In a down economy and relatively soft insurance market, independent agencies have had a hard time holding their own, let alone increasing their revenues. But York International Agency has managed to generate growth even in these challenging times with its risk management emphasis.

The Yonkers, N.Y.-based firm saw its total commercial lines premium volume increase from $66 million in 2006, to $70 million in 2007, and to $72 million in 2008. The agency's total income during that time grew as well, from $8.1 million in 2006, to $9.4 million in 2007, and up to $9.6 million in 2008.

That ability to grow no matter what state the market or economy is in helped York International make the grade as one of three winners in the eighth-annual National Underwriter Commercial Insurance Agency of the Year Award program, earning the firm an Honorable Mention.

“We've been able to grow steadily over a long period of time,” said Robert Kestenbaum, president of York–already a role model for its peers as a “Best Practices” agency under the benchmarking program run by Reagan Consulting and the Independent Insurance Agents and Brokers of America.

While the agency has not experienced “unbelievably huge growth” over the last nine years, he noted, York has grown organically in all of its departments.

“To us,” Mr. Kestenbaum said, “growing 6 percent or 8 percent–we like that. We can control that. We hire well for that. We can deliver the right services that way. It is not until you look back over a long period of time that you see the amazing impact of that steady growth.”

He said a key to generating growth is York's “much higher retention rate” than its competition, noting that it was able to renew all 20 of its top accounts last year, while the agency's award essay cites a 97 percent retention level overall.

York achieves its nearly flawless retention rate, according to Mr. Kestenbaum, by saying what it can do, and then doing what it says.

“We deliver what we promise and strive to be proactive,” he said. “When you anticipate the need, have the technical ability to help them solve a problem and have a trusted relationship, retaining the client is never in doubt.”

Expanding on the retention strategy, York's essay points out that the agency does not have a “new business marketing department”–instead, the team that wins the client stays on as the client service team.

Additionally, Mr. Kestenbaum said, “for matters of ongoing service, once a client is won, we develop a service plan that takes shape with input from the York team, the insurer and the client. The typical profile of a York client has us engaged with the CFO, who allows us to have access deep into the organization to help save them time.”

He added that “as part of our Customer Intimacy Program, we developed York University, offering Web-based training programs that engage both clients and prospects throughout the year.”

When it comes to writing new business, Mr. Kestenbaum said York relies on referrals, rather than pure cold calling or telemarketing.

The agency also works up front with prospects to identify, assess and mitigate their hazard and operational risks through a process called RADAR–Risk Assessment and Data Analysis Review–which is a precursor to the agency's service plan for existing clients.

According to York's Web site, “a RADAR engagement will start with a discussion with senior management and include employee interviews throughout various levels in the organization. [The agency has] developed the assessment tool to take no more than 30 minutes of any one person involved in the process from the client side, so it will not strain [the] organization.”

The process involves a full diagnostic on a business–including specific workers' compensation claims, OSHA issues, fleet safety, contract reviews, building valuations, and cyber- and product recall assessments, according to Stephen DeMatteo, executive vice president and a principal of York International.

“Our RADAR risk assessment approach provides a tangible path to lower overall cost of risk, and we are bullish about our ability to grow our business while other agents struggle to hang on to what they have,” he said.

“We see everyday examples of clients and prospects that are willing to turn over every rock to save money in this tough economic environment,” said Mr. DeMatteo.

In its essay, York added that “when producers solve problems and do not simply pitch products, it changes the tone of the relationship and the client is much more open to change.”

The key to generating new business in a very competitive environment, Mr. Kestenbaum said, is to get to know the clients and develop a strong relationship from the beginning, rather than getting into a “bidding” mentality.

“The clients that you win on price, you lose on price,” he said.

However, York International Executive Vice President and principal Carey O'Connor said the agency will compete in other areas. “When we know we can make the playing field uneven in our advantage, we will compete,” he said, citing risks in industries that York specializes in–such as executive liability (where premium volume at the agency has grown from $1 million to $5 million in six years) as well as in real estate.

Regarding its business overall, York's essay notes that over 67 percent of its business is commercial property and casualty, while over 10 percent is personal lines.

While York does not have a significant percentage of its business in the benefits area–8.6 percent total for group life and health last year–York CEO Jim Krantz said the agency “decided awhile ago that we want to be major players” in this area.

The agency had done all right in benefits, he said, but was not as strong in that space as it was in personal and commercial lines, “so it's something we really wanted to improve.”

