Guest: Michael Schroeder, Founder & President of Roundstone Insurance
There’s nothing worse than getting sick or injured and not having insurance, or such limited insurance you have to bounce between providers to find one that accepts it. And if you’re an employer offering health benefits plans, you know the complexities and compromises that come with providing even the most limited insurance options, especially when it comes to cost to the company.
What if, instead of funneling the underwriting profit to the insurer, you got that money back to re-invest in your company? It sounds too good to be true, but it’s the real deal.
In this enlightening conversation with Michael Schroeder, Founder and President of Roundstone Insurance, we explore their mission to provide affordable, quality healthcare plans for middle-market employers. Unlike most insurance providers, Roundstone is a self-funded group captive. Their unique process informs clients of their real-life costs and returns underwriting profits to them. This means you can see your costs, take steps to reduce them, and instead of the insurance company keeping the excess, you get back that profit.
Using Salesforce Pardot to power these customer relationships, Roundstone makes sure their middle-market insurance solution actually answers their clients’ needs and seeks to elevate employee care, driving openness of information in the middle-market insurance sector.
Check out our discussion to gain insights into Roundstone’s one-of-a-kind approach to middle-market insurance and its commitment to aligning the needs of employers and employees.
Providing Affordable Middle-Market Insurance with Pardot
Don’t have time for the full episode? Here’s what you need to know:
The Highlights
Can you tell the audience what sets you apart from other insurance agencies?
0:40 - We serve the middle-market employer throughout the United States and we're unique in that we actually return underwriting profit to our customers. We're a self-funded, what they call a group captive, and the advantages are we return the underwriting results back to them. So it's a very cost effective way to fund your health insurance and you are able to control your cost as well because we share with you what's driving your costs and solutions to hopefully contain them maybe better than you otherwise would.
What would you consider middle-market?
1:25 - In the broad category its 25 eligible employees all the way up to 1000.
The center of our bullseye is about 100 to 200 employees.
There's typically around 30 million Americans that don't have health insurance right now. Can you speak more on the importance of health insurance and why everyone out there should get it?
1:52 - Health insurance is just, candidly, how can you take care of yourself if you don't have the ability to go see a care provider? But for an employer, it's even more important because it really drives recruiting and retention and if you believe in culture and a healthy workforce, then your employee benefits, and particularly your health benefits, very much need to be a strategic emphasis at your company. We find that employers that put their employees as an asset and want to take good care of them and view them as their greatest resource, tend to be the companies that are great candidates or customers for us.
What made you get started in health insurance?
2:44 - I've had a 30-year career in insurance and it's been a winding path. It started off just broadly in insurance and then I started being exposed to self-insurance concepts and things like workers comp, self-insured trusts and I then started getting into captive insurance.
3:04 - I was part of a company that did that for the auto liability segment of insurance. It was very successful and I just thought to myself, this concept of a shared risk pool, a captive where the employers had control and they retain their savings, I think it might have some application to health insurance. So that was the idea. Let's take this concept that has predominantly been in the property and casualty segment, and let's bring it over into health insurance and so I did that.
3:34 - It's going on 17, 18 years ago and I've had some good fortune in that the marketplace responded positively, in part because health insurance is so expensive and the costs keep going up. There's a lot of pain in the market for employers and so they're looking for better alternatives and we are that better alternative.
I want to go back to self-funded or what you call “captive” insurance. May you dive into that and what the advantages are?
4:12 - All kinds of captives, whether it's health insurance or anything, the number one thing that they bring to the table is control. For the first time, the insurers or the employers, have the ability to get information and control, whether that's their plan design or the cost containment solutions. I'll give you an example of how important that is. During the pandemic, a lot of folks had health insurance that did not provide them with digital solutions where they could see a physician online or through a phone and so they had to wait until their next renewal season in order to get that kind of resource. Whereas if you're in a self insured solution, you have the control to say, you know what? If I don't currently have a digital health care delivery, and you can do so immediately. Our customers were able to adapt very quickly to that environment.
5:03 - Number two is information. You can only control, fix and really realize the best if you know what's going on, what's driving your costs. Surprisingly, traditional health insurance, they don't always share where the costs are coming from. Are people buying a name-brand drug? Are they not going to a primary care doctor cause they're going to the emergency room all the time? The information is not available for them to fix the cost drivers and so that's the other part of self-insurance and captives that's real important.
