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

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]