What services or lines of business are you focusing on for growth in 2013?
Spencer M. Houldin: We have particular focus on personal insurance for the high-net-worth consumer. These clients seek an insurance advisor with markets and product knowledge. We offer services, such as background checks for domestic employees and personal property inventory services, which are sought in this space. Given the competition for the commodity-based consumer, we are committed to growing our advisory-based customer numbers. An additional 2013 goal is to grow our group personal excess liability business with a particular focus on law firms.
Jeff Cavignac: We focus on our core competencies, which include the building industry (development, design and construction), real estate, manufacturing, non-profits and other industries we feel qualified to work with. We believe it is important to specialize in order to help clients effectively manage risk. We also plan to further develop our fee-based risk control services, specifically in the area of human resources.
Ted Devine: We will strengthen our relationships with our core carriers and identify additional carriers that might provide our customers with better security. We also will ensure that clients understand the unique value propositions of each of our carrier partners. Our clients want us to present their insurance options in a way that is relevant to them. Differentiation on something other than price is a core service we provide our clients and our carrier partners.
What was your biggest challenge in 2012? How did you overcome it?
Cavignac: Our biggest challenge was growing our top line at a time when many of our clients continued to experience a tough business environment. This has actually been a factor for some time. If we had renewed 100 percent of our clients since 2006 and not written anything new, our revenues would have been cut in half. The only way we have been able to develop the modest growth we have is the acquisition of new business. Our annual new business goal equals 15 percent of our year ending commissions. We also strive for a 95 percent retention and 5 percent productivity gains measured as revenues per non-broker employee.
Devine: In 2012, we saw a large increase in demand for small business commercial policies. Keeping up with the variety in businesses was one of our largest challenges. A few years ago, the market mainly consisted of computer consultants and a few other professional services classes. Now nearly every type of small business is looking to mitigate business risks.
We also have spent a tremendous amount of time and energy building out our product offering with new carrier partners in order to service as many industries as possible. It is a good problem to have.
Houldin: Our biggest challenge has been implementation of a segmented approach to our internal operations. We cannot afford to treat a $25,000 personal lines account the same way we treat a $4,000 account. Both are valued and both will be given an exceptional experience, but they have to be handled differently to preserve margins. This has led to additional training needs, severing of some client/CSR relationships, and new team building initiatives. The implementation was not without challenges. Taking direct feedback from all involved and adjusting our approach will allow us to end the year much stronger than we started.
Read on to hear panel opinions about mentoring young agents and compiling disaster plans.
Where do you turn for young talent? How do you mentor young agents?
Devine: We are fortunate to have a good relationship with college insurance programs here in the Midwest, and over time, these young insurance majors contribute to our success. A key part of this success is the enthusiasm and energy these talented grads bring to the team. Insureon’s culture is a dynamic and more entrepreneurial environment compared with other insurers. We give young agents a lot of responsibility and opportunity from the get-go, and they seem to thrive on it.
Cavignac: Young talent is the toughest to find. Many recent college graduates are not certain what they want to do with their careers. The young talent we have hired we already knew. Both our young brokers also played college sports. This was reflected in their demonstrated competitive attitude, ability to work within teams and the willingness to work hard. In the future we will continue to evaluate young brokers on these three attributes.
Houldin: I have enjoyed being involved with InVEST, a collaboration of agents and carriers charged with educating our youth about the opportunities within the industry. Under the auspices of the Big I, InVEST has grown over the last 40 years and is making a real difference in attracting young talent.
At Ericson, our top priorities in new hires do not necessarily include a strong insurance background. We look outside the industry for individuals who are clearly motivated to succeed, have strong technological skills and are forward thinking. We have the capacity to provide the training for them to gain a strong insurance aptitude. There are certain innate traits that you cannot train that we long for.
Does your agency have a disaster plan? When clients need agents most, how do you ensure that claims will be handled?
Cavignac: We are clients of Agility Recovery Solutions. If there is a disaster in San Diego and our building is inhabitable, Agility guarantees that we will be back and functioning within 48 hours. With Agility’s help, we developed a disaster plan that is reviewed with staff annually.
Devine: At insureon, we are proud of our internal disaster recovery plan. We built in redundancy for our telephone and technology infrastructure, and we have offices and staff in different parts of the country, which helps insolate us from the impacts of regional disasters. We are confident that regardless of what disaster scenario occurs, we would be able to continue operations. I just hope we don’t have find out.
Houldin: We have a comprehensive disaster recovery plan that is triggered in a variety of situations. As part of this plan, emails and voice messages revert to the cloud to be retrieved from any location. We have reciprocal relationships with agents in other areas who could to take calls for us. In the case of an impending event, we send a blast email to all clients, letting them know how to reach us post event. This usually involves a customized email address for the event. We meet after each cat event to talk about how we could be better.
Continue reading for panel discussions of legislative issues and social media use in the industry.
Devine: We would like to see a single national producer’s license.
Cavignac: We would like to see California’s indemnity statutes revised. Current indemnities allow upstream parties to force uninsurable indemnities on downstream parties. We review our clients’ contracts from a risk management and insurance perspective. Our job is to quantify risk for our clients so they can make the right decisions for their companies. Unfortunately, sometimes our clients are in a "take it or leave it" position. They either have to accept the lousy contract terms or walk away from the job. We are advocates for statutes that require each party to be responsible for the consequences of their negligence.
Houldin: With the President’s re-election, there will be renewed pressure to have the federal government play a stronger role in the financial services industry. With the status quo in Washington, Dodd-Frank is here to stay. We are fortunate to have a strong lobbying presence in Washington, primarily through the Independent Insurance Agents and Brokers of America (IIABA), to protect our interest and fight for preservation of the state regulatory system.
