Editor’s Note: Brenda Case is president and CEO, Lowry-Dunham, Case & Vivien Insurance Agency
The past few years have been more than challenging for independent agencies. A struggling economy has agents scrambling to find new business in the traditional markets. However, in an atmosphere that includes new and confusing healthcare options, consumers and businesses are reluctant to make any sudden moves.
Yet many agents are seeing an increase in business through specialty products, which can help them increase profits, balance revenue streams, and grow their agencies via a more focused approach.
Here are three agencies that are succeeding with specialization:
Lee/O’Keefe Insurance Agency: Banking on Schools
For Cheri Plummer, commercial lines sales agent for Lee/O’Keefe Insurance Agency in Springfield, Ill., specialty products have allowed her agency to compete. A generalist agency with just 10 employees, Lee/O’Keefe has four producers. In 2006, the company added school municipalities insurance products.
Until 2006, the agency had written just a few schools before establishing the specialty program with the help of membership in Associated Risk Managers International (ARM) Illinois, a networking organization for independent agents. “When we made the decision to participate in the Associated Risk Managers (ARM) program, it opened some doors with district superintendents. We were able to offer them a product that best meet their needs and an ease of doing business; one program specifically for Illinois public schools.”
Having a niche makes the agency more attractive to new business. “It’s been hard for schools to know where to go for coverage,” she says. Now, they have a clear choice.
In 2006, there were 17 original members, of which the agency had written six accounts. Since then it has grown to 145 across the state, with Lee/O’Keefe handling 22 of those accounts. Plummer has become well-versed in the products and exposures that schools face, which has helped her address unique aspects of each school’s risk profile.
Today, the school program is a large part of Plummer’s book of business. That has benefitted the agency by opening up a new market and enhancing the agency’s credibility with carriers.
Another benefit of the school program: Renewals are on July 1. “We can be heavy on school business during that time, and that leaves the rest of the year open for new business outside the school program. It’s a fairly low-maintenance product from a servicing perspective,” Plummer says.
Despite one slow period in 2009, Lee/O’Keefe has experienced steady increases in the number of schools in the program and the amount of premium volume. Schools now seek out the agency, which has made it easier to market. “We are the only ARM agency in a 13-county radius that covers school business,” Plummer says. “Plus, we have one agency we would consider our biggest competitor and we have been able to compete with them on the school business. Specialty products do that for us.”
Wellington Associates: Building Specialty Lines Organically
School business is also part of the product line at Wellington Associates Inc. in Jackson, Miss., an ARM South member. With three locations, 35 staff members and $6 million in revenue, Wellington saw its business increase when some savvy agents took an interest in the religious institution business. The agency has also added the towing business as a specialty line.
Buster Wellington, the agency’s president, says specialization has been a lucrative addition. Since its inception 20 years ago, the religion program has added nearly 300 religious institution customers from across the state. Association connections have made it easier to find that business, too. “The members talk to each other,” he says. “Once they learn you’ve become an expert in that particular area, that you’re doing a good job over here, and then it’s referrals from that point on. They call us.”
Wellington builds programs by starting with one or two policies. When there are more than 25 accounts in each program, Wellington approaches insurers to write the business since there enough data to show profitability and negotiate exclusive deals. “Depending on the company, many of them want at least $1 million to $5 million in volume before you get their interest,” he says.
Specialty business makes up 35 percent of Wellington’s book of business. The agency writes property, general liability, auto and workers’ compensation coverage. Also, the agency has the ability to broker for the school and religious programs.
Wellington says offering specialty programs has given the agency more revenue stability. And because the agency knows and has secured the market, coverage is easier and faster to obtain.
It’s easier to write an account when there is a deep knowledge about the line versus quoting the first few policies. Plus, specialty business cuts costs dramatically, he says. “You turn quotes around a lot faster.”
Today, Wellington operates with an eye toward new specialties. “We’re constantly looking at companies and what they do to see if it’s the kind of business we’d like to go after. We’re always thinking about what our next program is,” Wellington says.
W. R. McClure Insurance Services: Specializing in Being a Specialist
For Bill McClure, president of W.R. McClure Insurance Services in Flanders, N.J., specialty product lines have become more than a way to augment the primary offerings; in many cases, they are the primary offerings. The nine-employee agency is a member of ARM Northeast and writes close to $6 million in business annually. Wtih 30% of the agency’s business comprised of specialty products, it’s a key piece of the agency’s revenue stream. Moreover, the business comes to them via referrals, which is a time-saver and a cost-saver.
Some of the more requested coverages include professional liability lines, such as E&O, or D&O and EPLI. The agency also writes a lot of home healthcare professional liability, real estate property liability (landlords), fleet management, and trucking. Another growing area is workers’ compensation. Because of changes to the insurance structure in New Jersey, insurers are not writing new workers’ comp, McClure says. That has left the WC area wide open, and business is active as many industries are looking for coverage.
McClure’s ARM membership and access to additional specialty products has helped the agency capture more business without having to grow it one account at a time. The agency was able to write coverage for a youth soccer league, which holds hundreds of games and tournaments each year, providing them with an event cancellation policy. Another example of how ready access to specialty products has worked includes insuring a plaster restoration services business for a Toronto-based craftsman.
“It’s our job to recommend a solution,” he says. “Once we solve their main issue, we attempt to write the rest of their business, but always we start with the resolving the customer’s problem.
“We wouldn’t be in business” without specialty products, he says. “Life becomes more complex, and everything in this business changes quite rapidly, and it’s going electronic,” he says. “People don’t have time – they want a quick answer.” Even that’s an opportunity, says McClure, who has seen business increase significantly. “I literally have hundreds of clients now that I’ve never met.”