In the November 2019 issue of Business Alabama Magazine, our president and sales leaders were interviewed on the consolidation trends seen in insurance brokerages over the last few years and why Valent takes a different approach to serving the state’s middle market companies.
“The M&A activity is actually slowing down now because it was so active the multiples became outrageous,” President Paul Barber said. “The prices don’t make sense financially.” Plus, it has a significant impact on the internal culture, which in turn shapes the client experience. “The private equity firms, when the prices are so high, it accelerates their need to do the financial engineering, cut costs, and it it doesn’t make the work environment attractive. Customer service goes down and people have to do more with less,” said Paul.
To counter this trend, Valent focuses on providing risk management consulting services in addition to purely broking the coverage. Allen Baker, senior vice president of Property & Casualty, said “There is very good positive pressure in the middle market, where we play, where companies are too big for the off-the-shelf products and need more consultation and specialization. These are companies spending $100,000 to $500,000 a year and who still need to talk with someone who will help them drive down their cost. To drive down cost, you have to restructure your insurance in terms of its policies, perhaps raise deductible levels, look for ways to self-insure.”
Healthcare insurance has particularly been a source of high cost since the implementation of the Affordable Care Act. “The conversation now is not just health insurance, but about long-term objectives and strategy” said Benefits Practice Leader Cooper Johnson. “You determine the drivers of the cost of health care by looking under the hood. It starts with data, and without the data, you’re shooting blind.”
Hawkins Tatum, senior vice president of Employee Benefits agrees, “We are data-driven and want to identify the underlying health conditions driving a plan’s annual cost. Once identifies, we deploy strategies to help clients through wellness programs, plan design improvements and employee advocacy.”
Overall, the approach is simple. Focus on looking not just for the cheapest coverage, but instead examine how the overall program is designed and address risk that you can control. Click the button below to download the full article.