I would love to see NARAB II come to fruition, which would streamline multi-state licensing for agents. The current method of interacting with each state is inefficient, unnecessary and detrimental to consumers. NARAB II has broad support in the insurance industry and has been endorsed by the National Assn. of Insurance Commissioners. It has passed the House on two prior occasions and I am hopeful that we see movement in both chambers of Congress next year.
Taxes, the Affordable Care Act and the Terrorism Risk Insurance Program also warrant attention.
How do you use social media to attract and retain clients?
Cavignac: I’m not sure social media attracts or retains clients. We use it so others can check us out. We are active on Facebook, LinkedIn and Be-Influential. We also blog for several publications. What we probably do best is publish position papers on key issues. We recently received an opportunity on a $500,000 account because the client performed a Google search on foreign insurance and found one of the newsletters we had written on the topic.
Houldin: This is an area in which we could do a better job and will have our full attention in 2013. We just contracted with Project CAP to design and launch a digital marketing strategy, which will largely involve social media. We are particularly interested in how social media can help us better educate our clients and respond to them in the time of widespread catastrophic loss.
One of our advisors launched and moderates a Linkedin group designed for agents who work with high-net-worth clients. The members of the group collaborate to solve problems and share marketing ideas. It has grown to just under 400 members.
Devine: For us, it comes down to having a long-term commitment to frequently posting content on Twitter, Google+ and other social media channels, while treating each channel differently. For example, we actively promote our news articles specifically to Twitter, while larger announcements are better for blogs and other channels.
How do you differentiate your agency and products from direct writers?
Devine: To the small businesses we work with, choice is critical. They want to know what their options are. What we hear from our clients—particularly the smaller accounts—is that they have difficulty finding agents interested in learning their business and capable of providing unbiased advice. A direct writer can be at a disadvantage when it comes to these critical areas.
Houldin: Independent agents offer the unmatched ability to provide choice in the marketplace, allowing us to customize the needs of the client in the most cost effective manner. The culture at Ericson is based on the premise that we are not selling a product, but playing a vital role as a trusted advisor. The product sale will come naturally.
Ericson focuses on the utilization of technology to enhance the client experience, both in coverage analysis and policy service. We strategically choose our carrier relationships to make sure all product needs are met, but also so we are a significant partner with the carrier.
Cavignac: Most insurance brokers "sell insurance" and provide reactive service. Any of our brokers will tell you what they do is "manage risk and negotiate insurance." The words are chosen purposefully. We use the Cavignac Risk Management Process. This system enables us to work with our clients to lower their cost of risk and drive dollars to the bottom line.
The panel concludes with advice for building trust with clients--even in times of disaster.
How do you build a trusting relationship with clients?
Houldin: You have to walk the walk, not just talk the talk. It takes time. A quick perusal of agency websites will show that everyone purports to provide great service. And many do. Actions are stronger than words, though, and we realize we need to outperform every day to earn client trust. We are grateful to have a very strong network of referral sources who sing our praises. Our biggest opportunity to gain trust is in the time of a loss when we show why their decision to favor us with their business was a good one.
Cavignac: We live our mission statement. It focuses on three areas: knowledge, service and professionalism. Knowledge means being the experts in our fields. We spend two to three times more than our competitors on education. We feel we understand the core industries we work with better than others. We also know what we don’t know but know where to get answers. We also utilize the Cavignac Risk Management Process. This four-step system enables us to work with our clients in a systematic way to help them manage their risk and drive dollars to their bottom line. Service is also critical. Every brokerage claims to offer “great service.” I can’t tell you what other brokers do, but I can tell you that we are constantly seeking to be proactive in our customer dealings. We ask our clients how we are doing, and if there is anything we’re not doing that they feel we should be doing. As the CEO, I make it clear to all clients that if we ever fail to live up to their expectations, I want to hear about it. The final area we address in our mission statement is professionalism, which we define as putting the client’s interest in front of your own. This is easy in theory but difficult in practice. It means recommending another broker or alternative if it’s in the client’s best interest. It can take dollars out of your pocket; however, it’s the right thing to do.
Devine: Our staff is the key to building quality relationships. Though the early stages of insureon’s application are online, each and every client speaks to a representative at some point. Our clients are typically focused on the day-to-day intricacies of running their business, so when it comes to insurance, it helps to have a partner they can trust. Part of doing that is making our products relevant to the client. That means we have to truly understand the business owners’ operations and the associated risks.
Additionally, at insureon, we are not transaction oriented. We understand that as the businesses we work with grow, even the smallest relationships pay dividends. When your clients trust you, they tell their friends.
How can agents be “trusted advisors” to both business and personal customers in the event of a disaster?
Houldin: Your reputation can be made or ruined based on your ability to be there for the client when they need you most—in the time of loss. They need solid counsel and empathy.
We have a full-time claims manager who has the resources at his disposal to provide immediate mitigation needs. We work hard to build these third-party relationships for the benefit of our clients. From there, we need to fully understand the potential loss, review the deductible and claims history and make an educated decision on whether filing a claim is warranted. Once filed, we educate the client as to the process and stand ready to be their advocate to the end. It is not unusual for a claims adjuster to interpret a contract differently than our team, which requires a thoughtful rebuttal to their rationale to afford coverage where it is deserved.
Devine: At insureon, we strive to understand the customer. And though that may seem like corporate rhetoric, it is fairly straightforward in the insurance industry. Clients want their agent to be an ally in any claim, they want frank advice and they want to know their agent understands their business. That is something we do well by training our team and creating specialized desks that handle claims for each industry. So when a restaurant calls in, they are dealing with an agent that does numerous policies a day—not a couple each month.
Disasters can be especially stressful because our customers know they are fighting for attention from carriers who are overwhelmed with claims. We are proactive and help create realistic time frames and expectations.