MARKETING AGENCY OF THE MONTH


FOCUSING ON HARD-TO-PLACE RISKS

Denver-based agency succeeds by tackling the tough lines of business

By Dennis Pillsbury


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Producers for ISU Insurance Services of Colorado: standing (from left) are: Stephanie Samimi; Samuel Abraham, LUTCF; David Carpenter; and John Burman, CLU, ChFC, CFP; sitting (from left) are: David Adams and Michael Moschetti.

Insurance Agency of Colorado, Inc., Denver, has "always been a downtown agency," according to Pamela Adams, CIC, executive vice president of the agency, which now does business as ISU Insurance Services of Colorado, Inc. While that doesn't sound that impressive on its own, it does carry more weight when one considers that the agency has been in business since 1882 and is celebrating its 120th anniversary. And in all that time, it has remained independent, although there were moments when it flirted with a change in that status.

Bill Adams, CEO, joined the agency in 1972 to serve as manager of the agency for The W.W. Rice Co., Chicago, a regional broker, who bought the agency in that year to be its Denver office. Prior to that, Bill had been with Crum and Forster. In 1977, the owner of the broker, W.W. Rice, fell and was seriously disabled. The broker didn't have key man disability coverage and decided to sell the entire organization. Bill and Jim Sullivan arranged to buy the Denver brokerage while all the others were sold to a national broker. As Pam points out, "it's ironic that lack of insurance allowed my dad to buy the agency." At that time, revenues were about $191,000 and there were five employees. Today, revenues are approaching $3 million and the agency has 24 employees. Bill remained the majority stockholder when Jim retired. Other key employees had already received minority interests.

Bill almost sold to a national broker in 1986. He was on his way to sign the papers when his legs started shaking so badly, he decided that "something was telling me this wasn't the right decision. It was a pivotal moment. If I wasn't going to sell, then I had to start thinking about what we had to do to remain independent and stay successful."

Bill determined that the agency "had to appear larger so it could compete with the large national brokers. We were already part of the ISU network of independent agents, but we really became active at that point. As a network, ISU is the seventh largest broker in the country.

"We also needed to become a single source of insurance for our customers. We hired a CLU and set up an employee benefits and life/health department which today accounts for around 30% of our revenues. It's really helped us grow." Commercial property/casualty remains the largest contributor to revenues, with about 55% of the total, and personal lines provides about 15%.

Their niche is being a generalist

"We also put together a committee to try and determine niches that we had penetrated," Bill continues. "I know this sounds strange, but we found that our niche was being a generalist in tougher risks. When someone else couldn't write something, our centers of influence would refer it to us." Bill explains that those referrals even came from competitors, both direct writers and other independent agents, as well as lawyers, accountants, bankers and other professionals who are part of the agency's network of centers of influence.

08p19.jpg Volunteers of America, Colorado Branch, has been a client of the agency since 1946. Pictured (from left) are: ISU Insurance Services of Colorado CEO Bill Adams; Nolan Knox, director of nutrition services for VOA Colorado; Jim White, manager of community affairs, VOA Colorado; and Pam Adams, ISU Insurance Services of Colorado executive vice president.

"Our reputation for integrity has really been a plus in this area," Pam points out. "We were getting a few referrals from one of the State Farm agents, but not a large number. Bill went to him and found out that the agent was leery about working with other agents because he'd gotten burned. Some agents would write the referred business and then turn around and steal the client. We showed him our system for tracking referrals and agreed not to go after personal lines. One of our largest accounts was referred to us by him. A lot of our business is referral. We work heavily on networking and it's really paid off."

Bill continues that there are certain specialties within the generalist tough market niche that are specific targets.

"We write a lot of financial institution business and are endorsed by the Colorado Bankers Association. We are the exclusive agency for BancInsure in Colorado." BancInsure was formed by 15 state bank associations to provide financial institution coverage "by bankers for bankers."

"We recently became the exclusive Colorado broker for the Restaurant Insurance Corporation program that is supported by the National Restaurant Association. And we have a unique dry cleaner program including all environmental coverage."

Other niches that have been receiving attention are private schools, hi-tech industries and law firms. The agency anticipates having an exclusive program for several counties for lawyers professional liability by the time this article appears in print.

Marketing to the niches

About a year ago, Bill's son Mike joined the agency as marketing associate. Prior to joining the agency, Mike worked with Christy Sports, one of the nation's largest ski, snowboard, and patio furniture retailers.

"I went to work for Christy Sports full time after graduating from the University of Denver in 1998. All through college, I had been working with them on a part-time basis. I majored in public relations and marketing and wanted a position in the marketing area."

Runnin' of the Green 2 The Runnin' of the Green raises money for the Volunteers of America's Meals on Wheels program. The event is a Lucky 7K race held on St. Patrick's Day.

So last year, Bill decided that the agency needed a more concentrated marketing effort and talked to Mike to see if he was interested. He was. "I can remember going into the agency when I was a kid. It seemed like the right place to be.

"I liked the approach of marketing to specific target markets. It really gave us something to talk about in our campaigns," Mike says. "Bill and I work together on a particular program to try and determine what the hot buttons are so we can focus the campaign and improve its chance for success. We do a lot of direct mail and try to make response as easy as possible. We use fax-back forms or postage-paid return envelopes and really get a great response. Of course it helps that we have association support for several of our programs.

