From the February 20, 2012 issue of National Underwriter Property & Casualty • Subscribe!

Globalization Equals Opportunity for World-Minded Producers

As globalization becomes a business fact of life for more and more firms, regardless of size or home-office location, it has become increasingly important for insurance producers to increase their ability to place international business.

In fact, it may be a make-or-break issue for many. Those that develop a reputation as a global-ready resource are positioned to flourish. Those that don’t may quickly see their business poached by more agile players.

Here’s a look at three brokers who have managed to transform themselves from local or regional players to those with global portfolios.

While their stories are different, they do all share one characteristic: They are all members of various global brokerage alliances, whose members can help each other effectively place risks in countries wherever their clients do business.

Kapnick Insurance Group Reinvents Itself as Global Player

Based in the Detroit metropolitan area of Adrian, Mich., Kapnick Insurance Group was founded in 1946. It is a third-generation insurance brokerage firm run by brothers Jim and Mike Kapnick.

The privately held firm derives 90 percent of its revenue from corporate clients. As a middle-market broker, its clients’ businesses range anywhere from 50 to 4,000 employees, with companies with 100 or so employees being its sweet spot.

When the economy began to go south five years ago, Kapnick was faced with the challenge many firms face today: deciding what its perpetuation plan should be.

To remain viable and grow, President Jim Kapnick decided the firm had to determine how to reinvent itself. Part of that reinvention was developing an international component to its business. 

As far back as the early 1990s Kapnick Insurance was a passive member of Assurex Global, whose 500 partner offices on six continents account for some $28 billion in annual premiums. But Kapnick admits that his firm never utilized a lot of the benefits that came with membership. Five years ago, the firm even considered leaving Assurex. 

But before doing so, Kapnick executives met with Jim Hackbarth, Assurex’s president and CEO, who convinced the brokerage to re-engage. After meeting with five brokers with successful international operations in the United States, Canada and Europe, the firm knew what it needed to do to revitalize itself: It began placing overseas business in the U.S. 

In turn, says Kapnick, the firm developed a greater comfort level in executing international placements for U.S. companies. As the economy has improved, the firm’s clients are showing more interest in international risk-management advice as they look to overseas markets for business. 

“We understand the international market,” he adds. “We have gained the relationships and feel we can go in and leverage national accounts with our knowledge. Nothing is easy; you have to commit the time and resources to doing it.” 

CFR Seizes Opportunity When Major Brokers Leave Town

Founded in 1934 in Tulsa, Okla., CFR developed into a large regional agency over the ensuing years, says President Trey Biggs. But seven years ago, the principals decided it was time to switch gears from being a successful insurance agency and focus instead on brokering and risk management.

The reason, he explains, is that at one time the major insurance brokers serviced Tulsa’s commercial-insurance needs from offices in the city. But when the brokers began consolidating their operations in offices in major cities, local clients often were left to trek to the hub locations to do business. 

“We decided there was a vacuum we could fill and began working on it,” says Biggs. 

To help in its quest, the firm soon began to take on “high-end, capable people” from the global firms.

Tulsa’s economy is primarily concentrated in providing equipment and services globally for the energy industry. Servicing these clients properly, Biggs notes, necessitated developing an internationally expanded focus.

One of the first steps to gaining that global perspective was joining Intersure more than two decades ago. Intersure is a global alliance of independent insurance agents.

Membership allowed CFR to form partnerships that helped develop ideas, let the firm gain from others’ experience and gave it access to brokers in overseas markets that could help manage its clients’ risks in foreign locations.

Today, CFR has 110 employees and generates in excess of $200 million in premium. Its client sweet spot is upper- and middle-market companies predominately within the geographic footprint of its offices in Tulsa and Oklahoma City that do business abroad.

CFR’s expertise, says Biggs, lies in having professional partners on site in foreign countries who can answer the unique insurance issues that can arise in overseas jurisdictions.

“It is not about what offices you have, but what expertise you have—and we can compete very effectively from that standpoint,” Biggs adds.

Foa & Son Corp. Finds Niche in Insuring Luxury Brands

Foa & Son Corp. is an international insurance broker with five generations of brokerage experience going back to 1861. From Genoa, Italy, Mario Foa moved the firm to the United States in 1935.

In New York, Mario Foa set up shop brokering Hull and Machinery reinsurance coverage for international shipping and sold life insurance. The business remained concentrated in those markets until Conrad Foa, father of current President Justin Foa, took over, extending into P&C about 40 years ago.

Foa & Son developed a niche providing insurance for luxury brand products from Europe, ranging from clothing to shoes to handbags—products “that you run into walking down Madison Avenue,” says the firm’s president.

Many of those clients are now household names, and they market their products through their own retail establishments. Their insurance needs range from Cargo coverage to the Liability and Property related programs typically required by a retail client.

Over the past seven years, the international business has boomed. “We have more interest than we can handle,” Foa says.

This growth was aided by a number of factors. One is its membership in Intersure. Another is frequent networking trips to Europe to solidify relationships with clients—and with other brokers.

Multilingual capability is also a part of the success picture. “We have sales assistants with language skills here that help the process of placing risks,” Foa says.

With more than 100 employees, four offices and $15 million in revenue, the firm provides information to and places risks for European brokers.

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