Moody Insurance Agency Bucks Trends

Moody Insurance Agency Bucks Trends Colorado firm uses new blood to sustain growth against bigger competitors

If there is a secret to keeping a family insurance agency humming along, one Colorado firm might have found it through a combination of cooperation and diversity that maintains growth even in the face of increasing competition.

“We actually get alongall of us,” remarked Troy Moody, the 34-year-old chief operating officer and vice president at Moody Insurance Agency in Denver, Colo.

Us is the Moody family, which heads one of the largest privately held insurance agencies in the state. Troy's father, Evan, 67, operates the firm's bond department and remains actively involved in the agency as president. His 37-year-old brother, Brad, is executive vice president heading up commercial lines and is the agency's lead producer. Then theres MomKarenwho runs the agency's accounting department.

We all hit different areas of the business, noted Troy, who does some sales but is largely involved with the automation and operational side of the business.

The story of Moody Insurance goes back to 1972 when Evan E. Moody founded the agency, whose business concentration was insurance and bonding services for commercial construction and some personal lines business, explained Troy. “Colorado did not have much manufacturing or much else then,” he noted. “Construction was where the premiums were.”

The agency prospered through the 1970s and 1980s with about 15 employees and a booming construction business. It survived the economic crash of the late 1980s and the hard insurance market. “We made it through smoothly,” said Troy.

Change began in 1992 when Brad joined the agency, explained Troy. “When Brad came on there was a renewed vigor with having him come into the agency,” explained Troy.

It was a time to shift strategy, diversifying the agency's book and bringing in some new blood to help the agency grow.

When Brad joined, the average age of the producers was between 45 and 50. Today, the average is around 35. In addition, the agency's book expanded to property, distribution centers and manufacturing.

By the mid-1990s, the state came out of its economic doldrums with new investment, including the construction of Denver International Airport and other capital improvement projects. The agency saw steady growth in premiums during that period, averaging 5-to-10 percent.

In 1995, the agency launched its first major expansion with the acquisition of the Valley Agency in Grand Junction, renamed the Moody-Valley Agency. The 22-person agency was heavy with personal lines businessabout a 50-50 split with commercial lines, noted Brad (who said that ideally, personal should be no more than 25 percent, adding that the agency was overstaffed for that mix of business).

Instead of cutting staff, he said, they grew the book. There was no workers comp. It was a wonderful opportunity to cross-sell, said Brad. We grew the book 25 percent on that alone. They also brought in three young producers whose job it was to grow the commercial book, said Brad.

As the business grew, they did not increase staffinstead using technology to make the office more efficient. Today, while the book has grown, the total staff has dropped from 26 to 23. “It was a natural progression at Grand Junction,” said Troy. “Some of the people who were not holding their own naturally left. We made cuts through attrition, not layoffs.”

“Our intention was to hold people accountable and increase productivity,” added Brad. However, they also realized that there was a different business and community culture the Valley Agency had cultivated that they did not want to alienate.

Grand Junction is smaller than Denver but is the largest city on the Western slope of Colorado separated by the state's mountain range. Construction is not significant business on that side of the state, and the business catered more toward the resort community. The commercial books are also smaller.

In the community, the Valley Agency was civic-oriented, and Moody Valley was not about to change that. “We had a fine line to walk there,” said Troy. “We had to respect the kind of community it was and the environment.”

Remaining a good and committed neighbor, Moody also helped the new agency's producers pursue new business. The solution, Brad said, was to set up the small-commercial book as special accounts serviced like personal lines clients and “take them off the back of the producers.”

Since that acquisition, there have been a few small bond account purchases but no significant agency acquisitions, Troy pointed out. It has not been from lack of looking, Brad said, but a good opportunity has not presented itself.

To keep expanding, Moody has concentrated on organic growth. Brad said growth has come from “a good, young, aggressive sales force” that has allowed the agency to expand organically from 15-to-20 percent annually over the past four years. In 1991, the agency pulled in $3 million in commission income. Today, it is standing at $11 million in commission income, managing $80 million in premium.

On the commercial end, about 60 percent of the book is in construction. The other 30 percent involves largely property, distribution centers and other commercial business, with the remaining 10 percent rounded out by workers' comp, which has grown 100 percent over the past three years, Brad noted.

The agency also manages the Colorado Roofing Association Workers' Compensation Program through Pinnacol Assurance, a state fund program.

Brad said that unlike other associations, which use the preferred rates available through Pinnacol to attract members, with no control over membership, Moody imposes very strict requirements. Members must have a good safety program, a return-to-work program, very low loss experience, and must participate in quarterly safety meetings.

He said he has the authority to dismiss members from the program based on their “performance or attitude.” Since 1998, the program has returned more than $2 million in dividends to its members. For the 2002-2003 policy year, the program paid a dividend of $214,401 to 22 members. Since its inception, rates have dropped 40 percent for its members, Brad said.

The major challenges for the agency remain competition and the state's economy. Most of the agencies in the state are either owned by banks or large insurance brokerage firms. “The privately held agency is a dying breed,” Troy noted.

“We have learned that to survive, we have to be active on the new business side but still be capable of getting [our accounts] out to the marketplace and protecting those accounts for the long term,” he added.

Reproduced from National Underwriter Edition, April 15, 2005. Copyright 2005 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.