Sunday, November 16, 2003

Sunday, November 16, 2003
Copyright © Las Vegas Review-Journal

NEVADAN AT WORK: BRIAN CRUDEN, President, Insurcorp

Insurance agency's boss keeps policy of honesty in keeping clients covered

Brian Cruden is president of Insurcorp, a company offering group medical, dental, vision and life insurance products to employers.
Photo by SAMANTHA CLEMENS/REVIEW-JOURNAL

Brian Cruden offers businessmen a beacon to guide them through the hurricane of health insurance cost increases.

As president of Insurcorp, the 43-year-old insurance executive advises businesses of various sizes and how best to provide affordable health insurance to their employees. He and his partner, Steve Pollott, oversee a staff of 24 workers and consultants, including the first insurance executive for whom Cruden worked.

He sees more increases in health insurance coming, but he also believes the soaring price of health care coverage will plateau.

Question: What is the secret of your success?

Answer: Stay focused. Be honest. Never give up. I'm not a quitter.

Question: When did you become interested in business?

Answer: Even from my early days, I was always focused on business. It was not unusual for me to be holding down three jobs when I was 15 years old. Boxing groceries at the Boulevard Market, which old Las Vegas people will remember, and also busting tires for Ted Wiens Firestone.

Right after high school, I started with First National Bank of Nevada and continued through college. I was operations officer. One of my depositors was a fairly large insurance agency in Southern Nevada, and he hired me as his general manager.

Question: Who was that?

Answer: It's Allen Vogel Insurance Agency. Allen has since retired and now works part-time as one of my agents. It just pleases me to no end that the person who was responsible for getting me started in the business is now (working) with me and my company.

Right after working with him, I went to work for Sierra Health Services as vice president of marketing and sales and developed the first insurance PPO (preferred provider organization) product for them in the 1980s. (A PPO is a health plan with a provider network of contracted physicians and hospitals but may offer reduced benefits to people using providers outside of the network.)

I was developing HMOs (health maintenance organizations) and PPOs. I actually wrote and designed many of the PPO plan designs that you see today.

I was responsible with my team for developing a product for Sierra Health Services to offer the product to Southern Nevadans. And then, we in turn took it out to about seven Western states.

Question: Before that what kind of health insurance did people have?

Answer: Just indemnity insurance back in the late '70s, early '80s. HMOs were the first managed-care type of product. It was basically a deductible insurance co-pay type platform. You paid a deductible up front, and, after that, you and the insurance company shared the expense.

Health Plan of Nevada (an insurance service of Sierra Health) was actually the first HMO in Southern Nevada.

Question: Then, you set up your own business.

Answer: We saw a void in Southern Nevada in quality, consulting business. Both of us have basically grown up in the insurance business. We didn't read the book. We wrote it. From the day that we opened the doors, it has been a rocket ship.

Question: What types of programs do you provide?

Answer: Group medical, dental, vision and life insurance products to employers. We represent every insurance company licensed to do business in the state of Nevada. We manage more than 1,000 commercial employers just in the Southern Nevada market.

Question: Who are some of your clients?

Answer: Terrible Herbst Gaming, all of the Wolfgang Puck restaurant operations, Las Vegas Police Protective Association (civilian employees), Associated Builders and Contractors, just to mention a few. The Walters Group. Cirque du Soleil.

Question: How much are health insurance costs increasing?

Answer: Health insurance costs have gone up tremendously. National averages are averaging anywhere from 14 percent to 20 percent per year for the last five years. We're seeing some employers having in excess of 20 percent of the entire gross profits going to employee benefits, which is a staggering number.

The physicians are having to deal with increased malpractice costs, physicians as well as hospitals and health centers. That cost is now passed on by the insurance company to the employer, which then in turn is passed on to the employee.

The first thing we tell employers is you've got to get your employees involved. They've got to understand why premiums are going up. What they can do to reduce their own costs.

Prescription costs right now are resulting in almost 35 percent to 40 percent of the entire cost of health care to the consumer. Ask your physician: Is there a generic prescription in place of the brand name you've been giving me? If everybody did that, it would start bringing the cost down or at least to a manageable level.

Question: Will health insurance costs continue going up?

Answer: I see it continuing for a while. There is not a limit on the amount of money that can be charged for a certain service. There's no limit on what can be charged for insurance. As a result, the costs will continue to grow until we plateau.

Small employers in particular are struggling in just offering basic levels of benefits. As a result, a lot of them are joining associations in hope that an association plan might be more affordable, but normally that's not the case.

Question: Do you think the federal government is going to get more involved in health care insurance, or will the government let the marketplace make the decisions?

Answer: The last eight years, even in the Clinton administration, the intent to have some form of nationalized health care has been a key topic with a lot of our state and federal politicians. It doesn't address the actual rising cost of health insurance, so the buck has to be passed to somebody.

I think the big problem right now is buying individual insurance. A lot of products out there don't provide insurance for pre-existing conditions. It can be double or triple what you would pay through an employer group policy. If I don't qualify, I'm left out.

We have a number of large employers who before offered a rich, freedom-of-choice health program and now, as a result of rising health care, have resorted back to entry level HMO products. (They say) if you want a freedom-of-choice product, then I'm going to pass that increased cost on to you.

Question: What could stop continued escalation of health insurance prices?

Answer: With group insurance in general, the bigger the pool, the lesser the risk. As a result, the more insurance companies can find ways to put people into these insurance pools, there's more to spread around and that, as a result, may cause a plateau (in cost increases).

If an insurance company can come up with a product that's more affordable to employers, the more employers can purchase that, the more funds in that pool (and), as a result, the risk will be less.