By Dennis Pillsbury
Executives of The Huval Companies include (left to right): Kathryn H. Pontiff, director of human resources; Tommy Huval, chief executive officer; and Dale F. Huval, corporate sales/business development.
When two brothers--Patrick and George Huval--started their independent agency in Breaux Bridge, Louisiana, in 1973, it is unlikely that they envisioned that their agency, which initially had about $35,000 in revenues, would grow into The Huval Companies, today's insurance and financial services conglomerate generating more than $5 million in revenue. In addition to the agency, Huval Insurance Agencies, Inc., which remains the flagship company, the other parts of the group include Insurance Programs, Inc., a wholesale broker specializing in professional liability; Cost Management Services, Inc., a firm specializing in loss control and risk management; Benesys, Inc., an employee benefits administrator; and Huval Management Company, Inc., the organization's operations service company.
The agency serves the Acadiana area of Louisiana, the south central part of the state--an area which Tommy Huval, chief executive officer of The Huval Companies, describes as the "Cajun heart of Louisiana." We talked to Tommy who, along with his brother, Dale, and sister, Kathy Pontiff, has majority ownership of the companies.
Patrick had been a claims manager prior to starting the agency and George was an adjuster. "My dad's (Pat's) company wanted him to relocate, but he didn't want to leave the area," Tommy says. "So he and his brother purchased an agency producing about $35,000 in revenue and started building the business." Tommy joined the agency in 1978. Ownership of the agency was sold to the next generation first when the founders retired.
During its first 20 years, the agency had the enviable position of being in the right place at the right time. The Acadiana area was enjoying exceptional economic prosperity. And Patrick and George had a strong work ethic (which seems to have been inherited by the next generation) that served to help them achieve excellent growth. To help serve a growing clientele over a wide geographic area, the Huvals set up branch offices, with each office under the supervision of a branch manager. That system served quite well for a number of years. However, as the agency grew, it also became clear that a different, more efficient structure was needed so that it could continue to provide the best service to all of its clients.
As Tommy explains, there were several factors that led to the decision to restructure:
* The diversity of clients and client needs.
* The need to relocate the operations/main identity office to the largest city in the Acadiana area to achieve increased market penetration.
* The soft market made it imperative that agencies become more efficient.
* The consolidation of management/key personnel for effective communications.
* The demand from sophisticated clients for insurance alternatives.
Client service always paramount
A primary key to the success of Huval appears to rest on the fact that it never lost sight of customer needs as it went through changes and restructuring. The addition of new "profit centers," as Tommy refers to each of the corporations, came about in response to customer needs. For example, the TPA operations "allowed us to get much closer to our more sophisticated clients. We used to hand those services off to the insurers. But this gave us more control of those services and much better influence with the valued clients," Tommy says.
He points out that "a great strength of our agency is its relationship and rapport with clients. When we restructured, we had to make certain that we built on that strength." He explains that the agency's original book of business consisted of the local people and businesses. It was only later that larger commercial clients began to turn to Huval for answers to their insurance needs.
"We didn't want to abandon our base of personal lines and small BOP accounts. However, it also was clear that the larger, more sophisticated accounts needed a higher level of service than the structure then in place could provide. Virtually every one of our 11 offices had at least one major account that was handled by the manager. However, that individual also might be handling as many as 1,500 other clients, so naturally the focus was on these smaller accounts. This just was not the best way to handle either type of account."
So the agency adopted a new system. The corporate offices were moved to Lafayette, and the large commercial accounts were brought into the corporate office for service. The personal lines and small commercial accounts remained in the 11 branches. "This allowed us to stay in the marketplace where we started and continue to serve those clients who had been loyal to us all these years," Tommy says. "They still had the advantages of a local agency and, in fact, were even better served because that agency did not have its focus on two different areas."
Back office operations were located to the corporate offices, including all incoming mail. This greatly reduced the load of paper in the branch locations, allowing them to focus on retaining and increasing clients. These client service representatives now can effectively service 1,200 to 1,500 clients each.
