Brokerage

Specialization Aids Broker Success

Successful brokers say finding niches enhances growth and creates new revenue streams.
By: | October 21, 2016 • 5 min read

Focusing on niches and leveraging the latest technologies are two ways successful insurance agencies are boosting their bottom lines – even as organic growth across the sector has slowed a bit, according to the Independent Insurance Agents & Brokers of America (IIABA or the Big I).

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A survey of 260 so-called “best-practices” agencies determined by the trade group and Reagan Consulting found that best-practices firms grew organically by an average of 6.9 percent in 2015, down from the recent high of 9 percent in 2012, according to the “2016 Best Practices Study.”

While growth has slowed, the best practices agencies found that specialization enhances growth and creates new revenue streams.

“We write this type of coverage all over the state because we get a lot of referral business through word-of-mouth.” Dennis Hilton, president and CEO, Cheney Insurance

One of the best-practices agencies in the study, Cheney Insurance in Damariscotta, Maine, developed a niche for insuring “Maine guides,” professionals who guide clients through outdoor activities such as hunting, fishing and kayaking, said Dennis Hilton, the agency’s president and chief executive officer.

“Maine guides can have basic or more unique exposures depending on their operations, in terms of their cabins, camps or lodges, as well as their boats, canoes and kayaks,” Hilton said. “Our agents are very familiar with the unique exposures associates with guiding, and the many requirements they need to be concerned with.”

For example, his staff has the expertise to help guides complete the paperwork and provide certificates of insurance required by large corporate landowners that allow guides to access their property during the various hunting seasons.

The agency handles these types of issues frequently, whereas many other agencies in the state do not have that level of expertise, Hilton said.

“We write this type of coverage all over the state because we get a lot of referral business through word-of-mouth,” he said. “As a result, we write more coverage for Maine guides than any other agency.”

Blake Johnson, president, Minard-Ames Insurance Services LLC/Insurica

Blake Johnson, president, Minard-Ames Insurance Services LLC/Insurica

Another best-practices agency, Minard-Ames Insurance Services LLC/Insurica in Phoenix, specializes in brokering insurance for the construction industry, said Blake Johnson, president.

“Fortunately for us, the construction industry relative to insurance has become very complex, requiring a high degree of technical expertise,” Johnson said. “This has provided us a tremendous advantage and increased our value proposition significantly.

“For contractors today, it’s all about staying out of trouble, and how we can help them accomplish that.”

For example, contracts are an important part of every construction project, as the construction industry tends to be fairly litigious, he said. As such, ensuring proper risk transfer within these contracts is critical, and insurance plays a major role.

“Whether that advice is to a general contractor regarding what to require of those working for them or advising a subcontractor when the requirements imposed upon them exceed that for which they are insured — or are simply unreasonable. It is all part of how we partner with our customers,” Johnson said.

Focusing on this niche also enables his firm to be able to attract new producers: “They come to us because our reputation within the construction industry provides them a leg up,” he said.

Best-practices agencies are also leveraging new technologies, according to the IIABA study, which cited data from CB Insights that showed more than $1 billion in technology investments by insurance startups during the first half of 2016.

Cheney Insurance has a mobile app that assists its customers in various scenarios, Hilton said.

Another trend noted in the IIABA study is the significant increase in the average age of employees at most agencies.

If they are involved in an auto accident, the app helps them take photos of the vehicles and the scene, which can then be sent directly to the agency. Customers with homeowner policies can use the app to create a household inventory, taking photos of big items in case they are ever stolen or damaged.

The agency provides the app through a subscription with a mobile app vendor, Insurance Agent.

“We also excel at collecting and leveraging client email addresses,” he said. “Most agencies don’t do a very good job of soliciting emails from clients, but we have acquired 85 percent of our client emails by incentivizing our staff to always ask, and then we use automated digital marketing technology to stay in close contact.”

The agency sends clients birthday or seasonal e-cards, and many people respond very favorably, “which keeps our agency in the top of their mind for the next time they may have an insurance need,” Hilton said.

Minard-Ames Insurance Services provides technology that offers a template for its construction firm customers to issue their own pre-approved certificates of insurance or endorsements, such as for additional insureds or waivers of subrogation.

“This saves our customers time, as they can do it 24/7 and from their mobile phones,” Johnson said.

Another trend noted in the IIABA study is the significant increase in the average age of employees at most agencies.

“Savvy firms are placing an emphasis on early succession planning for all key leadership positions,” according to the IIABA. “Best-practices agencies recognize that their future independence hinges on creating an environment that attracts and retains talented employees to successfully perpetuate their business.”

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The study also noted that the pace of consolidation has steadily increased since 2009, coming off low merger and acquisition activity during the Great Recession. According to SNL Financial, 469 transactions were announced in 2015.

