MARKETING AGENCY OF THE MONTH
Rhode Island agency reaches $20 million in revenue; dominates market
By Dennis H. Pillsbury
The Starkweather & Shepley board (from left on this page): John Duval, Senior Vice President; Gary E. Heaslip, CPCU, ARM, AMIM, AIM, AU, ASLI, Senior Vice President; and Lawrence E. Keefe, President of the Westerly office. On the opposite page (from left) are: Fred R. Tripp, President; Natale P. Calamis, Executive Vice President; and William P. McGillivray, CPA, Executive Vice President and Treasurer.
In 1879, an insurance man named George Shepley and a manufacturer, James Starkweather, founded an insurance agency, Starkweather & Shepley, in Providence, Rhode Island. Shepley supplied the sales acumen and Starkweather the leads. Shepley was the innovator and go-getter who developed a tremendous following in the state. When Starkweather passed away early in the partnership, Shepley continued to grow the agency, venturing outside Rhode Island and even outside New England. At one point, he had an office in Paris through an arrangement with a French insurance company. He also worked with Grinnell Corporation to provide sprinklers to his commercial clients.
"He really got this place rolling," says current president, Fred Tripp. "He established a tradition of innovative risk management service coupled with a strong sales culture that continues today."
Following Shepley's death in 1924, there were a few successions. Each time that occurred, there were costs involved in perpetuating the agency. In 1935, the agency's stockholders got together to try and develop a perpetuation plan that would alleviate this problem. "What they did was form a trust and put all their stock into the trust," Fred says. "That's where it is today. Ownership resides in the trust with the trustees responsible for maintaining the goal of the trust--to run the agency for the benefit of the employees. I'm one of the trustees, along with Natale Calamis and William McGillivray."
The trustees have two principal functions: they elect the agency's board of directors and they determine any bonus payments.
"The net effect of the structure is that we have not had to fund any perpetuation plan since 1935," notes Bill McGillivray, executive vice president and treasurer. "It really has created a situation where we can continue with successive generations of management and still make more money available to employees."
Fred adds, "This has allowed us to reward our employees and offer a very competitive employee benefits package which, since the 1950s, has included profit sharing."
The Providence offices of Starkweather & Shepley, circa 1908.
"Historically," Bill says, "we've attracted all different kinds of employees. We place tremendous value on all our people. They are well thought of and well compensated. We've hired insurance professionals who are exceptional at service and good internal and IT people. The trust arrangement has helped us create an outstanding team atmosphere where we are all working together to get the job done. And when people are happy at their job, it shows in the way that they relate with clients. It shows up in first-class service and has led to our being the dominant player in our market."
The sales culture
Service, of course, is extremely important, but sales is the engine that drives the machine forward. Nat Calamis, executive vice president in charge of sales, explains that the commercial department is set up in four sales teams. Three of the teams are doing service and retention work, and one is pursuing new business. The teams include marketing people, account managers, and producers. The new business team continues to service the account for the first three or four years, and then the account will move to a servicing team.
"We are aggressive and proactive," Nat says. "We have a sales meeting every Friday morning to see how our new business goals are progressing. We also have a general sales meeting every other Monday. We are steadily marching across New England and are particularly strong in the southeastern part. We offer stability and a team approach that is very attractive to both new and current clients. Many of our sales people have been with us for 10, 15 or 20 years and that provides a consistency of approach as well as a level of expertise that makes us
very competitive.
The Liability Department, circa 1908.
"Of course, when I say competitive, I'm not talking about price," Nat explains. "We stay away from selling price. Coverage and stability are emphasized. We have an outstanding stable of companies and can offer both traditional and non-traditional solutions for transferring risk."
The agency also has a commercial sales center which produced close to $200,000 in new commissions in 2003.
Commercial insurance is the agency's "bread and butter, where our target is accounts between $25,000 and $500,000 in premium," Fred adds. "We do write some significantly larger ones, but the middle market is our most important segment." Commission income from commercial lines represents approximately 70% of total revenues. Personal lines provides about 12% and benefits around 6.5%. Other revenue (fees, etc.) account for the balance.
