Burnham Benefits Insurance Services Inc. is looking north for growth.
The Irvine-based firm has opened an office in San Rafael to capture potential market share in Northern California. The opening also is aimed at strengthening Burnham’s employee health-benefits coverage and consulting business throughout the state amid uncertainty in the healthcare industry over federal and state reforms.
Burnham is among the largest insurance brokerages in Orange County, with a workforce of about 40 here. It has smaller offices in Los Angeles and Santa Barbara, along with locations in Oregon and Washington, D.C. The firm works exclusively in the employee-benefits arena, providing healthcare and wellness-benefits services but not retirement plans.
It wrapped up last year with roughly $12 million in revenue, according to founder and President Kristen Allison.
That marks an 8% increase year over year, following the 19% growth from the year prior. It said it brought on 58 clients last year while maintaining a 97% retention rate of existing customers.
Burnham’s leased a 2,000-square-foot temporary office in San Rafael while a permanent 6,000-square-foot office is being prepared for move-in in the summer. The office will initially house a team of seven, and the firm said it plans to boost headcount to about 20 within two years.
Running the San Rafael location is Michael Michalski, who joined Burnham this month as regional president. He previously served as San Francisco area president at Arthur J. Gallagher & Co., one of the largest insurance brokerage and risk management firms in the world. The Itasca, Ill.-based company had $195 million in profit last year on revenue of $2.52 billion.
Michalski joined Arthur J. Gallagher in 2003, when it acquired Benefits Planning Inc., a regional benefits-only firm where he had served as president since 1989 after merging it with Optimum Benefits Co., a firm he founded five years earlier.
Trend
Burnham’s expansion into Northern California parallels an ongoing slant toward consolidation in the brokerage industry, particularly over the past year as many companies scrambled to finalize deals before tax hikes took effect this year. The trend could present opportunities for smaller firms like Burnham, according to Christopher De Rosa, a president at Cigna HealthCare, a subsidiary of Bloomfield, Conn.-based health services provider Cigna Corp.
De Rosa oversees the company’s Western U.S. market, which comprises about a dozen states, including Arizona, California, Montana and Washington. He works out of Cigna’s Irvine office, which counts 53 employees.
“There’s been a lot of consolidation on the broker side … [and] some of the disruptions in the market have created these byproducts,” De Rosa said.
Increased debt and expenses on the buyers’ books, for instance, could pressure brokerages to up their fees, in turn leaving customers more likely to shop for competitive prices, he said.
“In the last 18 to 24 months, I’ve definitely seen more clients bidding their brokerage coverage than I’ve seen historically,” he said. “It’s a lot of clients looking to see if there is a way to get something cheaper … which is important because, if I’m a regional firm, there’s an opportunity to dislodge a client, where maybe four years ago, I might not have tried that.”
He added that the uncertainty of the impending changes of healthcare reform has pushed more brokerages to diversify their services to strengthen their bottom lines.
“We’ve yet to see the impact of exchanges in the marketplace, so a lot of brokerage firms have been expanding their services beyond just geography,” De Rosa said, referring to state-based insurance platforms that take effect next year and will allow individuals to buy insurance directly. “Brokerages are not just about health plans and commission; they’re also providing services that are complementary to what the carriers provide.”
Burnham Gibson
Burnham has been able to diversify, thanks in part to its strategic alignment with Burnham Gibson Financial Group Inc., a financial advisory firm also based in Irvine.
Burnham Gibson, headed by Darin Gibson, has about $750 million in assets under management for corporate and individual clients.
A close tie between the firms has helped both to offer a varied selection of services, including insurance, wealth management and other estate planning services, Allison said.
