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Strategies From ‘Best Practices’ Agencies

Searching for ways to survive and thrive in the soft market cycle? Cultivate untapped customer markets; proactively service renewals; use technology for efficiency and to manage customer expectations; assertively seek referrals and strive to be the best at what you do.

Those are just a few tips offered by a trio of principals from three very different agencies recognized by the Independent Insurance Agents and Brokers as “Best Practices” agencies — firms that are the “best of the best” in their revenue categories.

Speaking as part of a panel on surviving the soft market cycle at the Independent Insurance Agents of Texas annual convention in June, Brad Berrong with Ed Berrong Insurance Agency in Weatherford, Okla., said he sees opportunities in the soft market. It’s a good time to develop new insurance company relationships, as companies are looking to expand their writings. And it’s a good time to move good, but perhaps slightly difficult, accounts from surplus lines into standard markets for the same reason, he said.

Weatherford is located in rural western Oklahoma, Berrong said, but his agency writes all over Oklahoma, is licensed in nine other states and does a fair amount of business in those states, including Texas.

Berrong, whose agency handles not only property and casualty risks but group and individual health accounts as well, said while property lines have softened considerably casualty accounts have held their own. On the general liability side, Berrong said he’s not seeing the same softening that’s occurring with property accounts unless they are part of a package.

Frank Swingle of Swingle Collins & Associates in Dallas said his firm of 35 employees concentrates on middle market commercial business in North Texas. Swingle explained that with most major brokerage firms having a presence in Dallas it makes sense to focus on middle market commercial as “the large accounts in the city are still very much controlled by the brokerage firms.” He said technology, real estate and manufacturing are among the industries in which Swingle Collins specializes.

Like Berrong, he’s seen a downswing in property. “If it’s a large account … we’re seeing insanity,” Swingle said. “It has nothing to do with the risk itself.”

Pierson & Fendley Insurance in Paris, Texas, about 100 miles northeast of Dallas, is “a little different from these guys, we have a smaller market,” said agency principal Matt Frierson. “Most of our business is within probably a 50-mile radius of our office. We have three agents and a staff of nine, including five CSRs.” He explained the agency is more “Mom and Pop,” with a lot of Main Street business and a personal/commercial lines breakdown of around 55 percent/45 percent, respectively. “We’re sort of in the position that we take on all comers. There’s a lot of small town atmosphere in Paris. We don’t necessarily specialize in one particular area,” Frierson said. He agreed that commercial property prices are down but said personal lines seem to have stabilized.

Untapped Markets

Berrong said his agency has found an untapped market in ethnic communities. He said between 15 percent and 20 percent of his commercial accounts are with businesses that are owned by Asian Indians. Pakistanis and Hispanic-owned accounts are also well-represented in his book of business, he said.

He explained that ethnic communities are often closely knit and that if a service provider does a good job for them, word gets around. Also, Berrong said, statistically, Asian Indians have the highest average income level per person in the United States, twice the average income level per person as Caucasians. Chinese and Koreans also average high average per person income levels, he noted. “That’s a very big market,” Berrong said. “I think if people are missing embracing the change in ownership that’s occurring in our country, then they’re missing out on a lot of these accounts.”

The important thing when working with ethnic groups that are different than one’s own is to make an effort to understand and relate to them, verbally as well as culturally, he said.

Referrals

Berrong, Frierson and Swingle agreed that referrals are essential for success, whether it’s a soft or hard market or something in between.

Swingle said his agency aggressively seeks to solve problems for his customers, including helping them prevent problems by addressing risk control issues. And, he said, Swingle Collins is equally aggressive in seeking referrals from the accounts for which they do a good job.

“We try to go in and solve problems for our customers and if we solve problems for one customer … we also ask for referrals. We’re very proactive,” Swingle said.

Berrong said one thing that helps generate referrals is that his agency tries to dominate in the fields in which it specializes, such as the oil and gas industry. “As an example — oil field consultants, drilling consultants, flow testers — when you have a pretty sizable percentage of that, that’s when the referrals start coming, because they’re talking to their peers. And if they’ve heard from three or four of their peers [about you] that’s where they go. That’s a big deal for us.”

Another positive “is we have this reputation for taking stuff that’s got ‘hair’ on it,” Berrong said. “Tough stuff.” He said agents all over western Oklahoma, generally smaller agencies, send difficult risks to Berrong. “They don’t want to tackle them,” he said. Instead they tell their customers, “Go to Berrong’s, they’ll take care of you.”

Make the Most of Technology

The use of technology to manage customer expectations, keep on top of renewals and enhance customer retention is one of the cornerstones of Pierson & Fendley’s success, Frierson said.

“What we really want to look at is our retention over all, even if it costs us a little bit in the soft market,” he said. “We want the customer to know, very bluntly, that we are there for them and that we want to build that loyalty with them.”

He explained that he has one employee whose job as a personal lines rater is to manage the agency’s book of renewal business. Technology plays a big part in that, Frierson said. “We look at the rates and we know beforehand, 60 days before renewal.” So, when a client calls saying they have seen an ad claiming they can save 33 percent on their insurance, “we already know that. … We’ve already done our effort on the front end and we can say, ‘look, we’ve got a carrier that can save you X amount of dollars on home and auto.’ … We’ve already beat them to the punch. That’s our own way of marketing, our own way of getting out there.”

Berrong said if “you’re using your technology well, it’s so much easier to come up with a re-marketing package. … I would say that I have never, ever spent a dollar on technology where it was directed and engineered … that I haven’t at least gotten two and a half times the return in less than a year.”

“Just look at how much more productive we are today than we were even five years ago,” Swingle added. “You can put an Adobe package with a whole submission together in 20 minutes on an account where it used to take half a day to do that.”

Topics Texas Agencies Tech Pricing Trends Property Oklahoma Market