Steven E. Deware, CPCU, ARM, CIC, AIM, Senior Vice President, and Mary E. Keenan Jordan, CPCU, CPIW, ARM, Assistant Vice President, review a submission with Risco, Inc., President Barry A. Phillips.
Fred explains that "we're not proactive in personal lines. This business comes to us primarily through referrals."
Bill adds, "Personal lines, however, is very lucrative. We primarily sell high-value personal coverages." He goes on to explain that "benefits has not been a significant factor in the agency because of the domination of the Rhode Island market by Rhode Island Blue Cross, which until recently did not pay agency commissions. However, with our move into other parts of New England, we anticipate that benefits will become a more important revenue source."
In addition to its headquarters in Providence, Starkweather & Shepley has offices in Westerly, Rhode Island, and Westwood, Massachusetts, with a total of 110 employees. The agency also is in the process of acquiring a very large agency in Massachusetts, which "will be our largest acquisition to date," Bill says, "and will add about 20% to revenues."
Up until the 1980s, Starkweather & Shepley had grown through internal growth only. Then, the agency started doing some strategic acquisitions in the late '80s. "This has given us some excellent personnel and some company representation that we did not have," Bill notes.
George L. Shepley, who, along with James Starkweather, founded the agency in 1879, is shown in his Providence office.
"We also started a surplus lines organization, Risco, in 1987," Fred says. "Risco is a wholesaler that has binding authority contracts with London and some domestic excess and surplus lines companies."
Alternative solutions
Anyone who has been in the insurance industry during the final decade of the 20th century knows that workers compensation hit the doldrums. It actually became the number one problem area for members of the U. S. Chamber of Commerce in the middle of the decade. And Rhode Island was not immune. In fact, it was one of the worst states for workers comp. Needless to say, this was not a happy circumstance for Starkweather & Shepley or for its commercial clients.
"We insured a number of manufacturers that were having real affordability problems with their comp programs," Fred remembers. "These were good risks caught up in a tough market. We put together a self-insured workers comp program for them that continues today. It's been fantastic. We acquired a TPA service to administer the program. It's been innovations like this that have helped us keep customers."
Donald J. Curran, CIC, Senior Vice President (left), and Maria G. Caprio, Assistant Vice President, discuss a personal lines referral with Peter H. Gross, CIC, Vice President.
Bill adds, "The workers comp TPA grew out of necessity but has turned into another service that makes us unique."
The agency also has a full-time claims department with a staff of five that "has helped set us apart from the competition," Nat says.
Fred concludes, "We're a generalist agency with some specialties. We do business in manufacturing, health care, construction, marine and other areas. We've developed programs for industries where we have sufficient numbers. Not surprisingly, because of our location near the Atlantic Ocean, we developed an expertise in the marine area. This has grown into three countrywide programs--ABBRAGARD, the Community Boating & Sailing School Program, and the C-PORT Insurance Program."
* ABBRAGARD is a program designed exclusively for boat builders and repairers. It is available only to members of the American Boatbuilders & Repairers Association.
* The Community Boating & Sailing School Program is designed for organizations dedicated to
sailing education.
* The C-PORT Insurance Program is designed for operators of quick response towing and salvage vessels and is endorsed by C-PORT, the trade association for professional towing and salvage companies.
Another interesting program, especially to this author who moved from an area where there were three Dunkin Donuts shops within walking distance to an area where it is a long drive to the only one in the city, is the Donut Program. The program was developed to solve the unique needs of food franchise operations, many of which had worked with Starkweather & Shepley. The agency now insures more than 250 Dunkin Donuts franchises.
We are pleased to recognize Starkweather & Shepley for its customer-focused marketing that has led to tremendous success and to its being named this month's Rough Notes Marketing Agency of the Month. The agency has a history of success that will be eclipsed only by its future successes. "We've had five record years in a row and believe 2004 will be another record," Bill says. And best of all, the agency's people reap the benefits, guaranteeing future success.
Fred concludes, "The three of us collectively have nearly 90 years of experience and we've seen a lot of changes. We all agree that the future has never looked brighter." *