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Business Insurance

As seen the week of: Broker Supplement, December, 2009

Productivity In Profile

Mid American still reigns as most productive

By Sally Roberts

When it comes to being productive, no agency or brokerage in the United States does it better than Mid American Group Inc.

The Westmount, Ill.-based employee benefits broker, consultant and administrator generated an impressive $367,892 in revenues per employee in 2008, making it No. 1 in Business Insurance's Top 20 ranking of the most productive U.S. agents and brokers for the fourth consecutive year.

BI analyzed the revenues and employee counts of 135 U.S. agents and brokers for this year's productivity ranking. To qualify, the firms had to generate at least $500,000 in 2008 revenues and derive a majority of those revenues from commercial retail brokerage or employee benefits.

Mid American specializes in providing employee benefit products and services to middle-market clients, most of which have 100 to 1,000 covered employees.

Because many of these firms have a small human resources staff that needs assistance, Mid American has found its niche in offering not only brokerage services but other services as well, including flexible spending account and COBRA administration, Health Insurance Portability and Accountability Act compliance training, employee assistance programs, and customized employee benefit Web sites.

While such specialization certainly helps with productivity, Jim Lill, Mid American's chief executive officer, says there are several other keys to the broker's success.

He noted, for example, that Mid American outsources nonessential jobs that don't involve direct contact with clients, such as information technology and accounting. As a result, all of the firm's employees "touch our customers", he said.

"We are looking to work mostly with closely held business," Mr. Lill said. "We need to understand the purchasing process and it usually is pretty clear within a closely held business."

Therefore, Mid American avoids customers that look at brokerage services as a commodity, he said. "We really don't want to be on someone's spreadsheet. It is important that we are given the opportunity to meet with decision makers, present our value proposition, and connect personally with the executives at our selected customers."

Given all the complimentary services the broker provides, Mr. Lill said it's important that it also work with what he calls "profitable" accounts-meaning Mid American brokers all of the employee benefits for an account, including medical, life, disability, dental, vision, long-term care, voluntary plans and 401(k) retirement plans.

Technology also plays a role in the firm's productivity, Mr. Lill said. All of Mid American's in-house administrative services, for example, are done on Web-based applications, he said. So the status of COBRA recipients, the balances of flexible spending accounts, and timelines associated with the Family and Medical Leave Act all are maintained on a secure site. "As a result, the staffing both Mid American and our clients is at the most productive level," he said.

While Mid American could act like a third-party administrator and offer COBRA, FSA and other administration services on a stand-alone basis, Mr. Lill said those services are provided only to its brokerage clients. As a result, Mid American does not have to hire additional personnel and can take a more "holistic approach" to manage clients' benefits.

As a result of Mid American's productivity, it is able to take those margins and offer at least one new service each year, Mr. Lill said.

Within in the past few years, for example, the broker has added total compensationstatements and ERISA 5500 report preparation services to comply with the Employee Retirement Income Security Act. "Next year, we will be providing dependant eligibility audits" for clients, Mr. Lill said.

Timothy J. Cunningham, a principal with OPTIS Partners L.L.C. in Chicago, attributes Mid American's success to its "very disciplined" business approach.

Not only does the borker have a clearly defined client size, but it "will not do business with an account that does not get and appreciate their value added," Mr. Cunningham said. "As such, their account size provides sufficient scale to deliver the value added to an audience that appreciates their value proposition."