Gateway to the South
Lockton's office in Memphis signals the growth strategy for the insurance, risk management, and employee benefits specialist.
Lockton associates in the Memphis Team: Front Row, Left-Right: Cindy Winek, account manager; and Ben Seward, account executive. Middle Row, Left-Right: Teresa Sheppard, account manager; Vince Gaffigan, CID manager; Kevin Hunter, producer; and John Vargas, EB manager. Back Row, Left-Right: Joe Lammel, producer; Matt Lammel, account executive; Bob Reiff, COO; and Pam Kail, account Executive.
photographs by Wayne Crook
St. Louis’ Gateway Arch may be America’s portal to the West, but for one American insurance giant, Memphis is the gateway to the South.
The St. Louis Series of Lockton Companies expanded into Memphis in 2011 and has been aggressively adding to its staff while readying itself for further expansion in the region.
“The Mid-South region offers a lot of growth potential,” says Bob Reiff, Chief Operating Officer for Lockton’s Memphis and St. Louis operations, which are sister offices. “We feel the market is underpenetrated for Lockton. Our teams have no boundaries, and it’s very much a relationship business.
“In Memphis our expectation is that initially a great portion of our revenue will come from the Memphis marketplace, but it will also provide us with an opportunity to reach into other markets and still have more of a local service center,” Reiff continues.
Specifically, Reiff mentions Memphis’ immediate neighbors Little Rock, Nashville, Birmingham, and Jackson, Mississippi. Currently Lockton operates 28 offices in the United States, the nearest of which, outside of St. Louis, are in Dallas and Atlanta.
Reiff says the company is still determining which Southern city will be next to open an office.
Lockton first entered the Memphis market on June 26, 2011, and currently employs three producers and 10 associates. The office is led by W. Joseph Lammel, executive vice president and a veteran of the Memphis commercial insurance industry, having spent more than three decades with Marsh. Kevin Hunter joined Lockton in August 2012 as a risk management advisor and producer.
The company’s newest hires include Jennifer Maddux, account executive in employee benefits; human resources consultant Christine Ferris; Sarah Rossetti, account manager in employee benefits; Bethany Greene, associate account manager in employee benefits; and employee benefits consultant and producer Ashley Pace.
Employee benefits is only one area of Lockton’s offerings, which include property/casualty insurance, a retirement practice which is primarily 401(k) plans, a compensation consulting practice, and an executive benefits practice.
But the recent emphasis on employee benefits isn’t coincidental. Employers are slowly digging themselves out of financial distress, reassessing their benefits needs, and, in some cases, expanding their work forces.
“Especially when businesses are under a lot of financial stress and strain, that’s when insurance-buying practices are in need of review, and with healthcare reform, there’s a lot of questions that employers need answered on the benefits side,” Reiff says.
“Memphis is a competitive market, and one of the areas of interest for us is that we’ve never been here, and the resources and tools that we bring to the table will be competitive. Having Memphians in our office was critical. They have an understanding of the culture, the market place, and the industries.”
Reiff says Lockton’s revenue has grown by double digits even through the last several turbulent years, which is partly due to healthcare reform. Lockton developed a proprietary tool to help businesses figure out how the reform, and more specifically reforms in how doctors will be paid, will impact their insurance costs.
“On the benefits side, there’s a fairly clear direction on the impact that healthcare will have on employers of certain sizes,” Reiff says. “What we’ve been doing is working with clients and prospects, assisting them in making decisions. The implementation phase [for healthcare reform] is through 2014, so it has been very good for our business in relation to growth.”
Changes in Medicare reimbursements and physicians’ pay structure are expected to change whether or not mandatory health insurance coverage for all is retained or repealed at some point in the future depending upon the political climate. All of that points to changes for costs of overall healthcare.
The primary issue that emerges for insurance plans as far as costs are concerned is wellness.
“When we look at some of the key initiatives, there are four real critical areas of cost management,” Reiff says. “It’s looking at population eligibility, health risk management or wellness, purchasing efficiency, and the plan design and contribution management at the employer as well the employee level. We also look at their technology management, their communication management, and compliance.”
But wellness above all seems to spark the most change in business for employers. Having a program which encourages employees to lose weight and improve their health, and shows measurable results to that effect, lowers premiums because it makes it less likely that insurance will have to cover costly treatments later on.
Lockton offers its own incentives plan for employees who reach certain levels of improvement with their health. Recently, a Memphian won Lockton’s in-house weight loss contest, losing 54 pounds.
Offering incentives requires an investment on the part of employers, but as Lockton primarily works with middle-tier companies of 200 to 10,000 employees, most benefit greatly from lower premiums.
Efficiency is also critical for lowering insurance costs, Reiff says, particularly when it comes to spending at the pharmacy and general purchasing practices. Lockton consults with businesses to streamline their plans to make sure they get everything they pay for and actually need what they buy.
Lockton was founded in 1966 and now has 60 locations in 17 countries, with 28 in the U.S. It employs more than 4,500 worldwide.
With $914 million in revenue for 2012 and some 15,000 clients, Lockton is the largest privately held independent insurance broker in the world. The Memphis office has already opened 30 accounts.
Reiff says more Memphians will be hired as the business expands. The office in the Renaissance Building was made to accommodate 21 people, so there is room to grow.
Most of the clients are targeted by Lockton’s producers, but the Memphis group still participates in marketing functions, such as sponsoring the keynote address for a recent Society of Human Resources Management meeting.
“We’re in the business development phase,” Reiff says.