In a market where growth seems elusive, the leader ofConnecticut's newest managing general agency believes hisstartup–focused on servicing $1,500 surplus lines accounts–couldbind $10 million of new business by year's end.

Earl O'Garro Jr., the 27-year-old chief executive officer andpresident of Hybrid Insurance Group in Windsor, Conn., toldNational Underwriter during an interview earlier this yearthat market dynamics, a fresh approach to the business, and evenhis age may be factors that will spur even more growth for the newfirm in years to come–through acquisitions and expansion into otherstates.

Hybrid officially launched on April 1 with a goal of servicingsmall, hard-to-place accounts–an idea that came from a privateequity firm, which approached him with the opportunity inmid-January, according to Mr. O'Garro.

He could not reveal the identity of the Connecticut-based PEfirm or the size of its investment, saying only that the outfitfocuses on funding specialty insurance businesses and that theylook to invest something in the range of $1-to-$1.5 million. But hedid explain why a small-business focus makes sense for an MGAstarting up in a soft market.

Current market and economicconditions mean that specialty brokers–even those with steadyrenewal rates–are sitting with books of business with averagepremium sizes that have shrunk down 20-to-25 percent, he said,noting that the reaction of large wholesalers is to allocateresources to bigger accounts.

They are “going after bigger things, and what will ultimatelyend up happening is the small, $1,500 policies fall by thewayside,” he said, adding that if a wholesaler has three otherdepartments writing premiums that are $70,000 or $80,000 onaverage, then “those are probably going to be the units that getmore people, more marketing efforts.”

This natural tendency on the part of large wholesalers createdan opportunity, he said.

A business “foundation made up of ten $1,000 accounts as opposedto one $10,000 premium account” is a more effective businessstrategy over time, Hybrid said in a recent press release.

To avoid falling into the same traps as other firms, Hybrid is“focusing specifically–as our core competency–on this segment,” Mr.O'Garro said, describing the target market as small bindingauthority property and casualty business with premiums of $100,000or less, in lines such as general liability and liquorliability.

The firm will not entertain professional liability accounts butwill write some casualty brokerage business, he noted.

FRESH APPROACH

With that singular production focus, Hybrid professionals arealso working to make themselves process experts, “coming up withthe most efficient ways to handle–touch, feel–that business,” Mr.O'Garro said, going on to describe the development of a managementsystem that allows Hybrid “to time processes, literally.”

For example, he said his team met recently to analyzeendorsements, looking at the time devoted to each facet of thetransaction, such as sending information to the carrier, getting acarrier response, responding to carrier questions.

“We want to use the data we collect to addressinefficiencies”–to reduce overall time spent without sacrificinginformation accuracy or document integrity, he explained, addingthat such analysis also allows the firm to communicate estimateddelivery time frames to customers.

“When we talk about technology, it's not just about beingpaperless and being able to work from anywhere and have access toour systems. It's taking the systems we have and communicating whatwe're doing,” he said.

A “Live Chat” feature on the MGA's website is anothermanifestation of Hybrid's dual goals of efficiency and customerrelationship management.

Mr. O'Garro said the idea came to him when he was visiting abank's website seeking information about a credit card. A pop-upappeared asking, “Can I help you?” not only responding to hisimmediate need but also spurring an idea for Hybrid.

If a retail agent is coming to the MGA's website, then thatcustomer has a question–perhaps about an account receivable, hesaid. The “Live Chat” feature will be manned between 8 a.m. and 5p.m. during the week and between 9 a.m. and noon on the weekends torespond to such inquiries once the agent inputs necessarycredentials (confirming identifying information such as agencyname, address and account number for security purposes).

Older wholesalers “probably look at that and say it's not worththe money, but in the demographic that I have, I've got agents thattext or send instant messages on Twitter or Facebook,” he said.

“It's about understanding your audience,” he added.

He recalled that a mentor in the business would often urge him,“Pick up the phone. Call [the customers]. Talk to them.”

At Hybrid, when one of the underwriting assistants alarminglyreported recently that the phones weren't really ringing, a checkof the firm's cluttered inbox revealed that nearly 200 e-mails hadcome in by that point in the day–a testament to a business modelthat's working.

CUSTOMER FOCUS

According to a press release, the new MGA applies “apersonalized and attentive business ethic” to the small bindingauthority arena, and Mr. O'Garro reports that he and his teammembers are ready to respond by phone or in person to customersthat want to do business that way.

He said his age is an asset in that regard, since he's able tohop on a plane at a moment's notice, visit agencies, work andinteract well into the evening, and then wake up at 6 a.m. the nextday to do it over again.

Mr. O'Garro isn't the only Hybrid employee on call for agencyvisits, however. “Everyone is a part of the marketing of the firm,not just the sales force,” he said. “Our accounting team will goout to meet the people they're doing business with,” he added,reporting that underwriters also go out for agency meetings.

Hybrid, he said, “is pretty much a box and computers. It isreally the people and the relationships they bring that arecritical [to the firm's success]. Customer relationship managementat every level is primary.”

Mr. O'Garro said the name Hybrid refers, in part, to themultifaceted backgrounds of the employees who make up the team–lessthan 15 so far–some of them business school associates withexpertise in mergers and acquisitions, accounting andmarketing.

While it was important to bring in some insurance expertsinitially, remaining employees simply demonstrate the ability tolearn the business, said Mr. O'Garro, who himself has an E&Sinsurance background, having worked through school at wholesalerS.H. Smith & Company. After his internship there, he took afull-time position at the firm nine years ago, most recently asmanager of the small-accounts division.

As he recruits employees for his new firm, he views motivationas a more important attribute than an understanding ofinsurance.

“Binding authority is very, very different. It's a type ofperson that does it,” he said. “You have to get charged up aboutwriting a $2,500 account–and doing that 70-to-100 times in amonth.”

“That's a different kind of person. You can't just go out andfind a small-accounts person. You almost have to grow themyourself, but that growth starts with the personality,” hesaid.

“I am not really hiring an underwriting assistant,” heconcluded. “I'm hiring a relationship manager and a clientmanager.”

PURPLE ELEPHANTS

Asked about overall goals that might be measured in terms of atargeted number of customer relationships or premium volume, Mr.O'Garro said, “I'd love to be between $8- and $10 million in newbusiness by the end of the year.”

“If we can do that through 10 agents, that's great; if we haveto do it with 150 agents, that's great, too. But then it justbecomes a little harder to manage those relationships,” hesaid.

Ultimately, he said the goal of the firm is not to be calledupon by retail agents for one-off placements but to capture all thesmall, hard-to-place accounts of each of the retail customers thatHybrid attracts.

For example, he said an agent might call about placing coveragefor a holiday weekend event. In response, a Hybrid employee willsay, “Sure. We'll absolutely write that for you, but can we have ashot at the rest of your E&S business,” he reported.

Beyond that, Mr. O'Garro said he and the PE firm have aggressivegoals to expand nationally and internationally in future years, andthat another domestic office is slated to open in the fall.

The young entrepreneur–who is also a member of the NationalAfrican-American Insurance Association and the Connecticut YoungInsurance Professionals–said his age may be an advantage in makingfuture acquisitions. He noted that many privately held surpluslines agencies have older owners with no plans in place to passtheir firms down to successors.

“It's almost like the purple elephant in the room that no onewants to talk about,” he said. “This is an industry that's agingexponentially.”

“We're talking right now to wholesalers who are having thatissue,” he reported, adding that youth means longevity.

“I hope to do this for the next 40 years,” he said. “So even atmy age and at the age of the firm, acquisition opportunities arecoming to us just because of lack of succession plans” at otherfirms.