Every three years, the trade group collaborates with Reagan Consulting to select “best practices” firms throughout the nation for outstanding management and financial achievement in six revenue categories ranging from less than $1.25 million to more than $25 million.

Agencies are nominated by either a Big I-affiliated state association or an insurance company, and qualified based on operational excellence. Financial and benchmarking information for the participating agencies are also reviewed and updated for the following two years.

This is the 24th edition of the annual benchmarking analysis and the first year of the current three-year study cycle.

Katie Kuehner-Hebert is a freelance writer based in California. She has more than two decades of journalism experience and expertise in financial writing. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

In the Fast-Paced World of Retail, This Risk Manager Strives to Mitigate Risks Proactively and Keep Senior Leaders Informed

Janine Kral works to identify and mitigate risks, building strong partnerships with leaders and ensuring they see her as support rather than a blocker. 
By: | October 29, 2018 • 4 min read

R&I: What was your first job?

My very first paid job was working on my uncle’s ranch in British Columbia in the summers. He had cattle, horses and grapes — an unusual combo. But my first real job out of college was as a multi-line claims adjuster at Liberty Mutual.

R&I: How did you come to work in risk management?

Right out of college I applied for a job that turned out to be a claims adjuster at Liberty Mutual. I accepted because they were offering six weeks of training in Southern California, and at the time that sounded really fun. I spent about three years at Liberty Mutual and then I spent a short period of time at a smaller regional insurance company that hired me to start a workers’ compensation claims administration program.

I was hired at Nordstrom as the Washington Region Risk Manager, which was my first job in risk management. When I started at Nordstrom, the risk management department had about five people, and over the years it has grown to about 75. I’ve been vice president for 11 years.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I would say that technology has probably been the biggest change. When I started many years ago, it was all paper and no RMIS.

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R&I: What risks does the retail industry face that are unique?

We deal with a lot of people — employees and customers. With physical brick and mortar settings, there are the unique exposures with people moving in and out in a public environment. And of course, with ecommerce, we have a lot of customer and employee data, which creates cyber risk — which is not necessarily a unique risk in today’s environment.

R&I: Can you describe your approach to working with senior leaders and front-line staff alike to further risk management initiatives?

It starts with keeping the pulse of what’s happening with the business. Retail moves really fast. In order to identify and mitigate risks proactively, we identify top risk areas and topics, and then we ensure that we have strong partnerships with the leaders responsible for those areas. Trust is critical, ensuring that leaders see us as a support rather than a blocker.

R&I: What role does technology play in your company’s approach to risk management?

Janine Kral, claims adjuster, Nordstrom

We have an internal risk management information system that all of our locations report events into — every type of incident is reported, whether insured or uninsured. Most of these events are managed internally by risk management, and our guidelines require that prevention be analyzed on each one. Having all event data in one system allows us to use the data for trending and also helps us better predict what may happen in the future, and who we need to work with to mitigate risks.

R&I: What advice might you give to students or other aspiring risk managers?

My son is a sophomore in college, and I tell him and his friends all the time not to rule out insurance as a career opportunity. My advice is to cast a wide net and do your homework. Research all the different types of opportunities. Read a lot — articles, industry magazines, LinkedIn. Be proactive and reach out to people you find interesting and ask them about their careers. Don’t be shy and wait for people and opportunities to come to you. Ask questions. Build networks. Be curious and keep an open mind.

R&I: What are your goals for the next five to 10 years of your career?

I have always been passionate about continuous improvement. I want to continue to find ways to add value to my company and to this industry.

R&I: What is your favorite book or movie?

My favorite book is Shantaram by Gregory David Roberts. It’s a true story about a man who was in prison in Australia after being convicted of armed robbery, and he escaped to India. While in India, he passed himself off as a doctor in a slum. It’s a really interesting story, because this is a convicted criminal who ends up helping others. I am not always successful in getting others to read the book because it’s 1,000 pages and definitely a commitment.

R&I: What’s the best restaurant you’ve ever eaten at?

Fiorella’s in Newton, Massachusetts. Great Italian food and a great overall experience.

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R&I: What is your favorite drink?

“Sister Carol.” I have no idea what is in it, and I can only get it at a local bar in Seattle. It’s green but it’s delicious.

R&I: What is the riskiest activity you ever engaged in?

Skydiving. Not tandem and without any sort of communication from the ground. Scary standing on a wing of a plane, but very peaceful once the chute opened, slowly floating down by myself.

R&I: If the world has a modern hero, who is it and why?

I can’t think of one individual person. For me, the real heroes are people who have a positive attitude in the face of adversity. People who are resilient no matter what life brings them.

R&I: What about this work do you find the most fulfilling or rewarding?

It’s rewarding to help solve problems and help people. I am proud of the support that my team provides others. &




Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]