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

Earl O'Garro Jr., the 27-year-old chief executive officer and president of Hybrid Insurance Group in Windsor, Conn., told National Underwriter during an interview earlier this year that market dynamics, a fresh approach to the business, and even his age may be factors that will spur even more growth for the new firm in years to come–through acquisitions and expansion into other states.

Hybrid officially launched on April 1 with a goal of servicing small, hard-to-place accounts–an idea that came from a private equity firm, which approached him with the opportunity in mid-January, according to Mr. O'Garro.

He could not reveal the identity of the Connecticut-based PE firm or the size of its investment, saying only that the outfit focuses on funding specialty insurance businesses and that they look to invest something in the range of $1-to-$1.5 million. But he did explain why a small-business focus makes sense for an MGA starting up in a soft market.

Current market and economic conditions mean that specialty brokers–even those with steady renewal rates–are sitting with books of business with average premium sizes that have shrunk down 20-to-25 percent, he said, noting that the reaction of large wholesalers is to allocate resources to bigger accounts.

They are “going after bigger things, and what will ultimately end up happening is the small, $1,500 policies fall by the wayside,” he said, adding that if a wholesaler has three other departments writing premiums that are $70,000 or $80,000 on average, then “those are probably going to be the units that get more people, more marketing efforts.”

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

A business “foundation made up of ten $1,000 accounts as opposed to one $10,000 premium account” is a more effective business strategy 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 binding authority property and casualty business with premiums of $100,000 or less, in lines such as general liability and liquor liability.

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

FRESH APPROACH

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

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

“We want to use the data we collect to address inefficiencies”–to reduce overall time spent without sacrificing information accuracy or document integrity, he explained, adding that such analysis also allows the firm to communicate estimated delivery time frames to customers.

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

A “Live Chat” feature on the MGA's website is another manifestation of Hybrid's dual goals of efficiency and customer relationship management.

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

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

Older wholesalers “probably look at that and say it's not worth the money, but in the demographic that I have, I've got agents that text 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 alarmingly reported recently that the phones weren't really ringing, a check of the firm's cluttered inbox revealed that nearly 200 e-mails had come in by that point in the day–a testament to a business model that's working.

CUSTOMER FOCUS

According to a press release, the new MGA applies “a personalized and attentive business ethic” to the small binding authority arena, and Mr. O'Garro reports that he and his team members are ready to respond by phone or in person to customers that want to do business that way.

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

Mr. O'Garro isn't the only Hybrid employee on call for agency visits, however. “Everyone is a part of the marketing of the firm, not just the sales force,” he said. “Our accounting team will go out 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 is really the people and the relationships they bring that are critical [to the firm's success]. Customer relationship management at every level is primary.”

Mr. O'Garro said the name Hybrid refers, in part, to the multifaceted backgrounds of the employees who make up the team–less than 15 so far–some of them business school associates with expertise in mergers and acquisitions, accounting and marketing.

While it was important to bring in some insurance experts initially, remaining employees simply demonstrate the ability to learn the business, said Mr. O'Garro, who himself has an E&S insurance background, having worked through school at wholesaler S.H. Smith & Company. After his internship there, he took a full-time position at the firm nine years ago, most recently as manager of the small-accounts division.

As he recruits employees for his new firm, he views motivation as a more important attribute than an understanding of insurance.

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

“That's a different kind of person. You can't just go out and find a small-accounts person. You almost have to grow them yourself, but that growth starts with the personality,” he said.

“I am not really hiring an underwriting assistant,” he concluded. “I'm hiring a relationship manager and a client manager.”

PURPLE ELEPHANTS

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

“If we can do that through 10 agents, that's great; if we have to do it with 150 agents, that's great, too. But then it just becomes a little harder to manage those relationships,” he said.

Ultimately, he said the goal of the firm is not to be called upon by retail agents for one-off placements but to capture all the small, hard-to-place accounts of each of the retail customers that Hybrid attracts.

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

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

The young entrepreneur–who is also a member of the National African-American Insurance Association and the Connecticut Young Insurance Professionals–said his age may be an advantage in making future acquisitions. He noted that many privately held surplus lines agencies have older owners with no plans in place to pass their firms down to successors.

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

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

“I hope to do this for the next 40 years,” he said. “So even at my age and at the age of the firm, acquisition opportunities are coming to us just because of lack of succession plans” at other firms.

Special Reports /

Conn. MGA Launch Focused On Small Biz, Customer Communication

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