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After Studying 10 Options, P&C Firm Chooses Strategic Alignment With OneDigital

SITUATION: Seeking solutions for long-term stability.

In 2005 Mike Reese Jr., president of a Washington, D.C. area P&C and employee benefits agency, saw the handwriting on the wall. The employee benefits component of his firm’s business was getting more complicated and time consuming – and the industry was under enormous pressure to change. He began researching options for the best way to prepare for the future. Five years and 10 heavily scrutinized opportunities later, Reese, Yeatman & Associates closed a partnership deal with OneDigital Insurance.

“Our relationship with OneDigital elevates our competitive status and delivers a method to achieve long-term stability and growth,” says Reese. While OneDigital acquired and will manage the regional agency’s employee benefits accounts, the firm still sells new business, and clients continue to work with the same familiar faces.

Established in 1964 by his father, by 2010 Reese Yeatman had experienced its best year yet financially, generating about $2.75 million in revenue. The client base is a mixture of main street businesses with a concentration on medical practices, government contractors and technology firms ranging in size from two employees to 1,000. Most have about 50 to 200 people on the payroll. The agency represents roughly 600 P&C clients and about 150 employee benefits clients, with 40 percent of the accounts cross-sold.

After starting his career with an insurance carrier, in 1987 Reese joined the firm when its focus was solely on P&C insurance. His goal was to build the employee benefits segment of business, and he met with immediate success.

“It was a lot of fun and exciting when I got started,” he recalls. Unlike the P&C business where access to insurance companies is restricted by volume commitments and other criteria, the employee benefits business was open territory. “In the late 1980s and early 1990s, we had access to dozens of companies that offered medical insurance,” says Reese. “There was the thrill of the hunt, a search for the ideal policy for a particular customer and rates to negotiate.” Much to his chagrin, those elements of the sales process are now gone.

By 2005, the changes brewing on the horizon had Reese concerned about far more than satisfying his own aspirations. He began to focus on positioning his agency to better meet his clients’ needs. Now in his mid-40s, he had no interest in retiring or selling his business. “I was seeking solutions to elevate our market status.

“As an independent agency, we couldn’t afford to invest in the types of services our clients will need going forward,” he explains. “There is no way I can be a compliance specialist, a customer advocate and an insurance agent, while simultaneously being an expert in insurance markets, products and pricing.”

SOLUTION: “We could never do something like this on our own.”

OneDigital bought Reese Yeatman’s existing book of employee benefits business and two of the firm’s staff members are now OneDigital employees, remaining in their Virginia office. “We have the same people in place, so there is consistency for our clients,” Reese explains. “They are used to dealing with certain individuals and that hasn’t changed.” One unanticipated benefit: “We no longer have to manage and train customer service representatives to support the employee benefits component of our business. That’s a huge time-saver.”

OneDigital pays the agency a management fee based on commission flow. In addition, Reese Yeatman continues to sell new employee benefits business and splits commissions with OneDigital. “What are we getting in return? A lot,” he responds. “And our customers benefit as well.”

The partnership created immediate liquidity for the firm and addresses the risks associated with HCR. It also delivered a significant financial upside for the agency to reconstitute an entirely new block of business by leveraging OneDigital’s expanded benefits solutions. And finally, it enabled personnel adjustments that position the firm well for the future.

“I explored a lot of options and am very familiar with what is available to companies like ours. We chose OneDigital because it has all the right elements to enable our business to thrive, as well as insights into the solutions on the horizon. Unlike any firm I have spoken with -- and I have talked to most of them -- OneDigital has a vision of where this industry is going and how to get there.”   --Mike Reese, President Reese, Yeatman & Associates

In contrast to all other agencies and vendors in the benefits industry, OneDigital has invested millions into building a technology and communications platform that is years ahead of even the largest global consultants. “We are now able to leverage OneDigital’s decade-long investment to deliver efficient solutions to small- and mid-sized businesses in a way that we can call our own,” says Reese.

The customer experience also has been enhanced. OneDigital has a Customer Advocate Center staffed with experts in claims processing, appeals and resolving grievances to handle employee questions and concerns. “An agency our size cannot offer that independently,” says Reese. “The call center is a big deal to our clients.”

Among the additional assets gained:

  • HCR resources and compliance expertise
  • An automated, integrated HCR information and compliance product, including professionally produced client communications with regulatory updates, plus ongoing webinars.
  • An “Ask the Expert” service with access to resources, including attorneys who can answer specific questions about ERISA and other topics.
  • Automated communication capabilities enabling the firm to distribute direct employee communications on behalf of employers for such things as Medicare Part B creditable coverage notification to employees, retirees and dependents.

“These services and more offer huge benefits to our clients,” says Reese. “We could never do something like this on our own. The bottom line is that this partnership lets us stay close to our clients and eliminates resource-draining responsibilities yet enhances efficiency along with expanding the services we offer,” he explains. “Other models may work better for some firms; this one works well for us.”

The agency’s customers know their employee benefits are now being offered under the OneDigital Insurance brand. “Most of the human resources people we deal with are closely affiliated with the Society for Human Resource Management (SHRM),” he says. “They understand the benefits business is changing and appreciate that more powerful resources are needed to support them.” OneDigital representatives are involved with SHRM and have helped with the organization’s educational activities. “The fact that we are associated with something bigger and stronger produces a comfort level for our clients,” he says. “The change was well received.”

Reese says his firm now enjoys a feeling of greater security, his clients are receiving enhanced service and all parties are better positioned for success. “With our partnership,” he says, “we can now sell health benefits to clients, split the commissions and OneDigital delivers the enhanced infrastructure, support and services that dramatically change our value proposition.”

“We are 10 years into developing employee benefits solutions that extend to our P&C partners. Our goal is to position Reese Yeatman and all our partners in the employee benefits business with growing revenue streams for years to come. Rather than investing capital to keep pace with this rapidly changing marketplace, leverage ours.”    --Mike Sullivan, Executive Vice President, Chief Marketing Officer, OneDigital Insurance

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