Risk & Business Magazine California Risk & Business Magazine Summer 2017 - Page 26

RUDY GARCIA: MAN ON A MISSION his own firm, Qandun Insurance Agency. Qandun was originally formed as a traditional agency, yet Garcia became increasingly disillusioned when he saw firsthand the frustration experienced by business owners as their employee health insurance premiums continued to rise every year: 8 percent, 15 percent, sometimes 25 percent or more. Faced with these annual rate increases, many companies have simply thrown up their hands, according to Garcia, concluding there is nothing they can do to combat these persistent price hikes. “For too many employers,” Garcia notes, “it feels like they have no control. Employers keep paying the increases . . . until the day comes when they just can’t afford to anymore.” Garcia sees a point in time when many companies will be forced to cancel coverage or severely reduce benefits to the point where employees no longer value their company’s benefits package. CRISIS OF CONSCIENCE Even more troubling to Garcia was the broker’s compensation. “Broker commissions are built into the insurance premiums that companies pay,” Garcia explained. “Because of the annual premium increases, brokers are getting raises of 10, 15, 20 or even 25 percent per year purely from the growth in health care costs, not from any improvement in the broker’s performance.” Garcia just wasn’t comfortable with the broker’s automatic pay increase even when the broker did a poor job for his client. CREATING A BETTER MODEL When Garcia began looking for a way to make his business practices and compensation structure more transparent and client-focused, he found no existing model to follow. However, after conducting some due diligence, he managed to get some targeted training, partnered with other agencies that were also taking a new approach to the market, and began developing a transparency model. The new model would transform the agency from a traditional agency to what he terms an “ABC,” or “agent-broker- consultant,” that reflects the heavy client 26 focus of his reimagined firm. In fact, as he began to reinvent his agency, Garcia took the part of the client in a transformative game of ‘Imagine’ to help reimagine his firm. Now Garcia asks companies to imagine that their ABC agency, their benefits advisor, is a true… …Client Representative, whose relationships with insurers and vendors take a backseat and hold less influence than its relationship with you; …Collaborator, that looks at your overall business to uncover areas of vulnerability and develop solutions to make your company more secure and less prone to costly liabilities; ...Advocate, working on your behalf with insurance companies to find your firm the best-in-class product and service solutions available and to negotiate the best deals; …Analyst, that uses metrics and analytics to evaluate performance statistics against stated goals to ensure that your company’s health and benefits needs are being met; …Business partner, that fully discloses its costs and revenues so that you clearly understand what you are paying for your benefits and what Qandun is receiving in fees and other compensation; and …Trusted Advisor, working with you to evaluate problems and opportunities and implement solutions to make your business more effective, more efficient, and more profitable. Garcia and Qandun’s new model for an employee benefits firm looks like nothing companies have seen before. The transparency of both cost and compensation in this new agency model is difficult for some company decision makers to grasp at first. According to Garcia, a big portion of the initial consulting process is often purely education. “Many of our clients are so used to the traditional brokerage system that it requires some education to get them fully onboard with our program,” says Garcia. When and where allowed by law, the transparency method allows the ABC agency to carve out traditional commissions from the premium and then negotiate an annual consulting fee, many times with multi-year guarantees for both fee and pe