted driving really was eating a taco on a Friday night as you were coming home. Distracted driving now is everybody and their phones. And if you talk to the claims people out there, they used to see skid marks before accidents. They don't see skid marks anymore because people are just driving distracted.

So that would be my advice to anybody is to take control of your risk management program. Check some options and make good business decisions. And I think if you make a good business decision, that's where MMA is really going to shine.

Greg:

You've both provided a wealth of information through this discussion here today. Before we wrap up, any final parting comments you'd make?

Allen:

You know, we, as Rachel and I sit here, are insurance geeks. We love it. We deal with it every single day. We're passionate about it. We want to make sure people are covered correctly. And if somebody decides they don't want to cover something, that they have a full understanding of what the risks are. You know? Make a business decision.

But my advice would be to find a good broker and that would be MMA. I can't say enough good about us, you know? But find a good broker. Develop that business relationship with them. But make it a business decision. Don't just cover and hope, keep your fingers crossed. Be a good, active part of your risk management program.

Rachel:

I think my comment would be just be open to hearing out other brokers that are calling on you. I understand business owners get 50 calls a day from 50 different people trying to sell them something. And, at the end of the day, you know, our approach is not to come in and try to sell you something.

We just welcome conversations and getting to know each other and knowing that you may have a good relationship right now with your current broker, and you may feel like you're getting everything you need, but until you have those conversations with an outside party, how do you know that? If anything, it just confirms, you know, that you've done your checks and balances, and you feel like you're in a good spot.

MMA and our office is very unique in that we don't want to talk numbers. We don't want to talk insurance. We really just want to get to know your business and determine from there if there's areas where we can help or if it makes sense to partner moving forward.

Allen:

And I guess one final recommendation. If somebody wants to come in and just quote your business, run away. Because this is not about quoting your business. It's about becoming a partner. And a lot of times we'll see that where a competing agency will come in and they'll take the policy and that's what they're gonna quote. And, really, it's more than that.

You've really gotta understand the business. And I think, like Rachel said, that's really where we excel as we'll sit down and take the time to understand the agribusiness industry or whatever industry that our professionals work in. Whether it be healthcare or non-profits. As we take the time to understand the industries and those things that impact that industry.

Greg:

If someone wants to begin the review process with MMA, where should they start?

Allen:

Great way to start is just call us at our office. Our number is 605-339-3874. And if you're somewhere outside of our coverage range just go ahead and give us a call, and we'll refer you to whatever national office might be closest or might be the best fit for you. The other place, Rachel, where can they get us on the web?

Rachel:

So our website is www.marshmma.com. And, for first steps, let's just start to get to know each other, figure out what you currently have going on, and really spend some time getting to know about your business and where you want to take it.

Greg:

Very good. Lots of very helpful information that you've provided. We'd like to, again, thank Allen Schlenker, Risk Management Consultant, and Rachel Gackle, Employee Health and Benefits Consultant, with the Marsh and McLennan Agency.

 And thanks to our listeners for joining us for this edition of MMA's Business Link podcast.