VP, CFO and - insurance agent?

• Author: Falconi, Robert R.
• Position: Risk Management

If you can't beat the growing cost of employee benefits, then maybe it's time to join the ranks of those who sell your company its insurance policies: Become your own agent. Here's the convincing story of one CFO who did.

Pick up almost any business publication and you'll see a story about how one business -- or in some cases an entire industry -- is struggling, and often failing, in its efforts to reduce costs. It's not a matter of increasing profits; it's a matter of survival. Cost-cutting is the watchword of the 1990s. Consequently, financial executives have to closely examine every cost of doing business to see where they can help their companies save money. And sometimes that means they have to develop expertise in areas that aren't traditionally part of a financial executive's agenda.

One of the most obvious targets for a CFO's fat-trimming cleaver is employee benefits. Employee benefits now comprise between 20 percent and 40 percent of salaries. A big component of that number, and certainly the fastest-growing cost element, is the expense of health insurance. And, although it hasn't received nearly as much media attention, the cost of life, accidental death and dismemberment (AD&D), long-term disability and short-term disability insurance represents a significant piece of the benefit pie, too. In fact, depending on the benefits a firm offers, these costs can range anywhere from less than 1 percent of salary per employee for a relatively lean benefit to as much as 2 percent for a more generous package.

Unless you've been asleep for the past five years, you're probably aware of the various measures that firms are taking to save money on health-insurance costs. Such changes as higher deductibles, higher co-payments and higher costs for family coverage all translate into one thing: reduced benefits. That's not very popular with the rank and file, but it's becoming a fact of doing business today. So, given the current climate, is there anything a CFO can do to save costs on employee benefits without reducing the benefits?

I'm convinced the answer is yes. And one of the most valuable moves is to become your company's life- and health-insurance agent. You can save your company a great deal of money without hacking away at your employees' benefit package. A SAD SONG

Take a hard look at the process you go through now when it's time to renew your insurance policies. Your insurance agent comes to you, shaking his head slowly, sighing heavily, and says, "Rates are really going up, right through the ceiling." Your heart sinks as you ask him, "Did you get any other bids?" He assures you he did and, in fact, the three best bids are included in his...