Basically, Tommy says, the agency now has two different operations. Staff supervision, compensation and self-development requirements are totally different for the people in the agency. Dennis Landry is now the CEO for the agency branch operations. Tommy admits that it was a difficult transition for people, especially those who felt that the different levels of service were somehow unfair. "We met with all our people and pointed out that it was okay to treat people differently as long as we always treated them fairly." But the change also was very rewarding. "It allowed us to really utilize the talents of our people. Some were much better in service roles for personal lines and small commercial accounts. They enjoyed the constant interaction with a variety of people and helping those people. Others enjoyed working with more sophisticated clients and getting involved in complex insurance solutions. Finally, some staff members excelled in data entry, data processing and the operational requirements of the company."
"Our agency's greatest strength is its relationship and rapport with clients. When we restructured, we had to make certain that we built on that strength."
--Tommy Huval
This focus on service and attention to customer needs has led to a kind of evolutionary process where the role of the agency changes to reflect the changing needs of its customers, Tommy explains. The addition of new profit centers exemplifies this evolution as sophisticated clients looked to the agency to provide risk management services beyond traditional insurance. Some of the key agency client groups are sugar cane growing and milling, public entities, acquaculture and food processing and distribution.
The experience with the sugar cane milling industry provides an example of the agency's growing with its customers. Patrick Huval brought in a number of sugar cane mills years ago. "We grew it from there," Tommy says. "Word spread throughout that community that we were providing good service and much of the business came in through referrals. The fact that the owners knew about Huval Insurance when we called on them also helped a great deal." Huval ultimately became the largest agency for sugar cane mills in Louisiana.
This expertise with its sugar cane milling clients allowed Huval to move into the third-party administration services arena, first for group health/employee benefits and then for workers compensation. The employee benefits TPA, Benesys, is headed by Denny Bass. "We also market the mills as a group to our companies for the other property/casualty coverages. This has resulted in excellent pricing and service for this group of insureds."
Cost Management Services also was established to provide risk management and loss control services. "Many of these insureds didn't have full-time risk managers but had grown into sophisticated operations that could benefit from having professional risk management services on their behalf. We were able to serve as their outsourced risk manager. It was just an extension of what we had been doing as an independent agency for our clients, but the establishment of a separate corporation allowed us to focus our efforts on this area with people who were able to bring a greater level of expertise to bear on the risk management concerns."
This was especially important as growing numbers of clients started to increase their self-insurance retention levels. As the SIRs rose, the premium levels and the resultant commissions were not sufficient to compensate a team of strong risk management professionals. The separate corporation allowed for fee-for-service compensation.
This multi-corporate structure provides The Huval Companies with an opportunity to take advantage of different talent levels of people. Tommy notes one instance where a young man was brought in as a producer. "He had worked part-time with us while going to school. He had good people skills but, as it turned out, just wasn't cut out to be a producer. I had to lay him off." He went back to school, but Tommy kept in touch with him. He knew that somewhere his talents and work ethic would fit in somewhere. And he was correct. Huval was appointed to be an administrator for a large book of lawyers professional liability. "This field was technically challenging and required people skills that this person--Jon Ransonet--exemplified. We brought him back and he is now CEO of Insurance Programs, Inc.(IPI), the wholesale brokerage we set up to handle professional liability. He has since received his RPLU. Insurance Programs, which basically consists of only two people, contributed $250,000 in revenue last year."
The establishment of IPI created an interesting dilemma for Huval. Having a wholesale brokerage owned by a retail agency can be a cause for concern to other retail agents. "Before we established Insurance Programs, we went out and talked to the other agents in the area. We certainly understood that they would be concerned about allowing us to talk to their clients," says Huval. "We needed to reassure them that we would never use this relationship in any way that would be adverse to them. We were very gratified that our reputation for ethical behavior in all our business dealings preceded us. The agents supported our efforts."
Tommy continues that, in order to avoid any problems, Huval has a higher standard for an agent of record letter that might favor the Huval organization with professional liability business. "We won't recognize an agent of record letter if it involves agents in that group," he says. "We go to the next step of finding out exactly why the company is changing agencies and will only take on that business if there is a valid reason for the change."
