Theres money in multiline. But with myriad commercial insurance lines to manage, and life, health, property and casualty (P/C), and financial servicesnot to mention agency staffing, training and office administrationrunning a successful multiline agency can sometimes feel like spinning plates in a circus sideshow. Below, six successful agency principals explain how they keep their plates spinningand their profits rising.
Back in the 1950s, before Ft. Lauderdale became a spring break Mecca, it was a sleepy little beach town and home to a fledgling insurance agency called Gateway. The firm started out selling life insurance to locals, along with some very small group plans for area businesses. Today its a substantial multiline agency with a book of business that is about 50 percent commercial P/C lines, 25 percent personal lines and 25 percent life, health and group insurance. The firms 42 advisors earn about $6 million in commissions annually and another $1 million providing financial services.
Gateway learned that lesson well in 1992 after Hurricane Andrew savaged South Florida and the states insurance industry. For 18 months, as Florida insurers bled red ink, Gateway didnt give its staff raises. But after the company found its feet again, the owners looked for ways to reward employees who had stuck it out through the tough times.
They put together an employee committee that created a slate of perks and bonuses that are still in place today, including: A new dress code that enabled employees to look professional without spending a lot of money; an incentive pay plan that rewarded all employeesnot just producersfor overall agency performance; and a new policy that eliminated sick days in favor of personal days, enabling employees to take time off for personal matters without, Weinberg says, calling in and pretending to be sick.
The most popular perk of all to emerge from the employee committee: flex-time scheduling. Every Gateway employee works an extra 45 minutes a day and, in return, gets every other Friday off. The policy has proven a win-win for management and staff. Employees get an additional 26 days off each year, while management realizes extra administrative production as the staff works during hours when the phones are down. Weve actually had people come to work for us for the same or less money than they would have made at another agency so they could get the flex time, Weinberg says.
While Gateway managers find ways to keep employees happy, employees keep customers happy with what Weinberg calls Ritz Carlton customer service. The firm even sends its managers to New York periodically to tap into the wisdom of managers at the famed luxury hotel.
Our goal is to wow every person every time they call, Weinberg explains. At the end of each telephone contact, Gateway customer service representatives (CSRs) take a Ritz-Carlton minute: While you have me on the phone, theyll say to the caller, is there anything I or anyone else in the office can do for you? Then, every call is followed up with a personalized thank-you letter. According to Weinberg, this accomplishes two objectives: its great PR, and the letters document the time and purpose of every call, including change requests, providing added errors and omissions (E&O) protection.
Of course, the technical benefits of thank-you letters are transparent to customers, who appreciate the extra touch. Says Weinberg, Weve gotten thank-you letters for our thank-you letters.
While the Ritz-Carlton touch may work well for a big-city multiline agency, it might seem a tad much to the down-home customers at Morrison Insurance in Colorado. Although it is planted on the outskirts of Denver, its still a folksy, family-owned business with offices that occupy a house on an acre lot off a busy street in the shadow of the Rocky Mountains.
Owner Chip Morrison is a regular-Joe type of agency principal who jokes that hes the president, CEO and the guy who unplugs the toilet. He employs two part-time secretaries/CSRs, and his wife does the books on Tuesdays. But while Morrisons methods may seem out of step with trendy management mantras, they work: His agency, founded by his dad, is more than a quarter century old.
Morrisons secret: Mayberry-style, small-town service. When my dad first opened the doors in 1974, this was a very rural area, he said. There are still people who are my customers who started with the agency way back then. We have customers who come to the office every month to pay their premiums in cash, then come by at the end of every year to pick up their calendar.
To Morrison, small-town service means handling customer-service requests in-house, instead of farming them out to SAFECO, his primary carrier. SAFECO offers an 800 number that independent advisors can use to handle customer-service calls and questions, thus saving agencies time and labor costs. The company also offers a toll-free claims number. But Morrison prefers to have his clients call him first for claims and customer service, and has his CSRs do most of the initial paperwork to save clients time and hassle.
We figure every time we talk to an insured, its an opportunity to solidify a relationship, Morrison says.
