In study after study, agents and brokers regularly report that the task of finding new leads is critically important to maintaining a fiscally sound agency, and one they would frequently like more help with—from carriers, wholesalers and industry associations. But agents across the country are finding new ways to connect with clients in emerging markets. You just need to know what to look for.
David Baker, principal at Stratum Insurance Agency headquartered in Costa Mesa, Calif., became aware of food trucks as a "destination" dining option about 3 years ago. That was when he said he "first heard people say they were going to eat dinner at a food truck." Since then, his team has helped mobile food businesses of all flavors understand their insurance needs and get the right coverage. "Our agency has a focus on mobile businesses in general," Baker said, explaining that expanding their sales efforts, which cover businesses such as mobile window tinting, to include food trucks was a natural evolution. Having an office full of young foodies didn’t hurt, either. "I think part of it has to do with the personalities of our agents and going out and having an interest in the industry," Baker said of success in tapping the still relatively new food truck market. "I can’t speak for other agents, but I would assume that people sell what they like as well." Baker estimates his agency’s annual premium at between $10 million and $13 million, and said that food trucks make up less than $1 million of that.
Like Stratum’s off-hours interest in food truck fare, the team at San Jose, Calif.-based Thoits Insurance Service harbors a keen familiarity with technology. That expertise serves the agency well as it embraces and supports the quickly expanding cyber liability market. "The general concept for cyber liability really kind of started taking off about 18 months ago," said Ted Way, client executive and cyber and management liability practice leader at Thoits. "That was when we started making these submissions on a regular basis." The concept of cyber liability has actually been around for a while, according to Way, but it has only been recently that it has started to really gain traction. "Now we’re starting to see a lot of people pay attention to it, because of the technology and social media and Web presence—everything that we’re doing over the Internet. It is becoming a really interesting topic." He added that cloud computing, cyber bullying, and the growing use of electronic health records are also combining to give the issue more relevance every day. Cyber liability comprises about 3 percent of Thoits’s $125 million annualized premium volume.
Some agents, like Lee Gaudette, CPCU, president of Gaudette Insurance Agency, find new markets rising from the business scene in their local areas. Based in Whitinsville, Mass., Gaudette said his strength is an in-depth knowledge of his region, which is "an area that’s still very much dominated by mom-and-pops and independent small businesses." His team recognized early in the recession that employment opportunities were changing significantly among the local population, and folks were increasingly turning to self-employment when traditional jobs dried up. "I would say the dominant characteristic of those people going back on their own are tech-oriented consultants," Gaudette said, adding that a portion were mid-level managers who were now consulting back to their prior employer. Gaudette said that about 60 percent of his agency’s $20 million in P&C premium comes from personal lines, and by maintaining a strong presence in the area and carefully tending his existing book of business, he has been able to gain new clients as well as service existing customers who need new types of coverage.
Not all emerging markets are brand new—a handful are reappearing after a hiatus or are coming full circle. In the early ‘90s, policies for contractors using EIFS (exterior insulation and finish system), or "synthetic stucco," were growing. However, by the middle of the decade, several lawsuits were pending. "At the worst part, there were only one or two companies in the nation that would even cover an EIFS contractor," said Denise Johnson, vice president at ECI Agency in Piedmont, Okla., and immediate past president of the Independent Insurance Agents of Oklahoma. After product improvements and a host of regulatory and other changes, "we’re starting to see over the last 2 to 3 years a growing, competitive market," Johnson said. "It’s been an ebb and flow. First it was a great little market, then it just went to nothing because the lawsuits were so bad, and now it’s actually grown into a very nice little line of business." Keeping in touch with the industry and monitoring new developments has allowed Johnson to increase her client base in this previously down market. Today, EIFS makes up about 3 percent of her $5 million annual premium volume.
Once you’ve spied a potential new market, it is time to find and attract clients. Social media plays a sizeable role in the overall marketing plan at Stratum, but Baker said that simply sitting behind a keyboard probably will not be enough when it comes to connecting with potential clients in many of today’s emerging markets. "It’s more than just advertising where you want people to come to you. You have to go to them." He believes that agencies—not carriers—are often the ones who have to find the niches, and that although many agents have Facebook or Twitter feeds, too many rely on those to bring in business, rather than using them as a tool to reach out to potential clients. "You have to have the motivation to do that," he said.
With the food truck market in particular, Twitter acts as the primary tool used by truck operators to find customers. Baker’s team leverages that already active channel to begin the conversation. "We got in touch with a lot of [operators] that way, and then of course naturally people come to the website." He said their efforts began with social media, but "now they come to us. Now it’s a huge referral business for us." Baker also finds it useful to get out and find the food trucks on their own turf. "We attend food truck festivals," he said, "Not so much the festivals where you have 20 or 30 trucks, but maybe a festival where you’ll have 10 for a lunch thing. We attend a lot of that stuff."
