In an effort to expand their geographic reach and to deliver more creative and innovative benefit solutions to middle-market employers, five regional independent health insurance brokerage firms have formed Collaboration Centric Solutions.

C2 is a joint venture founded by Kistler Tiffany Benefits in Philadelphia; McGohan Brabender Inc. in Dayton, Ohio; McQueary Henry Bowles Troy L.L.P. in Austin, Texas; The Partners Group in Portland, Ore.; and William Gallagher Associates Insurance Brokers Inc. in Boston. Collectively, C2 will have 20 offices throughout the country.

With the complexity of health care reform and ever-rising health care costs, “a dramatically new level of service needs to be offered,” said Christopher Jon Nadeau, principal and employee benefits practice leader at WGA. At the same time, “all brokers need to find a new and more efficient way of doing business,” to compete effectively in this brave new world, he added. “Many independent brokers need to make some hard investment decisions, sell to (larger brokers) or get stronger.”

At the same time, many middle-market employers take comfort in working with local business partners, according to Anita Verheul, executive vp of WGA.

“We know the local market intimately and have a connection to the local market,” she said.

If the five firms had merged, they would have formed the fifth-largest privately held benefits brokerage in the nation based on 2011 total revenues of $185 million.

Instead, the C2 operating agreement will allow each firm to maintain their independence while sharing staff and other resources to bring the best services each has to offer on an aggregated basis, according to P. Scott McGohan, president of McGohan Brabender.

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“We looked at the talents and technology of each firm. We all wanted to be better than our peers. But, as they say, "aim small, miss small,'” he said.

Under the operating agreement, the firms will share and invest in data analytics, health engagement initiatives, international capabilities and anything else their middle-market clients need, said Keith Carmichael, president and principal of MHBT's Austin region.

Although C2 is looking for a few more broker partners in regions of the country where it is not as well-represented, they must share the founding members' “independent and entrepreneurial spirit,” according to Mr. Carmichael.

“We are looking for more partners, but not too many more,” he said.