The first MBA Group Company

The Concept

Provide cost-effective health insurance to small businesses in Massachusetts.

The Strategy

Richard J. (RJ) Valentine founded Massachusetts Businessman’s Association (MBA) – later known as Massachusetts Business Association – specifically as a tool for selling health insurance to small businesses. He convinced major health insurance providers in the Commonwealth to recognize MBA as a group, with members qualifying for group rates. MBA became, if not the first, then certainly one of the earliest affinity groups for sales and marketing purposes.

The MBA Differences

In the decades since the formation of MBA, direct mail advertising grew, flourished, and was largely replaced by email marketing. In those day, however, very few companies were using direct mail, which was referred to as database marketing. The first thing RJ did was buy a database of every small business in the region and send out mail promoting the Association and its group rate health insurance. The market responded in force. In short order, the Association had to hire a slate of representatives to answer the phones, prepare insurance quotes – and close sales. Growth was immediate and on. With every direct mailing, more small businesses called and joined MBA, gaining group rate health insurance and quickly making the Association profitable, with high margins and residual returns.

Remember, this was in the days before PCs and easy-to-buy computer applications. While most businesses of its size were still handling procedures manually, MBA bought a mainframe computer and developed custom software to manage the insurance policies of its rapidly growing membership efficiently. The computer system also allowed automation of other processes, increasing the effectiveness of marketing and sales.

The results

The growing membership soon led additional insurance providers to offer group rate health insurance to the small businesses served by MBA. The Association grew throughout the ‘70s and ‘80s, expanding its offerings with comprehensive employee benefits programs and becoming the voice of small business at the Massachusetts state house. By the 1990s – with expansion into Main, New Hampshire, Vermont and Rhode Island – we had become the leading provider of employee benefits in New England. We were managing the small group market for every health insurance carrier in Massachusetts, serving nearly 50,000 small businesses and their more than 450,000 employees.

The exit

In 2002, MBA became member of National Financial Partners (NFP), realizing a large infusion of fund and continuing to operate the Association with the expanded resources of the NFP network of companies. It also allowed the MBA partners to participate in NFP’s successful IPO, providing the capital for us to found and invest in a wide range of additional firms in diverse sectors.

In the late 1960s, small businesses were a seriously neglected market, with very little service or support. In fact, health insurance carriers did not offer group rates for businesses with under ten employees. So small business owners and employees were, basically, priced out of health insurance. It was just too expensive for them. I saw this as a huge opportunity.

RJ Valentine, Chairman The MBA Group