From a small- to mid-sized agency’s perspective, producing public-entity business can seem like a Herculean task. The risks are often large and complex, and the political circumstances in which public entities are embedded present two additional challenges above and beyond the mere underwriting.
The first is that public-entity risks are often bid out on a request-for-proposal (RFP) basis, a process which requires a great deal of paperwork and bureaucratic maneuvering for an uncertain return. The second is that political considerations can and will interfere with a public entity’s insurance decision, and the best proposal does not always win out. Add to the stew the typical bureaucrats’ aversion to risk, and it can be difficult for a smaller agency or brokerage to compete with the mega brokerages like Marsh, Aon and the rest.
And yet it is not impossible. Insurance Journal here looks at two Midwest agencies—one from a major metropolitan area, the other from a small city—who took the time to share their insights into how they broke down the public-entity barrier and finally got a piece of the pie.
Their kind of town
The Chicago Public Schools (CPS) is the second-largest school district in the country after New York City’s, with 600 locations and more than 52,000 employees. Make no mistake: it’s a big contract. So it was no small feat when a relatively small player—actually a partnership of two smaller agencies—won the bid against four others to operate CPS’ voluntary universal life, long-term care and disability benefits in 1992.
The partnership known as RFS/IRSI—Rolei Financial Services Corp. and Insurers Review Services Inc.—is headed by Jaime M. Rojkind and Alvin J. Robinson, who teamed up to broker the package of benefits insured by Lake Forest, Ill.-based Trustmark Cos.
“It was a pretty unusual situation,” Rojkind (pronounced “Row-kind”) told IJ of RFS/IRSI’s bidding success. “It was the first time little guys got such a big contract.” The contract totals $6 million in annual premium volume and just over a third of CPS employees take advantage of the $385 annual premium benefit, according to Rojkind. RFS/IRSI qualifies as a minority-owned business enterprise under Chicago’s contracting guidelines (Robinson is black, Rojkind is Hispanic), which Robinson said can be a tiebreaker come decision time but is by no means enough to be a sole factor in winning a bid.
“The biggest cost of the program is the cost of enrollment,” Rojkind said, noting that their partnership’s expertise in worksite management and payroll gave them an edge over the competition. “We bring a product that costs the employer nothing. Premiums are locked in for the life of the policy.”
Though the CPS life and LTC group benefit was the partnership’s breakthrough, it was not their first foray into public-entity business. Both had experience as minority subcontractors for earlier deals won by Aon and Marsh, and Robinson’s IRSI brokered a group life product for the Chicago Park District in the late 1980s.
“When we got that large deal,” Rojkind noted, “we were already running our own little operations. We were already established, and you have to be established for at least five years and develop the relationships with carriers. It’s a much more professional era than when I started out in 1977. The era of just peddling the product no longer exists. It takes lots of patience and lots of persistence, especially with RFPs where the process is not really transparent.”
Robinson said one of the advantages smaller players have on the alphabet houses is a higher level of service.
“One of the problems the big brokers are having is fee-for-service,” he told IJ. “With a smaller broker you can have a boutique-type relationship. You’re talking to a decision maker, as opposed to just an account executive. I handled the Park District account better than Marsh [the previous broker] did because of that. The risk manager wants you to come in and do what they want, listen to their needs.”
Still, he said that sometimes a higher level of service is not enough to win or keep the job. “Professional services—accounting, legal, insurance—fall into a different category for public entities,” he said. “They’re not tangible, so the decisions are intangible—more subjective in nature. Professional services is one area where politicians still get away with rewarding their friends and punishing their enemies.”
Which is why it makes sense, both men agreed, to develop the right friends.
Editor’s note: To read the rest of this story, see the June 7 print edition of Insurance Journal Midwest, which covers Ohio, Michigan, Indiana, Wisconsin, Illinois, Missouri, Minnesota, Iowa, North Dakota, South Dakota, Nebraska and Kansas.
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