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Q&A: David White, CEO, MorganWhiteGroup

Morgan celebrating 25 years as company makes strides

David White, CEO of MorganWhiteGroup, is celebrating the 25th anniversary of the company he started with John Morgan in 1986. MorganWhite recently made the Inc. 5000 list, which ranks the country’s top 5,000 fastest-growing, private companies. MorganWhite provides insurance brokerage and administrative and marketing services to companies in 30 states and has 140 employees in its Jackson office.

Q — Describe what MorganWhite does.
A —

We provide employer services. That doesn’t mean we don’t sell group insurance. We began selling employee benefits: health insurance, dental insurance, vision insurance. All of the other services we provided were related to that. Years later we started doing some administration. Consolidated billing services from the insurance carriers to the employers that we sold to. Then we got a little more successful and formed an AmFirst Insurance Company back in 1999. That insurance company has grown, and it’s today its licensed in 18 states. In January, purchased a New York insurance company, so now we’re in 30 states.

We have 190 employees, most in the Eastern U.S.  Most of them (about 140 are in Jackson). We have an office in Miami where we provide insurance administration to International insurers. In January, we opened an office in Utica, N.Y., because of the New York insurance company we purchased. We also have several salespeople who are not housed with us.

Q — How is your company preparing for changes that could come with federal health care reform?
A —
We’re really in a business that’s changing from commission-based products to fee-based services. We’re trying to position ourselves so that if health care reform comes about in the form that many people think it will, if and agents are not paid commission to provide insurance services, MorganWhite can continue to perform other employer services for its clients. We think in the future we may be more in the supplementary insurance business – not so much in the major medical business – and in employer services.

When health care reform came along a few years ago, we began to look at the business and say, “Is commission based insurance business going to be around very much longer?” Commission reductions had already begun with the insurers before the health bill, the insurance carriers began to squeeze commissions down to a lower level. In the past we received 10 percent commission on a major medical plan. Then it got down to 5 percent. Now, in many cases it’s down to 3 percent. I’m not complaining, because the premiums were getting larger due to inflation, so the 3 percent probably ended up being, dollar-wise, as much as the 10 percent. But we could see the writing on the wall and said, “You know, we better begin to get in more fee-based businesses.” So, this year began to offer payroll services, human resource services, and we’re offering services to keep everything electronically so the employer doesn’t have to have large numbers of paper files for their employees. Employers that keep their employee files in paper files for payroll are always trying to keep them safe and hidden due to the confidentiality requirements of those files.

We also, realized there was a great market in benefits administration. Selling the benefits means you sold the health insurance to the employer, but benefit administration means, “OK, what happens on a day-to-day basis with employee eligibility related to those insurance benefits?” When somebody gets married, you have to add someone to the carrier’s information database.  When somebody dies, you have to remove them from the coverage. A child graduates from college, they come off the coverage. An employee is terminated, and now the employer must notify that employee of their rights under COBRA. Someone must send that employee’s information to the COBRA administrator.

MorganWhite has provided a way to do all these functions electronically. Now the employer can just log on to their computer and say, “David White is terminated as an employee from our business,” and hit the enter button on the computer.  This information comes electronically to the MorganWhite Clearinghouse. Our clearinghouse electronically sends the employee information to the COBRA administrator. At the same time the clearinghouse sends the terminated employee’s and his dependent information to each carrier with whom that employee was insured. From the employer’s point of view, all he did was press a button to handle all of those carrier and service provider notices. These are all fee based services that have nothing to do with selling the group benefits to the employers.

In January, we also purchased half of Security Ballew’s 401(k) administrator. Another employer service provider that fits our go forward business plan.

Q — What medical insurance carriers does MorganWhite work with?
A —
In Mississippi we have a very narrow market place. That’s one of the reasons medical insurance is expensive for employers.. Basically, if you want to provide health insurance quote to your client, you’ve got BlueCross, Humana and United Health Care, and one or two others. If you’re a larger employer, you have the option to become self-funded. Then you can hire an administrator to take care of the health care administration for you. That’s basically it here in Mississippi. It’s unfortunate. If you are an employer in a larger state like Texas, you may have 10 choices, but in Mississippi, you’ve only got two or three. That’s an unfortunate thing, because I believe competition is what drives prices lower, and here we don’t have much.

Q — How have you done well through the recession?
A —
I think one reasons we’re growing in the recession, even though everybody’s business is down is that we’re trying to provide the services businesses need not just what we want to sell.  I also think the recession is very spotty. I talk to people all over the country all the time. I find that in some places, things are horrible, and in one state over people may be doing the same thing, and they are ok.

We’re excited about the Inc. recognition. We were No. 3,412 in the top 5,000 private growing businesses nationwide, but we were 34th among the insurance related businesses (within the 5,000).

Q — Revenues?
A —
Our revenue this year is going to be somewhere between $17 and $18 million for MorganWhite, which is all the employer services, marketing and administration. (That’s what the Inc. rating is based on, growth in the last three years.). We also own AmFirst Holdings, Inc. which is the holding company of the insurance companies. Revenue for those companies will be between $55-60 million.

Q — What did you do before you got into the insurance business?
A —
Neither John (Morgan) nor I were in the insurance business. He was in industrial real estate … I was a part of a family manufacturing business up in Flora. We manufactured sugar cane handling equipment. John called me up one day in 1986 (and said, “Let’s sell insurance to businesses.”

Q — Secret to success?
A —
We have always gotten good people. That’s the secret to any business. Our managers have all been with us 15 or 20 years. You try to take care of good people when God sends them to you. We have people who run their divisions like it is their own business.

More on White:
Favorite movie:
“The Help”
Favorite Food: Caprese salad
Current book reading: “The Law of Success” by Napoleon Hill

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About Amy McCullough

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