The visionary approach
This conglomerate that is The Huval Companies has proven beneficial in many ways. But perhaps one of the most significant benefits has been that it has freed up Tommy to focus on the agency's future rather than "spending my time putting out fires," he says. "I have the luxury, thanks to our size and the talents of our people, of getting involved in a lot of things outside the agency. I did a long tour of duty with the CNA Pacer organization and am working with the agency network group, Greenwich Group. I've met a lot of high level industry people and been introduced to consultant talent." This exposure to new ideas has allowed Tommy to look at the agency's future from "a visionary standpoint."
One of the people that Tommy ran into was Roger Sitkins, a well-known consultant. One of Sitkins' concepts was Forcing Vertical Growth (FVG) and it struck a chord with Tommy. As part of implementation, all agency people were analyzed for strengths and weaknesses. Business plans had to be prepared for the group overall and for each of the individual profit centers. This provided a real opportunity to evaluate the talents of all the individuals in the agency as well as to determine if the visions shown in the business plans complemented each other. It was a great way to set the groundwork for open communication--key in an organization with 12 different locations.
"It's hard enough for an agency to succeed when everyone is in 'synch'," Tommy notes. "But when people are headed in different directions, it can create real problems. Working with Roger has been a real help. We bring all our people together in Florida at a "corporate retreat" led by Roger. He's gotten to know our people and is a no-nonsense kind of guy who can cut right to the chase. He goes right to the heart of any problem, brings it out into the open and resolves the situation. Because he's an outside third party, there are no hard feelings. It's been terrific. This is worth a lot to any organization."
This open communication has become an important part of the management style. Huval has established a FVG team that functions as the operational committee for the group. "The people meet religiously every Monday," Tommy says.
"What really propels our organization is our management team," Tommy continues. "That team is comprised of owners and managing executives whose talents complement each other. My sister, Kathy, heads up our human resources function and our health and retirement benefits trustee groups. Although she is an owner, she has great rapport with our staff and can bring to our board meetings issues involving the staff.
"My brother, Dale, whose primary daily responsibility is production of large commercial accounts, obtained an MBA degree a few years ago. That formal education has proven to be a great resource to us in our management meetings. Dale is charged with supporting me when we are evaluating opportunities such as acquisitions or new sources of production.
"Scott Angelle, who is primarily a producer, makes critical contributions to our management team. He is being invited to be an equity sharing partner."
In closing, Tommy notes that the agency's "insurance company partners have been a tremendous asset to us. They've allowed us to stay viable and competitive."
The secret of success
While The Huval Companies is a conglomerate that does not appear to be a "typical" independent insurance agency, many of the factors that have led to its success are common to virtually every agency that has made it to the cover of Rough Notes.
* The principal concern is the customer.
* Problems are perceived as opportunities.
* Principals are receptive to new ideas and willing to change.
* Open communication has created a team atmosphere.
* The agency embraces and uses automation as a tool to enhance efficiency.
* Agency personnel are active in their communities and have strong ethical standards.
In short, Huval shows yet again that hard work and attention to customers is the real secret to success in the agency business. The reputation in the community, whether it be the local community or a community of similar interests like the sugar cane mills, results in referrals and receptive prospects. In short, there is no "secret" ingredient. Huval is an example of what can be achieved in a relatively short timeby owners who have entrepreneurial spirit and a receptivity to new ideas.*
Eight of the executives of The Huval Companies gather at the company's headquarters. Seated left to right: Jon Ransonet, CEO, Insurance Programs, Inc.; Jack Bienvenu, CEO, Cost Management Services; Kathryn H. Pontiff, director of human resources; Dale F. Huvall, corporate sales/business development; and Glenn Landry, chief administrative officer. Standing left to right: Dennis J. Landry, CEO, branch accounts; Tommy K. Huval, chief executive officer; and Mark Gagnard, vice president, Cost Management Services.
©COPYRIGHT: The Rough Notes Magazine, 1998