He said the agency set out in 2008 to find a “benefits champion” who could help drive business through expanded capabilities, production and management. “I can produce it,” Mr. Krantz said, “but that doesn't mean I live and breathe it.”

Enter Michael Bodack, now president of York International Benefits. Mr. Bodack had his own firm–Sequoia Financial Partners–which was merged into York, giving him equity in the new combined company. The merger doubled the size of York's benefits operation, and Mr. Krantz said the agency hopes to further expand the operation to make up at least 25 percent of the agency's top-line revenue.

As for diving further into the benefits market, Mr. Krantz said York is “cautiously optimistic, but in somewhat of a holding pattern” until there is more of an idea of what the health care landscape will look like after expected changes from Congress and the Obama administration.

Perhaps the most unique aspect of York's management structure is there are no managers, per se. “We are a very flat organization all around,” Mr. Kestenbaum observed.

For example, he noted that the agency's commercial insurance department does not have a sales manager. Instead, the department relies on the commitment of its staff, and meets every two weeks to discuss progress. “I chair the meeting,” Mr. Kestenbaum said, “but both as a salesperson and a coordinator, not as a manager.”

Explaining the strategy, he said, “we have adult insurance professionals who are passionate, with the desire to get work done. They don't need to be overmanaged.” This strategy evolved partly from experience working at larger firms, Mr. Kestenbaum recalled, where “everyone worked in silos.”

The agency's essay noted “there is no 'B' team at York. Everyone is client-facing. There are no layers of management, and everyone interacts with clients every day.”

York Executive Vice President Barbara Strauss said that “here, everyone talks to each other. There is no 'us versus them.'” She said the entire staff works in a collaborative effort with the goal of protecting the assets of clients.

To develop trust in the staff to work effectively without a traditional management structure, Mr. Kestenbaum said the agency has built an organization that is attractive to the right kind of job seekers. He said York's ratio of payroll-to-revenue is comparable to that of other agencies, but York International has less staff, and thus pays its workers better than many other agencies.

The strategy helps York attract and retain the right kind of workers, according to Mr. Kestenbaum, adding that the agency is starting to reap the benefits of hiring and developing employees over the long haul, as people who have been with the agency for years are moving into key positions.

The lack of managers in the traditional sense does not mean that York International does not believe in leadership. Quite the opposite, as Mr. Krantz said a critical aspect to success for York is the understanding that one must be an effective business leader in addition to being an insurance professional.

While understanding the business of insurance is important, Mr. Krantz said running a good business–maintaining the strength of the staff, developing good relationships with business partners and being viewed as business leaders by other business leaders–is also crucial to York International's identity.

Part of being a business leader, Mr. Kestenbaum said, is belonging to industry organizations and getting out to meetings.

York is a member of national producer associations such as the Independent Insurance Agents and Brokers of America, the National Association of Professional Insurance Agents, and the Council of Insurance Agents and Brokers.

On the state level, the agency belongs to the Independent Insurance Agents and Brokers of New York, and Mr. Kestenbaum is a board member of the Independent Insurance Agents of Westchester County.

Belonging to these organizations is important, according to Mr. Krantz, because it allows agents to learn from each other and hear success stories from colleagues. He said those who do not join organizations and attend meetings with peers are engaging in an “ostrich mentality.”

York International even belongs to the Risk and Insurance Management Society–the nation's leading association for major commercial insurance buyers–because the agency has a few large accounts that are RIMS members. Mr. Krantz said being a RIMS member helps those within the agency educate themselves and clients about critical risk management and loss control trends and developments.

“We believe strongly in ongoing education offered by organizations such as RIMS and the CPCU Society,” he said. “I'd estimate that 50 percent of the staff has obtained or are currently pursuing their CPCU, CIC or ARM designation.”

The agency also attends conferences in the markets it serves–citing the New York Buildings Show as well as the Las Vegas Shopping Center Convention.

In the end, however, it all comes down to being a good risk manager, York believes, noting in its award essay that “we never let the client lose sight of our belief that improved risk management and controls over time will lower cost substantially more than just bidding the insurance.”

York's essay added that “we work hard to anticipate client needs before they do,” noting that “most of all, we are disciplined in our ability to do what we say we are going to do when we say we are going to do it. Execution builds trust.”

Special Reports /

Risk Management Approach Keeps York Growing Even In Tough Economy

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