Employee benefits industry experiences growth surge
Gallagher Benefit Services among the companies leading revenue charge.
Employee benefits consultants in West Michigan are making more money — and for firms like Gallagher Benefit Services Inc., that means getting bigger.
Gallagher Benefit Services’ acquisition of Grand Rapids-based Fox Insurance Co. last year helped the Grand Rapids office of Arthur J. Gallagher & Co. more than double its West Michigan benefits revenue from 2014, from $1.7 million to $3.5 million.
While the acquisition had much to do with the company’s 105.8 percent increase in revenue, Bryan Hirn, Michigan area president of Gallagher Benefit Services, said the Grand Rapids location has seen steady organic growth of about 10 percent to 11 percent in the last five years.
That growth is in line with a number of employee benefits consultants in West Michigan, according to research by the Business Journal.
Holland-based Edify North saw a jump in benefits revenue of $400,000, or about 28.6 percent, to $1.8 million in 2015. Kentwood’s Lighthouse Insurance Group, which made $9.69 million in 2014, saw an increase of about 9.18 percent to $10.58 million this past year. And HNi Risk Services of Michigan nearly doubled its revenue, from $320,000 in 2014 to $608,000 last year.
Additionally, Berends Hendricks Stuit Insurance Agency Inc. grew its revenue by about 11.6 percent, and Professional Benefits Services saw an increase of 14 percent.
For Gallagher, the 11 percent organic growth in Grand Rapids — that is to say, revenue increase from new business — is slightly down from the statewide mark of 14 percent over the last five years. Hirn said that’s due to the Grand Rapids location serving public entity businesses more than private companies.
But where Gallagher can enhance its growth is in continuing to make acquisitions. Hirn said in recent years, smaller companies have been consolidated into the fold of larger ones, and Gallagher’s Michigan workforce of about 90 employees puts the company into that upper echelon. It’s a buyer’s market that might be here awhile, Hirn said.
“I see it as being sustainable for the medium-term future, and I’m talking the next three to five years,” he said. “And because there are a number of these (smaller) firms, and a number of them have very talented people running them and working there, we get fresh ideas and new people whenever we make one of these purchases, so we can continue to be innovative.”
In a perfect world, Hirn said, the difference between organic growth and growth by acquisition would be more balanced. The company’s summer internship program is one way in which Gallagher draws and develops talent to keep those fresh perspectives on staff, he said.
Hirn added Gallagher Benefit Services has been proactive in engaging its clients for feedback, and in doing so, can turn that information around to showcase the company to potential new clients.
“Every year we survey our clients and ask them to tell us how we’re doing, what they think of us and ask very specific questions,” Hirn said.
“For the last five or six years in a row, it’s been between 99 and 100 percent of our clients saying we are meeting their needs and they are pleased with our work. So that gives us something to put in front of a prospective client — yes, you’ve heard our name, but here’s what our clients think of us.”