Filed Under:Agent Broker, E&S/Specialty Business

Creative Thinking

Successful agencies find niches by leveraging knowledge in the E&S market

In today’s competitive insurance market and tough economy, it takes more than dedication to survive and succeed. Successful agencies blend tenacity, passion and ownership, as well as some practical techniques such as cross training employees, marketing the agency and regularly contacting clients.

And another key element is building niche markets by accessing the excess-surplus market to best serve clients.

For Mike Suskind of Logan Insurance Agency, it took some creative thinking and initiative to build and expand on a niche opportunity. Logan Insurance is an established agency in the Florida panhandle, and has been in business for the last 35 years. It’s a family owned business with experienced personnel and a real desire to help a client. Typical of most agencies, Logan Insurance provides property insurance, commercial auto and workers’ comp. Suskind attributes the company’s success to passion; the staff does its best to help out any company with insurance needs, even those that fall outside the agency’s realm of expertise.

That resourcefulness was evident when Suskind met a prospect in the beach services business—supplying chairs and umbrellas to Florida vacationers. The vendor told Suskind that his insurance company stopped coverage. Suskind immediately contacted one of his wholesale partners.

That one piece of business turned into a niche market for Logan Insurance, as Suskind’s client spread the word to other vendors. Suskind further expanded into beach services after becoming involving in their association, speaking at their meetings and advising several members.

Suskind owes part of his success insuring beach services to his relationship with a top wholesaler. "A good agency must align itself with a top MGA/wholesaler," he said. "Finding a wholesaler who can change with the times and think outside the box is very important to our business. Some MGAs will only write restricted, pre-defined classes. We needed a partner willing to listen to ideas, have access to markets that will write high risk businesses and work with us to insure risks rather than cancel the policy."

See sidebar "Owner’s Protective Indemnity Coverage".

Other agencies grow providing a solution for every need, which can be done by partnering with another agency or working closely with a wholesaler. That’s the philosophy of Case Fessler of The Fessler Agency in Clearwater, Fla.

Fessler offers everything including benefits, workers’ comp, personal lines, automobile, property and bonds. The agency is not unique in this approach; but at Fessler, staff work closely so each producer is able to service the client.

Fessler’s 18 employees are knowledgeable about all the services available to their clients and they feel comfortable talking about the coverages. Fessler agents adjust their opening conversation depending on the time of the year or the fluctuation in the market. If the healthcare market is very competitive but workers’ comp has recently gone down in price, an agent will mention the available opportunities in workers’ comp during the call, proactively marketing to their clients and educating them at the same time.

Related: Read "A Question of Ethics: A Producer's Responsibility To Reccommend Coverage" by Peter R. Kensicki.

This strategy is supported by vigorous employee cross training. Most often, Fessler hires personnel straight out of college. New employees spend 3 to 4 months working with the customer service group. From customer service they may move to the health insurance department and listen and learn. These recent hires continue to move from department to department through the first year. Simultaneously, new employees go on appointments with current agents, soaking up information on a daily basis. As a result, by the time employees receive their licenses and are building their books of business, they have a strong working knowledge of the procedures, processes and coverages provided by the agency.

This cross-training strategy also assists Fessler in retaining employees. "Our employees really like what they do. They enjoy being able to talk about numerous products and help clients out in a variety of ways," Fessler said. Work is never dull for this group. And cross training really never ends for them. They are always helping each other out. "Another nice thing is that an agent might have eight to 12 bids out to the market at any one time and those bids are on different aspects of the business," Fessler said. "This ability to handle different coverages allows the agent and the company to move forward—even in the normal ebb and flow cycles of business."

Related: Read Mark E. Ruquet's article "Cyberspace: The Next EPL".

Growing through acquisition is another option for some agencies. According to Alex Kincaid of RMI Insurance Services Inc. in Laguna Hills, Calif., "the market has been so soft for years now, that even as we retain our clients and continue to provide coverages for them, the value of our business decreases because the premiums are so low." Growing by adding other agencies and other services is a solution for RMI. The agency looks at firms that are close to retirement, want to sell merge firms. "If you’re in the business and want to grow your firm through acquisition, the most important aspect of your agency is the people who work for you," he said. RMI Insurance Services is a value-added agency that goes "way beyond selling insurance, and that means the people who work at RMI have to be great communicators," Kincaid said. "We have to have an excellent relationship with our clients to know what their needs are. And you can’t do that without talking to them often."

Finding the right people was not easy. Since RMI was founded 12 years ago, the owners have learned that distribution talents are scattered and variable. The agency learned in the first few years that there are too many variances in professionalism, product knowledge and the ability to deliver what is promised. Kincaid’s major problem was hiring producers that couldn’t produce, so RMI trains on the job.

At RMI, everyone takes ownership of the client. This hands-on personal service led to agency growth with the acquisitions of three other agencies. As a result, RMI’s premium volume has grown and the agency has been able to keep its expertise intact—the agents at RMI each have more than 10 years of experience.

Another frequently overlooked key for success is community service, said David Dignam, president of Key Agency in Englewood, Fla. Key Agency is a family-owned and operated business serving several small communities in Florida. Key Agency employees are active in community service and compassionate about doing what is best for their client. They are involved with Little League, the public school system and many not-for-profit causes. The agency sponsors multiple events resulting in frequent speaking engagements. Associations involved with homeowners, condominiums and mobile home parks often call on this firm to speak on legislation, claims scenarios or new insurance trends.

Related: Read "Setting Expectations" by Lisa Harrington.

The firm believes that everyone should be made conscious of their own personal liability. "During the hurricane season people sometimes need a reminder of how to be prepared," Dignam said. "They need to know what their policy covers and what it does not. We market to our clients and potential clients by providing education, particularly at emergency management events we help to sponsor. We work with radio stations, the Red Cross and other organizations to publicize information throughout the community."

Key Agency also writes commission-free insurance for charities and maintains a community charity fund which offers assistance with summer camp fees, sponsors scholarships for local students and supports events like the Relay For Life.

"We know our clients professionally and personally," Dignam, said. "And that makes us passionate about making sure we serve them well." The overall attitude at Key Agency is that everyone is part of the success of the company. "We allow our employees to take time off of work to volunteer with whatever cause they believe in. Our passion for our community works for us and it works for all of our employees. It’s just fun to work with people who are so dedicated to their job and their surroundings."

Each of these agencies saw and took advantage of an opportunity to build and sustain their businesses. Instinct and values played a part in the success of each agency as well. And in every case, the interest of the client came first.

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