IOA Seeks Partners, Not Just Producers

"I left that agency because they changed my contract three times in nine months," Mr. Ritenour related. "I decided that there had to be a better way to run an insurance agency than to keep beating up on the producers."

The solution Mr. Ritenour came up with was one of the factors that helped earn IOA an "Honorable Mention" in the 2005 "National Underwriter Commercial Insurance Agency Of The Year" award program.

Opening his agency–then Insurance Office of Florida in Apopka, Fla.–the first thing he did was to design a contract where agents received 60 percent of the commission and the agency 40 percent, on both new and renewal business. "It's the reason for our growth through the years–it's very producer-friendly," he noted.

He also knew producers wanted to see three things–ownership of their book, input on the way the agency would be run and stock ownership in the agency. Those elements were designed into IOA's producer contracts and remain a hallmark of the agency today.

"Since I was a salesman, I felt nothing happened until something got sold," he said. "Our lifeblood for running an agency, and growing an agency, was people going out and bringing business in. I wanted to make sure they felt rewarded and good about that."

Loyalty was planted early in the foundation at IOA. From the beginning, the agency displayed loyalty by dealing closely with three insurers (Safeco, and two others which no longer exist) that gave the firm appointments during those initial lean years. IOA did the bulk of its business with those carriers for a number of years, rewarding them for the faith they had shown.

The business then was primarily small- to medium-size commercial accounts–restaurants, body shops and car dealerships, for example–along with non-standard personal lines business. But early on, Mr. Ritenour saw the need to expand or die. "I knew a Mom and Pop agency would not survive with the wind and other risks here," he said. "We needed to produce volume."

In the first year, the agency attracted two producers, and kept adding each year as it looked to grow. "My concept, right from the very beginning, was to attract good, aggressive commercial lines insurance agents to partner with us and grow this thing," Mr. Ritenour said.

By the fifth year it became apparent that expansion would be necessary, and shortly after that Insurance Office of Florida was renamed Insurance Office of America with the opening of an office in New Jersey by a partner Mr. Ritenour trusted.

Today, IOA has 21 offices throughout the United States. In 2004, the agency had 370 employees and 125 commercial lines producers, generating more than $47 million in commission income. The firm projects about $60 million in commission income this year.

The decisions to open additional offices in Alabama, California, Georgia, Maryland, North Carolina and South Carolina were not strategic geographically but were prompted by the people who could serve as potential partners and the relationships the agency established in those states.

"When we have good people approach us and they want to do something with us, we make the determination–instead of making it by state or by location–we made the determination by the person," he explained. "If they are fairly good at what they do and they bring something to the table, and we feel they can be a long-term partner with us, then it doesn't make any difference where they are located."

However, to be an IOA agent means more than producing a profitable commission on their business. It also means commitment to the overall agency in terms of responsibility. While producing accounts, the producer must also be a manager. "We try to put people where their strengths are," Mr. Ritenour said.

"We are looking for a partner, not a producer," pointed out Dave Maki, the 57-year-old president of IOA.

Both Mr. Ritenour and Mr. Maki noted that in their capacity as company officers, they still earn their paycheck through commission, not salary. Other executives on the company's board of directors, advisory board and executive advisory board are compensated the same way.

Like Mr. Ritenour, Mr. Maki suffered through a bad experience where the agency principal did not live up to a promise of opening the door to ownership. His expertise was in workers' compensation, and in 1994 he came to IOA, and was elected by the agency's stockholders as president in 1997.

"We seek trust and loyalty that is non-traditional," Mr. Maki noted–adding that for an IOA manager, that means putting in that little extra time and effort on top of maintaining their own books.

Service Sells

The key to success, however, is attracting and retaining clients. In their award program essay, IOA noted that the agency "earns the trust and loyalty of clients" by serving as more than an insurance seller.

Among the additional services beyond insurance placement that IOA offers are on-site safety and loss control evaluations, claims administration, premium audits, attorney consulting and alternative market analysis–including self-insurance, large-deductible and captive options.

"We meet with clients and show them our value-added services," said Mr. Maki. "We make a commitment to meet with them and review what we are doing with them to ensure everything we promised is taking place."

To help finance the value-added services the agency offers clients, producers contribute 5 percent of the commission they receive on the account to the agency.

In its essay, IOA noted that their "typical client…does not have the financial means to hire their own risk manager," explaining that this role is usually delegated to their chief financial officer, controller or even the human resource director.

"Each of these positions already has a significant workload and [they] generally do not have the time needed to address risk management issues," nor do such people have the necessary expertise to handle risk-transfer, IOA added.

IOA said its producers "offer to become the risk manager for clients…meeting with them on a weekly or bi-weekly basis to address…key risk management issues."

This philosophy was put to the test during the barrage of hurricanes to hit Florida last year. IOA received 1,100 claims from the first of the grand slam of storms in 2004–Hurricane Charley.

"Our claims staff stepped up to be the claims advocate for our clients in significant ways," IOA said in its award essay. "One way was to partner with our IOA construction clients to have them assist other IOA clients that suffered damages in the roofing, electrical, flooded properties and screened enclosures area."

It was "very difficult to find contractors during the aftermath of the storms," noted IOA, "so this partnering process was very much appreciated by our clients. We were a 'godsend,' as one client phrased it. There is no doubt that these clients will be loyal, lifetime believers in IOA."

From a sales perspective, noted Mr. Maki, when it comes time for a customer to pick which broker they are going to go with, the decision becomes a clear one–while it might be easy to change agents who sell only on price, it's a lot tougher to justify firing one's "risk manager."

"What we provide is not just insurance. We provide solutions, which is different from the typical agent and broker," noted Mr. Ritenour.

That risk management approach, securing client loyalty, Mr. Maki pointed out, makes IOA an even more attractive proposition for any producer. "With our support, it's easy to sell," he said, noting that service sells an agency, not just insurance.

Infobox: (with agency logo)–see 10/11/04 edition, page 14, for template)

Flag: Agency At A Glance

Head: Insurance Office of America Profile

o Headquarters: Longwood, Fla.

o Commercial Premium Volume:

2002: $287 million

2003: $412 million

2004: $465 million

o Principals: 52

o Employees: 370

Caption: For picture of IOA building:

IOA, overseeing 21 offices throughout the U.S. from its headquarters building in Longwood, Fla., attributes a big part of its success to the fact its producers "become the risk manager for clients…meeting with them on a weekly or bi-weekly basis to address…key risk management issues."

Caption For Group Picture:

Producers at IOA–such as (l-r) Jeff Lagos, Senior V.P.; Dave Maki, President; John Ritenour, CEO; and Heath Ritenour, Senior V.P.–must take on leadership and management duties as well.