5:36 - Lastly, you have an estimate of your cost. But if through your own efforts, your outcomes and the costs are less, instead of the insurance company keeping it as profit, when you're in a self-insured solution, you get back the profit. And historically, to put this in perspective, we've returned on average about 10% a year in the premium coverage and about 20% overall. So when you run those on a typical employer . . . a 100-employee firm typically is spending $1.5 million a year on their health insurance, we're returning a couple hundred thousand dollars to them, that's a big deal. So its control, information and cost savings are why folks go the captive route.
Why isn't everyone offering insurance like this?
6:33 - That's a great question. Historically, the middle-market viewed self-insurance as too volatile. One year, the cost was good, the next year, the cost was bad. They felt that their budget or their cash flow could not handle that up and down as opposed to a very large company who are all self-insured, but they're able to weather the ups and downs.
6:52 - That was the first objection and the other objection was, boy, this seems complicated. I have to hire a claims administrator. I have to make sure I have a good plan, design and document. I need a pharmacy benefits manager—it just seems complicated for a 100-200 employee firm. Then along comes Roundstone and this shared risk pool eliminates that concern about volatility. So essentially, we can smooth out that year-over-year up and down through the type of coverage that's issued through the shared risk, where you get money back even when you have a difficult high claim here.
7:31 - Then the other piece of it is we have a lot of turnkey assistance and a lot of ability to make things a little simpler. If you want to buy the plan designs and the PBMs, the TPAs and all these things you need, if you want to buy them off the shelf from us, you can. If you want to customize it a little bit, we'll help you do that. But it's not as complicated as it was 10 years ago and it's a little more turnkey today.
Can you explain to us what your mission statement is at Roundstone?
8:08 - We believe . . . a big aspirational goal is affordable quality health care for all. We think health care is critically important to everybody and while we only kind of chip away at that by attacking the employer market, all of our employees know that what they're doing every day, whether they're answering the phones or underwriting a case or paying a claim that they're doing so to deliver health care in a quality way to another employee much like them. That really drives that experience they have and the effectiveness of how they deliver it impacts that person. So that's our mission . . . We can't solve it for everybody, but we can solve it for the middle-market and that's what we're going after. So quality, affordable healthcare for all that's our mission.
What are you guys doing to help build those relationships with your customers? What systems do you guys use to keep up with all that communication?
9:15 - Education is so critical, so we have constant outreach. We have a Roundstone University. We have ongoing blogs and newsletters—most of that is delivered through Salesforce solutions like Pardot. But it's all about education. We have webinars. There's just constant messaging. We have an annual conference, a medical captive forum, every year where hundreds of people gather together and learn about the latest and greatest solutions. It's all about education and obviously Salesforce and content management strategies are how we do that.
What made you guys decide to go with Salesforce?
9:57 - They're always improving it. There's always upgrades. There's always new little gadgets that Pardot offers us. It integrated very well with our other systems, underwriting and claims and we just felt that it was improving and it was growing and that's what our company was doing. It seemed like a good partner for us.
You have been growing your business over the last 20 years or so, but what are Roundstone's 12 month goals?
10:28 - We look at things from the number of new customers we have, and this year our goal is just under 300 new customers. We will crest over 1,000 customers this year and so the 12 months goal is to continue that growth and continue to add hundreds of new customers each year.
10:49 - We have obviously longer term goals and over the course of the next five years. We'd like to reach 3,000 customers and $1 billion dollars of premium. At the same time, make sure that we continue to deliver the service and the focus on the customer. It's not just about adding customers. It's about making sure you are able to provide a really good experience for them. We're growing at about a 30 to 40% clip, but we're doing so while delivering the same value we always have.
If there's one thing that you could do to improve the insurance industry or a need that you have, what would that be?
11:31 - I think like most markets, anytime you can get the consumer and the product solution closer together, it's better off. And in health insurance, the biggest problem is a lot of the service providers are not aligned with the ultimate consumer and so everyone kind of starts pursuing their own agenda. We work very hard in this area. We want to be aligned with the employer and the employee, and we make decisions from the perspective of what would the employer and employee want us to do here. Because there's plenty of opportunities for us to go down a side path that may be beneficial to us, but isn't in the best interest of that employer. So alignment and the one way to really encourage alignment is to get closer to that customer and how you deliver your product.
But, what's cool about it is, if we're able to get better aligned with our customers, our ultimate goal of affordable health care is enhanced and improved by that alignment and alignment has really become a big focus for us right now.
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