However, it's not impossible to break into group benefits. He adds: "Benefits is in a better place now, because it has forced brokers to be much more creative rather than just focusing on the placement of insurance policies."

On the following pages, longtime benefits experts offer eight tips that can help P&C agents and brokers get into this market.

Leverage pre-existing P&C relationships

At Marshall & Sterling, where 20 percent of its annual revenue comes from benefits, the 150-year-old brokerage turns to its established P&C relationships to bring in new group benefits accounts. For agents, it's the easiest way to develop new opportunities, says Diamond.

John Sarich, vice president of strategy at VUE Software, an insurance distribution management company, concurs. "The hardest thing in insurance is managing relationships," he says. "If you have a client who is spending $100,000 a year with you in premiums, it isn't a great leap to sit down with them and talk about employee benefits."

A company is more likely to stay with your agency or brokerage if you write multiple lines for its account. "Somebody who has one policy with you will shop every year," says Barry Seigerman, an independent broker and producer with more than five decades of experience. In addition, providing multi-line coverage to a single company prevents your competition from entering into that account.

Seigerman suggests that P&C firms partner with an outside third-party benefits company when starting out in the group benefits space, because these firms will have the expertise to navigate any compliance issues (see No. 6). "You won't earn the commission, but it's an opportunity," he says.

Prepare for a condensed market

In the P&C world, agents and brokers have many carriers with which to place coverage, but in the group benefits space, there are just four national players — Blue Cross Blue Shield, Aetna, United Healthcare and Cigna. And in some areas, access is restricted to two or three of the health carriers, Diamond says.

And that's not all — consolidation is occurring among agencies and brokerages. According to OPTIS Partners, a Chicago-based investment banking and financial consulting firm, a record high 451 M&A transactions were reported for the U.S. and Canada last year. Of the agencies sold, 17 percent were of agencies that focused solely on employee benefits, and another 17 percent specialized in both P&C and benefits.

"I'm seeing larger insurance agencies structure themselves like a professional services organization — like a law firm, which has lawyers that focus on domestic issues, business, maybe criminal, and other services," Sarich says. "When you bring in the employee benefits and P&C sides together, you now have an opportunity to become a one-stop financial store."

Do more than quote

Giblin estimates that the work she performs for her employee benefits clients, which typically are businesses with 500 to 2,000 employees, has gone up by 30 percent since the ACA was implemented. That's because she and her staff are providing consulting services, purchasing strategies, health management approaches, and other resources and tools for the client.

"Larger employers, especially, are expecting their broker to structure a wellness program for them," she says. Lockton has three wellness consultants on staff for clients in California, who figure out an employer's culture and philosophy around wellness, and establish a program to meet goals.

Another area in which brokers are expected to assist human resources is in employee communications. For her clients, "they are going to spend anywhere between $5 million and $40 million annually on their benefits, and they expect their employees to understand what they are getting, instead of 10 pages of fine print from an insurance carrier."

Giblin says that she pays particular attention to a client's demographics, because that determines the best ways to communicate benefits information. Baby boomers like hard copy, she says, but millennials prefer digital mediums.

"P&C agencies who want to plant their flag in benefits in the middle- or large-market segments really need to have these tools," says Giblin. "You can't just talk to markets and get a quote — you need to provide wellness and communications strategies as well. If you don't have a person on staff who can do this, what can you say to your clients besides, 'Eat your veggies and get off the couch?'"

Give HR a hand

Take consulting a step further. How do you — as an agent or broker — ease benefits administration and take that burden off of an HR department? You have to become an expert in technology.

Marshall & Sterling has a proprietary system called iNavigator, which it provides to clients. The technology helps with onboarding and off-boarding employees — it walks personnel through their health plan choices and other benefits. It also is used for ACA reporting.

The brokerage, which typically services clients with 50 to 500 employees, also utilizes technology from third-party vendors to help employers understand what the future of their health plans may look like. Using predictive modeling, Diamond can help design a plan that mitigates high-cost claimants and other areas of risk.

Take type 2 diabetes, for example. Marshall & Sterling looks at past claims history to see what employees are doing to manage their diabetes, and what can be done to prevent employees from becoming diabetic. "We offer population health management programs and also reward-based programs that change behavior," Diamond says. "Through the use of technology we can identify trends, implement programs and make plan design changes to address those trends to drive down costs, which can be monitored in real time."