"Our campaigns are designed to help our producers," Mike continues. "We don't try to sell any insurance directly through the campaign. Our response forms simply ask if they'd like to hear from us with solutions to some of their insurance needs. For example, when we mailed to private schools, we focused on the need for sexual molestation coverage because of recent publicity about that particular problem. The need for adequate pollution coverage was the focus of one of our campaigns to dry cleaners. When we get a response, the producer knows he or she will be talking to a warm lead."

Mike says the closing rate has been about 60% on those returning information, which is spectacular for a direct mail campaign.

Mike also has been responsible for helping to expand on Bill's concept of becoming a single source for insurance needs by expanding into ancillary products such as auto warranties for the agency's customers and customers of its banking clients, prepaid legal as an addition to the other employee benefit programs already offered, and a balloon auto loan program that they're marketing to financial institutions to allow them to compete with auto leasing programs.

Bill points out that the agency also does some "soft" marketing that is designed to keep the agency name in front of its clients throughout the year. "We have a private label ISU CD club. We send out musical CDs to our larger clients about every four months. The first one was easy listening, then we had movie themes and holiday music around the holidays. Patriotic music will be the next one and then we're planning on symphonic music. Each CD has a slogan printed on the CD cover. One was labeled 'Sound risk management' and another, 'We're always in the mood for referrals.' We've gotten a lot of nice comments from our clients."

Eight in '08

The agency's major objective, which was initiated in 1998, is to reach $8 million in revenue in 2008--"8 in '08", as they've
dubbed it. Bill explains that at the semiannual planning meeting, "we were trying to decide what we would look like in 10 years. We recognized that we would need to be much larger in order to continue our preferred status with our lead carriers. We felt that we would have to triple or quadruple our writings in 10 years in order to remain competitive. At the time, we had revenues of about $2 million and decided that our goal should be $8 million by 2008. We're right on target to reach that," Bill says, adding, however, that the agency had a small setback this year when its largest account and several other smaller accounts, representing about $3 million in premium, fell prey to the bad economy and folded.

Adams pres Catherine Percy, CIC, president and COO of ISU Insurance Services of Colorado, and Ed Stammel, Jr., CLU, senior vice president, financial services.

"Every month, we talk about our goal and see where we are and what we need to do to remain on track. We've been growing by better than 20% a year, but the loss of a major account this year probably will result in much smaller growth this year. But our new business growth remains significant and we're still on target to reach our goal."

In position to remain independent

One other interesting twist along the road traveled by ISU Insurance Services of Colorado was that it became a family business as Bill found each of his kids gravitating toward the agency. Bill had always encouraged his kids to find their own way. And all found their way into the agency.

Pam was the first to join--in 1993--after spending four years with an advertising agency. She became a producer after going through the same Caliper testing that all potential producers face. Today, she is senior vice president of the agency with responsibilities for producing commercial lines business, expanding commercial lines operations and managing the personal lines department.

Dave, who is a commercial lines producer, found his way after a successful professional soccer career. And then Mike joined last year, as was previously mentioned.

The agency established a perpetuation plan in 1996 and has revamped that plan a number of times to reflect new additions to the agency as well as changing IRS rules.

The key positive with this is that it is "very clear to everyone that we are not for sale," Bill points out. "It's proven to be a good selling point for producers who are looking to join an independent firm." Last year, a former Allstate agency joined the firm. They also added a heavy-duty estate planner to help to cross-sell to business owners and high-value personal lines customers, a benefits producer and another life and health producer to cross-sell to other personal lines customers.

"I also recognized that it was important that everyone in the agency realize that you didn't have to be part of the Adams family to succeed," Bill says. "Cathy Percy was named president and chief operating officer several years ago, sending a message that if you deserved a promotion, you would get it."

Knowledge makes the difference

Bill sums up, "We haven't done anything super sexy. We have written plans and put ourselves in position to take advantage of opportunities. But mainly, we try to keep clients by treating them right. And I guess we do that pretty well. We have a number of clients who have been with us for more than 50 years. We've insured the Volunteers of America Colorado Branch since 1946."

He continues that we emphasize "our knowledge and understanding of the business. Policies are simply funding vehicles; it's the knowledge that makes the difference. Our brand is--Our Knowledge Is Your Best Insurance--and we try to live up to that every day. At this year's annual meeting, we stressed back-to-basics and held a series of seminars in the agency to make certain that everyone is up to speed on what is happening in the insurance marketplace.

"You know, this is a great business," he concludes. "Someone new to the business can get started with a ball point pen and a willingness to work hard--and we'll even give them the pen. I've been here 30 years and I'm still learning new things every week and I'm still having fun. That's something we emphasize; we all try to have fun and most days it works. Someone might have a bad day. That's going to happen. But we don't want to see bad months or bad years. We don't do any blaming. Instead, we focus on explaining and fixing and having a good time.

"I taught insurance classes for a local community college and explained how insurance, in many ways, is the basis of the economy," Bill continues. "You couldn't buy a house or a car, unless you had a lot of cash, if you didn't have insurance. We make things right. We sell people 'control' so that when something goes wrong, we're there to make it right." *