Bollinger Rewrites The Rules For Agencies

Insurers, Mr. Lefevre explained, entreat the agency to join their customer service centers. But Bollinger has stood its ground to remain independent of centralized, outsourced customer service providers. "We have our own and we can deal with eight or 10 insurers rather than giving all our small business to one," he said. "And we control it because we think we can do a better job of handling that business on a direct basis."

Whenever an insurer becomes too insistent, he asks them one question: "'If you get 1,000 phone calls into your service center, how many of them come from agents? And they know the number51 percent That means the client is still calling the agent and were calling the insurance company, so nothings accomplished."

Any insurer able to get the number of agent calls down to 10 or 12 percent can "come back and talk to us," he said. "Theyve stopped asking me to put business in the service center until they get that number down."

In addition, placing accounts in insurer service centers would put the carrier in charge of managing the agencys business, he believes. Also, using such a center would mean the agencys customers would call an 800 number, "and then we would lose touch with those clients."

For example, a customer wishing to add a new automobile to a policy would call "and the company would try to make it look like they are dealing with Bollinger or any other agency, and we dont feel comfortable with that," Mr. Lefevre said.

The fear, he noted, is that the company could take over the agency business. Another concern is that "you dont know if a client is upset with you."

In an effort to cut its expense ratio, the insurer would retain 2 percent of the agencys commission, which is "not a big deal. If we could save 5 or 6 percent on the other side that would be fine," he said. "But we are still creating 25 percent return on investment in that department."

Some agencies successfully use company service centers, he said, "but if you look at the revenue per employee, we are one of the top in the country." Citing the figure as "our number-one benchmark," he said the agency is "up over $230,000 in revenue per employee."

In addition, the agency has more than doubled its commercial lines premium volume in the past four yearsfrom $96.5 million in 2000, to $198.5 million last year.

Bollinger has been able to achieve this, he said, by establishing sales goals for employees other than producers. One of the keys to new-business sales success, he added, is a companywide referral contest. Through a drawing, cash prizes are awarded to employees who refer friends, relatives and acquaintances. "Every employee is involved in the agency's growth, right down to the receptionist," Mr. Lefevre said. "Everybody is a salesperson."

Bollinger, established in 1876, was "reborn" in 1998. A Sales Council was launched that puts together an annual plan with goals at the departmental, divisional and corporate levels. The plan is reviewed monthly, he said, and a Company Relations Committee monitors the agencys relationship with its various insurers.

The entire process is governed by a strategic plan that drives all of the agencys functions. "Our chairman is a military mana former Marine," he explained. "So everything is done with a military-type bent. Most of us are not military, but we have learned to fall in line." He said meetings for the agencys profit centers are scheduled in early November for the entire year. "You dont want to miss those meetings, and you definitely dont want to be late," he said.

When he joined the agency in 1979, he said gross revenues were $450,000, but that has changed. "We spent $450,000 on postage this year. We had seven employeesnow we have more than that in our IT department," he noted.

Mr. Lefevre said he is not worried about future growth. Even though there have already been numerous M&As in the industry, "there are plenty of small agencies around," he said.

He noted that agencies being squeezed by insurers to do more volume are candidates for acquisitions, explaining that a number of insurers are cutting 20-to-25 percent of their agency force in an attempt to trim their expense ratio. These insurers "cant afford to have underwriters dealing with agencies that are only giving them one or two pieces of business a year," he said. "So they are concentrating their efforts on the next tier of agencies that can produce over a couple of million dollars."

Agencies that dont meet the companys volume quotas lose that market, he said, noting that Bollinger is not immune from such pressures. "Even at our size, were getting squeezed by some insurers," he noted. "We know what were going to produce in terms of new business, and we have to spread that around among our best companies." The difference between Bollinger and a small agency, he added, is that "we can say that because weve got $15 million or $20 million with them."

While some insurers want small agencies to write more business for them, other companies dont want them to write large accounts that may be out of their league, "so they can get squeezed both ways," he noted.

Additionally, small agencies trying to manage multiple accounts are in a bind because "you cant service 150 accounts and give them what they want," he said.

Bollingers chairman, Jack Windoff, who joined the agency in 1963, decided in the mid-1980s it was time to diversify and that it should be done through M&As, Mr. Lefevre related.

About half of the agencys growth has been through acquisitions, while the rest has been generated by organic growth, he noted. "Whether that will continue were not sure, but our door is open to look at any potential acquisition candidate. Weve done 21, and every deal is a different deal."

Up until three years ago, the agency operated out of Short Hills, N.J., but it has since added three additional locations in the state and one in New York. "Wed like to be considered a regional broker rather than a single-shop New Jersey brokerage firm," he said.

Despite the agencys active M&A strategy, Mr. Lefevre said he was proud to note that no employee has ever been terminated based on a merger or acquisition. "Thats a goal that we have, and were proud of that," he said. Natural attrition sometimes takes place if someone elects not to do the job they have been given, "but at least weve given everyone an opportunity to have a job," he said. The agency has 325 employees240 in the main office and 60 in regional offices.

"When we do an acquisition, we try hard to instill the Bollinger philosophy in every division," he said, adding that the agency must "fight" to accomplish that goal "every once in a while."

While the agencies that are acquired havent always been completely happy with the transition, "we havent had anybody walk out the door" over philosophical issues, he said. "Weve had some people in personal lines leave because they didnt like the rotational servicingthey loved that one-on-one with the clientbut we understand that."

Reproduced from National Underwriter Edition, October 7, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.