Filed Under:Agent Broker, Agency Technology

Lucky Strike: Cavignac & Associates

Owner's varied insurance career molds agency's recruitment, retention strategies.

Jeff Cavignac said he "lucked into" an insurance job right after earning his bachelor’s degree from the University of California at Los Angeles.

Like many young people, Cavignac had graduated "without a clue of what I wanted to do." While his father was an insurance broker, it had never been automatically assumed he’d follow in his dad’s footsteps.

After several job interviews outside the industry, he received his first real employment offer from Industrial Indemnity in San Francisco, where he had applied for a casualty underwriter trainee position.

"I figured I would learn the business in 6 months and then coast," he said. "What a surprise: After those 6 months, I was only just beginning to learn the complexities of our business."

Fast forward 32 years, and Cavignac, now president and principal of his own agency, is still learning the business. "I started studying when I got my first job—and I haven’t stopped since. When I say I ‘lucked into’ this business, I mean it. I was lucky to find such an interesting business that offered such an upside. The risk-management and insurance fields offer young people huge opportunities."

Cavignac is living proof of that statement. In the 20 years since he founded it, Cavignac & Assocs., this year’s winner in the Recruitment, Training & Perpetuation category, has succeeded and grown by identifying and managing its customers’ loss exposures with the goal of lowering their total cost of risk—and ultimately, driving dollars to their bottom line.

Cavignac specializes in serving several sectors, among them construction, real estate and development, manufacturing, design and environmental professionals, lawyers, accountants and small design firms.

The numbers say it all, with his firm showing steady growth in premium volume even in today’s challenging economy. Cavignac’s success also is reflected in achieving recognition from IIABA as a "Best Practices" agency for the sixth consecutive year.

Building and Perpetuating an Agency

Cavignac’s experience at Industrial Indemnity ended after 3 years, when he joined his father’s agency. Four years later, his father and his partner decided to sell the agency to a third party—a move that didn’t work out for the younger Cavignac.

"I resigned and started Cavignac & Assocs. as a one-man show," he recalled. "I really had no idea what I was getting into. The only way our company has achieved what it has is because I have been fortunate to surround myself with great people, from my three partners to our entire staff. I couldn’t be luckier."

But luck only goes so far when an agency needs to survive and grow: You need a plan, and you need young people in the pipeline, both for current success and for perpetuation down the road.

"We consider ourselves first and foremost a knowledge organization; and secondly, but no less importantly, a service organization," he said. "Without the knowledge, we will have nothing to service."

Recognizing that insurance is predominantly a "graying" industry, Cavignac believes the best way for the industry to attract young talent is through "awareness and education," he said. "We’ve been fortunate to find the right young people on a one-on-one basis; however, we do need to do a better job as an industry. I’m not certain if you start this in high school, but certainly there should be awareness at the college level."

The agency’s strategy focuses on recognizing talent and following through with training and mentoring. "Recruiting is the most important non-insurance activity the agency engages in," Cavignac said. "Identifying and hiring the right people as producers provides the best outcome for our agency’s financial growth, staff professional development and cultural integrity."

Some steps the agency takes to find new talent include advertising an interest in meeting potential candidates year-round on its website; participating in job fairs at the University of San Diego and advertising open positions on the job board at San Diego State University; and participating in an internship program with King-Chavez High School, a charter school located in downtown San Diego.

Because Cavignac & Assocs. is a smaller agency with about $1 million in revenue per producer, producer recruitment, training and mentoring is critical.

The agency currently has nine brokers, two of whom are new and in their early 20s. Kelly Weaver interned with the agency when she was in college at San Diego State University; she has now been with the agency for 5 years and is in her second year of brokering.

Preston Cavignac, the other young broker, started in October 2011 at age 23 after graduating with a degree in business administration from the University of Southern California’s Marshall School of Business. Helping to build on this experience prior to joining his father’s agency: an internship with the world’s largest global wholesale brokerage and reinsurance firm.

Training Regimen

Producer training gets special emphasis at the firm. Brokers are given a detailed 6-month training schedule that outlines all of the activities they will be trained to handle; included in the training are educational events to enhance their insurance knowledge.

New employees also attend multiple-day company seminars and conferences focused on producer development; a week-long producer training camp; and classes focusing on specific insurance issues. Further, they shadow the agency principals and more senior producers to observe and learn about their day-to-day tasks and spend time with account managers and learn about servicing clients.

All Cavignac & Assocs. producers, whether new or seasoned, meet monthly with the sales manager and president to review their progress related to year-to-date production; new relationships generated; status of preliminary risk-management meetings held; areas of growth needed, including mention of greatest failures and what was learned; and status of referrals.

Cavignac & Assocs. pays its producers a base salary during their first two years of employment. They also earn 10 percent commission on all new business they develop during that time.

In the third year of employment, they are expected to "validate" and are paid commission-only going forward. Cavignac does not disclose its compensation structure, but it is discussed with clients when they ask, and commission information is provided upon request.

The agency’s ownership is shared by four principals. "I am fortunate to have three great partners, all with different skill sets," Cavignac said. Jim Schabarum (Surety and Construction), Scott Bedingfield (Real Estate and Development) and Patrick Casinelli (Benefits) all have contributed significantly to the agency’s success. Every 3 years the agency balances its ownership based on an established formula and an agreed-upon agency valuation, a system which so far has worked well, Cavignac said.

Cavignac has developed a "Mack truck" replacement plan to be followed if he is no longer able to lead the agency: If the president was hit by a Mack truck, there are other partners who have been trained to step in and handle the activities he currently manages. All four principals carry key-man life insurance.

Additionally, "we have hired producers who we believe will be long-term members of the agency and have developed criteria to provide the opportunity for them to become agency partners," he added. "We will continue to use this model with each class of new producers."

This will ensure the perpetuation of the agency when partners begin their transition into retirement or part-time participation, Cavignac said.

"I started the agency by myself, but I knew that to expand I would need quality partners," he said. "We have had lots of interest from others to acquire us, but our objective is to perpetuate internally."

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