So far, those relationships are solid: Business is so good that Morrison doesnt advertise, not even in the Yellow Pages. Oh, he accepts the courtesy ad the phone book folks give to longtime customers. Still, he estimates that 80 percent of his business is referral based; the other 20 percent walks through the door.
One advisor Morrison knows serves Denvers high-maintenance business elite, as well as about half of the citys professional athletes. When the two swap stories, the uptown advisor refers wistfully to the strength and longevity of Morrisons customer base and says, Im knocking myself out for the same thing.
Most of our customers arent wasting our time or theirs because theyre not kicking tires, he observes. Even if we give them a rate thats 5 percent higher, we come recommended, so we still get the business.
Chas A. Tegner would have appreciated Chip Morrisons small-town approach to insurance. In the late 1800s, Tegner, a Swedish immigrant, hit it big in the Alaskan gold rush. Then in 1902, he used his windfall to open a small insurance agency in Santa Monica, Calif. Tegner, and later his son and daughters, ran the family business for more than six decades. Today, Tegner-Miller Insurance is the oldest business in town.
But old doesnt mean old-fashioned. In fact, the $33-million, 39-employee firm toes the cutting edge of technology. In the mid-80s, Tegner-Miller used an IBM mainframe that Aetna had given it to install its first computerized agency-management system. In 1994, when most people were still muttering http what? the firm launched its first website. Today, Tegner-Miller is engaged in a continuous, technology-based quest for improvement.
We undergo constant quality improvement and process improvement, says principal Bill Aspinwall. Weve made every effort to integrate technology into our operations. Thats critical for multiline because you have so many different things youre doing all day long. Technology helps us manage it all efficiently.
Just one example: Tegner-Miller runs, in addition to its main website, four niche websites. Three sites target specific insurance needs, but only one need per site: earthquake coverage, auto insurance and medical malpractice coverage. A fourth site targets a specific customer segment: business managers employed by Hollywood entertainers.
Using this niche approach, Tegner-Miller sells one or two policies a week online, and gathers another 50 or so telephone inquiries from prospects who were unable to qualify through its online direct-rater process. Advisors close another four to five of those prospects each week. Aspinwall stokes site success by renting key words from Overture, an Internet marketing service. That helps Tegner-Millers sites rank high in premiere Internet search engines such as Yahoo.
The agencys commitment to technology extends from high-end endeavors all the way down to more mundane daily functions such as fax management. Tegner-Millers fax traffic is so heavy, Aspinwall says, that the firm once employed a person whose job consisted solely of sorting through incoming paper faxes and running them to various offices. So the firm decided to automate. Today every fax is sent and received via a desktop computer, with incoming faxes routed by the receptionist over the office network. As a result, the agency saves time and money: No more hunting down lost faxes, since theyre all stored on the network. No more full-time fax-runner; she was redeployed to more productive administrative duties.
Aspinwall considers such technological tweaking essential to a successful multiline. Im managing personal, commercial, benefits, estate planning. ... The only way I can stay on top of it all is to have everything on my desktop.
Barnard Donnegan Insurance, a multiline agency in San Antonio, Texas, was staying on top of thingsat least on the surface. A group of 19 sturdy producers, along with a small cadre of CSRs, kept the firm rolling along. Still, sparks in the $30-million agency were flying in the wrong places. As with many multiline firms, says sales and marketing manager Win Johnston, an us against them attitude permeated the office. It was P/C versus life.
Further, as a mature agency, sales efforts had flattened somewhat, with existing accounts left unmined for new business, and some advisors content to simply service their books. The solution: Barnard Donnegan managers began making the agency more professionaldissecting and reengineering it piece by piece:
- They wrote detailed, bullet-point job descriptions
for everyone in the company.
- They created quality assurance checklists for every
type of sales contact.
- They created E&O checklists, and emphasized cross selling, including inquiries in their sales-contact checklists.
They converted CSRs into personal-lines producers, supplementing CSR salaries with commissions on new business they wrote.
They instituted 90-minute, biweekly producers meetings during which they discussed sales goals and methods, introduced producers to carrier underwriters and invited top-notch speakers on topics like sales and relationship management.
Barnard Donnegans professionalization campaign took an agency that was looking a little worn and whipped it into fighting form. In the process, the simmering us versus them attitude disappeared. Both producers and those who provide service now see the value the other brings to the business. Theres real teamwork going on, less bickering, Johnston says.