Thoits’s existing book of business has provided them with a solid launch pad into the cyber liability market. "We’re talking about cyber liability with probably 99 percent of our clients," Way said. Because of the extreme interconnectedness of today’s business methods, he believes that just about every business has a need for some form of cyber liability protection, but not everyone is up to speed yet on their exposure risk and what a claim could actually cost them. Way puts the ratio of proactive customers around 20 percent—those are the clients coming to him with questions. The remainder "don’t know about it, but that 80 percent, once we talk about it, they sure want it." He said that carriers are also helping grow the market by partnering with agencies to develop literature that educates and engages customers.
Those newly self-employed technology consultants in Gaudette’s area are particularly Web-friendly, and his agency has a full-time person focused on Internet marketing. "We’ve put a lot of work into our Web presence," Gaudette said, adding that they have completely eliminated methods like the Yellow Pages as advertising tools. "We’ve dramatically curtailed print ads." Even though his website has seen increased traffic, in-person networking opportunities, such as through local Chambers of Commerce, are still vital to finding new markets. "There are four or five chambers that serve our area and we’re active in all of them. There’s quite a robust variety of business networking groups where the members interchange referrals." Producers in his agency are members of about a half dozen such groups.
With his own marketing efforts in full swing, Gaudette said that carriers also are working to woo clients in this growing market. "It seems all of the commercial insurers have realized that the small commercial market hasn’t suffered from the same soft market conditions as the middle market, and therefore remains profitable," he said. "We have seen a number of carriers rolling out enhanced slot-based products with a variety of new eligible classes."
Johnson believes that carriers are attuned to the evolution of new markets, too. "Carriers seem to always have an eye out for new emerging markets," she said. She thinks carriers look for profitability in given markets, and a market "that may not have been profitable 5 years ago and has been off the radar can suddenly ‘reappear’ and the carriers will develop a program."
Educating the clients within an emerging market is key to providing trusted advice while growing your business, Way said. "What we’re seeing is not necessarily people knocking down our door wanting us to sell them cyber liability," he said. "What we’re seeing is that we’re educating people and today people understand immediately what we’re talking about and therefore they are [now] looking at cyber liability." He pointed to media-grabbing events such as the widespread hacking of gaming networks and the ever-present reports of the latest credit card database to be breached. "As soon as you mention [those] and people can relate to real life stories and real life situations, there is no question about it. They are very interested and want to receive a quote on it."
Way cautioned that new markets require an extra dose of niche knowledge, specifically when it comes to helping clients understand their true level of risk. "I think the biggest issue for brokers and agents across the country right now is that we’re providing an expert service to our clients. If we do not—and this is one of the reasons why we’re so involved in this—if we don’t recommend or explain this type of coverage and there’s a claim, we’re in trouble." Way said that even something as simple as an ill-advised post on a Facebook page can harbor serious liability risk for a company. Thoits maintains expertise within the organization to ensure that developing information is processed and reviewed on an almost daily basis. "If brokers and agents are not doing that right now proactively, they are going to be in trouble as well," Way said.
Even though Johnson said he believes that streamlined underwriting guidelines and other changes have created an environment for success for EIFS contractors, she still thinks they "will carry the weight of the…lawsuits always with them." Her industry expertise allows her to help clients understand how the problems of the past might create coverage difficulties for them even today. "I do think that the general contractors still need to understand that many contractors have EIFS exclusions on their policies, and they need to be diligent to make sure that the exclusion has been removed and there is coverage."
Protecting technology consultants from risk includes not only recommending the best product based on their unique situation, but also knowing what other options may be available to them. "They do have an E&O exposure," Gaudette said," but we usually counsel [them] to secure a contractual release/indemnification from their client—which is usually only one company."
New business owners, especially those with little or no prior experience running their own operations, may not have all the information to select and purchase the right coverage. "What happens when you’re a small business owner is you find out you need insurance because someone suddenly requires it," Baker said. "For example, if you’re a food truck and you want to go to a certain office complex, the landlord may require it and possibly some of the businesses will want to be an additional insured." Those additional insured requirements are sometimes not allowed by the carrier due to the extra exposure, and "balancing the understanding with the client, the additional insured, and the carrier can be difficult," Baker said. He also described situations where a producer may sell a caterer’s policy to a food truck, even though the carrier is not expecting the policy to cover anything other than a traditional caterer. "You find a lot of people have the wrong insurance," he said. "A little education helps." Knowledge of each client’s industry is important, but successfully writing new business in an emerging market may hinge on your network of contacts with carriers and underwriters, too. To illustrate, Johnson recounted a cold call she received earlier this year from a potential client looking for coverage for an unusual business. "We’re in Oklahoma and they were in Alabama. They attach fuel tanks to barges, and the client called and said, ‘Our agent said they can’t find a market and I don’t know what to do about this.’" Johnson knew an underwriter with the right experience and connections to get the coverage the client needed. After getting the account written, Johnson asked the client how she found her name. "She said, ‘I did a general liability search and you came up first on the list.’" Johnson’s SEO ranking was no doubt a big boost, but her ability to find just the right underwriter for this unusual request was important to making the sale. "We were able to write that account," Johnson remembered. "It was kind of odd, it was kind of different. It wasn’t working out for her where she was, but most consumers today, they go on the Web and they search until they find what they need."