Past, present and future play part in Mississippi merger
By John Chivvis
Ronnie Tubertini is president/CEO of SouthGroup Insurance and Financial Services, a new entity that resulted from the recent merger of 12 of Mississippi's oldest independent agencies.
SouthGroup's centralization of resources and the implementation of technology have put more information and capabilities into the hands of CSRs and producers.
On January 1, 2002, history was made in Mississippi as the past merged with the future. As 2001 passed away, so did 12 of Mississippi's oldest independent agencies, only to be reborn in 2002 as a single agency--SouthGroup Insurance and Financial Services.
The merger not only created Mississippi's largest privately owned insurance agency, it also created new opportunities, new possibilities, and new challenges. In fact, according to SouthGroup's new president and CEO, Ronnie Tubertini, these changes reflect the timeless aspects of these agencies--past, present and future.
Learning from and letting go of the past
Tubertini is quick to point out that the foundation of the merger was really put in place almost 12 years ago. In 1989, a number of the agencies which are now part of SouthGroup formed a cluster called the Associated Insurors of Mississippi (AIM). Contrary to the strategies of other clusters in the region at the time, Tubertini says that AIM wasn't out to be "defensive" and protect its markets.
"We wanted some offensive firepower, some clout," says Tubertini, "so we formed something similar to an old farmer's co-op--a marketing co-op--if you will." The cooperative strategy helped create larger volumes in certain companies and at the same time provided a little leverage.
The other benefit from AIM that aided in the creation of SouthGroup was the cluster's ability to share information and resources. "We were all friends before this; we respected each other and knew each other to be of high quality and ethics," says Tubertini. That trust meant the cluster could share ideas, marketing information, technology and technology information, without the fear of competition. "We signed 'no-compete' agreements or even divided up the state into regions to prevent competition," he adds.
Even though this was before the days of pervasive, high-speed, always-on access, AIM's producers and CSRs shared market information and helped each other. "Each one of our producers and CSRs had a contact list for everyone else," Tubertini explains, "and when something came up where one person couldn't find a market, that person would contact the list--by phone or e-mail--to find someone who could."
It was in the information-sharing sessions that the idea of merging was first initiated. As Tubertini recalls, it started with the realization that each agency was quite similar. Each was well established, ranging from 50 to over 100 years old, and each was the largest agency in its region. They shared a common mission, a common reputation, and a common goal characterized by offering customer service built on personal relationships. "Our relationships with our customers and our companies was and is an important part of how we do business," says Tubertini.
Tubertini is the first to say that the merger into SouthGroup has definitely enhanced their core competencies. "The merger gives us a little more clout now with our companies and in our partnerships," he notes. However, for SouthGroup to be successful, it would mean letting go of the past. In this case, it would be letting go of the long-standing identities and names of each of the agencies. "This was a hard decision for all of us," he acknowledges.
"Look at the J.H. Johnson Agency [one of the merged agencies]," says Tubertini. "J.H. Johnson helped initiate the independent insurance agency system in Mississippi over 100 years ago. One of our association's annual awards even bears his name. His name carries a lot of weight, and here we were about to drop his name, as well as all of the other names."
Once again, the new leadership of SouthGroup looked back at the history of their agencies. "While we knew our agencies were old, we realized that they were dynamic," says Tubertini. "That's why they are as old as they are, and if we want to be in business 100 years from now, this had to be done."
SouthGroup recognized the need for a single brand. "We need to take a different approach, so that our brand will be known statewide, as well as with our companies. This year, SouthGroup will be doing some transitioning of brands that includes a SouthGroup logo with each agency name underneath, but those agency names will, as Tubertini puts it, "fall off" later.
Preparing in the present
The SouthGroup merger took almost 18 months to complete, and while that process was not exactly easy, Tubertini sees the present to be even more of a challenge.
With agencies located as much as 300 miles apart, technology and infrastructure are definitely a concern. "Half of our folks are on Applied Systems' agency management software and the other half are on AMS," says Tubertini. "The easy decision would be to choose one, but the problem is that when you do, half of the people will be dealing with the trauma of a huge learning curve of mastering a new management system while trying to deal with the trauma of a merger, and still conducting their normal business."
For the present, SouthGroup operates the two systems side by side, using third-party software for consolidating the data. "We felt it to be extremely important for our employees not have to deal with changing management systems right now," says Tubertini, "but at some point in the future, we will."
Connectivity is also an issue. SouthGroup brought in a technology consultant who discussed the need to build a centralized system of servers that would reside in Jackson, Mississippi, and be accessible by each agency office using Internet, frame relay and virtual private network connections. "We had it all mapped out with redundancy of servers, firewalls, intrusion detectors and all sorts of other devices," says Tubertini. "It was over a half million dollars before we could even blink."
Using his own network of independent insurance agent and association contacts, Tubertini began contacting other large agencies with similar geographic network concerns. From talking to these agencies and how they all connected and communicated with each other, a different solution arose.
"We decided to pursue an ASP [application service provider] model," says Tubertini. At first thought, SouthGroup's plans were for one of the agency management software vendors to host it all. Difficulties, though, in hosting and providing support and service for non-agency management system software were an issue.
So, SouthGroup is now in the process of finalizing a deal with an outside ASP that will build their system, configure their servers, and host not only the agency management system software but all of the office, productivity, and other third-party software as well. And, Tubertini adds, "The system will be hosted in ASP's data center, where they'll be providing security, support, and service in a manner that we could have never dreamed of, or afforded."
Agency offices will still use Internet, frame relay and virtual private network connections for accessing the system, but all of the software resides on the server. Noting the seemingly cyclical return to a central system, Tubertini jokingly points out, "In essence, our PCs have once again become dumb terminals; makes me wish I'd kept those old DEC machines."
Looking forward to the future
Looking into 2002, Tubertini and SouthGroup have much to do. Besides completing the technology shift, plans are to centralize the accounting, customer service and claims departments at a single Jackson-based office.
One reason for the centralization is that Tubertini sees that margins are getting thinner in the independent insurance agency system. "As an agent, I now have to think about opportunities to reduce expenses that impact our bottom line," he says, adding, "Now, as SouthGroup, we can make it less expensive to do business than before."
This also translates into the operation of the agency. Centralization of resources and the implementation of technology have put more information and capabilities into the hands of CSRs and producers. This includes managing projects and conducting meetings online as well as online "newsletters" that daily give CSRs and producers access to the latest in carrier product and service news. "Agents and CSRs will be able to access more carriers and programs and negotiate better pricing for their customers," says Tubertini.
Customers not only will have access to round-the-clock customer service, but also will be able to dial in locally. Tubertini says, "We are very excited about this, because we remain customer-centered, and we can now support them at much greater levels." He notes that all of these changes, moves and shifts will be transparent to customers, adding, "All they'll see is a name change."
Projecting into 2003, Tubertini sees SouthGroup moving into strategic locations across the state and possibly beyond. And with the regulatory system changing, he believes that within the next 18 months, changes to the uniformity and reciprocity of licensing will provide SouthGroup with a world of opportunities. While SouthGroup considers acquiring or merging agencies around the state, he says, "When you think about it, with our centralized infrastructure in
place, we could open an agency
almost anywhere."
Ultimately, Tubertini says it's all about building relationships and providing good customer service, and SouthGroup's past, present and future has and will allow it to keep doing just that. "We want to be able to give customers the best of what the independent insurance agency system has to offer: objective advice and counsel, advocacy, and choice." *
The author
John Chivvis is a Texas-based writer who specializes in topics of technology implementation. His work has appeared in a number of national and regional publications.