The campaign has also re-energized sales efforts. The emphasis on cross selling to existing clients now accounts for 40 percent of the agencys new business. Two years ago, that figure was less than 15 percent. The new cross selling ethos has, in turn, inspired producers who had lapsed into merely servicing existing accounts. Now theyre getting out and bringing in completely new business, Johnston says. They are generating so much new business that the firms client count is up 30 percent from 2000.
As Barnard Donnegan managers know, theres more to cross selling than just, say, handing the commercial P/C client off to the agencys personal life advisor. In fact, Michael Mayers believes this handoff approach can be disastrous.
Mayers, a senior risk management vice president at CBIZ, a $144-million multiline giant in Fairfax, Va., remembers the time he was doing some consulting for a commercial client. The client was struggling with a smorgasbord of benefits providers, doing dental with one company, pension with another, medical with a third, and so on. Mayers had convinced the client that CBIZ could eliminate the clients multivendor hassle and serve as its one-stop shop. To get the deal rolling, he brought in a new player, a CBIZ benefits advisor, to make the client presentation.
We thought we had people who could really help this client, Mayers remembers. But after the benefits guy made the presentation, the client came back to me and said, We want you to do it. Translation: We dont like the benefits guy.
The client told Mayers that during the presentation, the benefits specialist did all the talking and didnt let client representatives ask any questions. That completely turned the client off, who had been more in tune with Mayers consultative, interactive relationship style. As a result, the whole deal was back-burnered until Mayers could find a new benefits person for the client to work with. Lesson learned: When cross selling within a multiline firm, Mayers says, match your client with people from other departments who suit the clients personality. Brief agents from other lines on what youre trying to achieve with the client.
Also, let them know what the client is like. Is he a bean counter who wants to see reams of cost analyses and projections before making a decision? Or is he a corporate visionary, interested in broad strokes and bottom lines? Once youre confident of a workable client-advisor personality match, smooth the transition with a personal introduction to the clientmaybe even sitting in on the first meeting. The key to cross selling with multiple advisors, says Mayers, is remembering this is a relationship business all the way around.
But who defines the relationship? Dave Cantley, principal of Cantley and Associates, says it had better be the multiline advisor who defines itor that advisor risks losing sales. Cantley, who runs a $4.2-million agency in Charlotte, N.C., worked for five years in sales and marketing at General Electric. If that experience yielded one critical take-away for Cantley it was this: GE never allows a customer to decide if he wants to buy a GE product. GE always decides who its customers areand then goes out and gets them.
After opening his multiline agency, Cantley applied the GE philosophy to insurance. There are two ways to market: Either sit and wait for the phone to ring, or take the active approach and ask yourself, What am I going to write this year?
This plays out for Cantleys seven-advisor sales force as active annual selection of specific industries. This years targets: construction contractors, car dealerships and commercial printers. We find out what coverage that type of business needs. Then we obtain a list of those businesses in our area, send literature and direct call.
Cantleys industry-targeting process is strategic, not random. To improve his producers success in writing new business, he contacts carriers to find out what types of businesses theyre targeting. Some actuary ... figures out his company made money in a particular [industry] class last year, so they send out memos, trim premiums down, and try to underwrite more policies in that industry. If you want to write business with that particular carrier, write it in their target classits easier to get it past underwriting.
Cantleys systematic commercial-lines architecture provides a constant flow of clients to his personal lines producers. Like most multiline advisors, the firm strives to write personal auto, home, health and estate-planning policies for business clients. But like his commercial lines marketing plan, Cantleys cross selling goal is very specific: A book of business thats evenly split between commercial and personal lines.
Thats by design, he says. If youre too heavy in commercial and go through a hard market like now you can suffer losses on key businesses. Example: The client company is sold and the new owner plays BYOA (Bring Your Own Agent). Or it merges its assets with a larger firm and dumps your benefits services.
Building a half-commercial, half-personal book of business is the most insulating thing you can do for a multiline business, Cantley says. Its the GE strategy: Youre deciding who your customers are; theyre not deciding about you.
Lynn Vincent is a frequent contributor to Advisor Today.