Market to millennials

Just like in the P&C space, millennials are disrupting group benefits. "They don't want an employer who says, 'This is your plan, take it or leave it,'" says David Contorno, president of Lake Norman Benefits, a member of the Hilb Group, located just outside Charlotte, N.C.

Private exchanges are becoming more popular, where an employer earmarks a set amount to spend on benefits for each employee, and then the employee uses that money to purchase the specific benefits plan he or she wants.

"Say an employer tells each employee that he or she can have $5,000 to spend on benefits for the year. The employee would then go to a company portal, choose the right health plan, choose the best dental option, choose if he or she wants life insurance, pet insurance or vision,"  Diamond says. "If I'm a younger person purchasing health insurance, a higher deducible in-network plan may be more appropriate, and then I could choose to put the additional dollars into an HSA account or spend the extra money to purchase more life insurance.""

However, in order to provide this kind of option, an agent or broker needs to provide the right technology to the client's HR department. "Essentially, this is a marketplace, and you need to provide a shopping cart," Contorno notes. "The technology would need to know what deductions are pre- and post-tax and pull up comparisons." For that service, Contorno estimates that his Lake Norman Benefits agency spends $150,000 a year on software and support staff.

Know that the government is watching

It's imperative for agents and brokers to understand all of the regulations relating to healthcare and benefits. And if you don't, hire an attorney who does. Giblin says that Lockton has five attorneys on staff to review ACA compliance.

"A few weeks ago, we got involved with a client who owns 12 or so Dunkin' Donuts chains," Contorno recalls. "They first went to their P&C agent for their employee benefits. They thought it was just a few managers and a few key employees who were eligible for healthcare. However, this client had a lot of variable-hour employees." These are employees with work schedules that fluctuate, and who may average 30 hours or more work per week, in which case they they would need to be tracked and determined if eligible for health insurance under ACA.

"This P&C agent got in way over his head. He wound up jeopardizing the coverage for his client, due to not keeping proper records of employee work hours — and the account had two months of penalties to pay under ACA."

Mike McLaughlin, president of Core Benefits in Houston, agrees that the government has stepped up its compliance monitoring: "I've been doing this for 38 years, and in the first 35 years the number of clients I have had go through a Department of Labor review is zero. The last three years: seven."

Don't be afraid of self-insured plans

Under the ACA, businesses of 50 employees or fewer are required to use a rating format, called modified community rating, to determine the pricing of small business group healthcare premiums. The rating is "modified" because it allows for age and family size to affect rates, but not health status or medical conditions. In some examples, this could mean that a company with 20 employees who are in their 60s could be paying premium rates based on a 40-year-old. However, the inverse is also true: some companies with many employees in their 20s could be paying rates for those much higher.

As such, McLaughlin, whose agency primarily sells benefits to companies of 50 employees or less, says that self-funding healthcare has become a real cost-saving tool for small businesses. "If I have a company with a lot of young people, like a health club or a technology company, why would I want to go through an ACA product and pay more?" he asks.

A self-funded or self-insured group health plan is one where the employer pays each out-of-pocket claim as they are incurred, instead of paying a fixed premium to a carrier. Self-insured employers typically set up a special fund to pay for these claims.

Self-funding isn't just for smaller employers, Contorno, who targets to businesses of 50 and 500 employees, and Lockton's Giblin, whose clients are between 500 and 2,000 employees, also encourage it for specific cases.

"The increases in insurance rates are unsustainable for many businesses and employees," Contorno says. "And our clients are looking for something different than just us shopping each year and coming in with this year's cheapest rate — which is still typically more than it was last year. These solutions can come in the form of self-funding insurance."

Also, when a business is self-insured, "we're going to get tremendous data," he continues. And, in turn, that data can be utilized for targeted education and wellness programs that further drive down rates and claims.

Get your E&O coveraged updated 

State laws vary as to what advice agents and brokers are allowed to give with a Life & Health license, and most E&O products cover only activities that one can perform under that license. In Texas, McLaughlin says that a Life & Health license does not cover discussions pertaining to COBRA, cafeteria plans or flexible spending accounts. He recommends that agents update their E&O coverage to include those activities.

"Our role has changed a lot; we are taking on the jobs of consultants and talking a lot about compliance," he says. "You better make sure your E&O insurance is modified to pick up those issues. If you have brought that COBRA compliance into a meeting with your client, and something goes wrong, you will be involved in that lawsuit."