Marketing Agency of the Month

A culture of caring

Its people are Daly Merritt's greatest strength

By Dennis H. Pillsbury

“We have at least one camaraderie event every month,” says Marty Daly. “And that’s been part of the agency culture for the last eight or nine years.” Martin F. Daly, CIC, CPCU, president and CEO of Daly Merritt, Inc., an independent agency based in Wyandotte, Michigan, continues by pointing out that an important focus is “showing care and respect to all employees. (There are 32 employees responsible for some $5 million in revenue.)

“We usually include employees’ family members in the different social events so they too can feel like they are part of the Daly Merritt family. We also pay above market wages as a way to show that we truly believe that they are our most important asset. And they’ve reciprocated with loyalty. Several have been with us more than 25 years and many for 10 years or more.

“In addition, we always look for ways to help employees if there are events that have an impact on their lives. For example, when gas prices soared to over $4 a gallon, the agency provided every employee with a gas card for a nearby service station so they could just drive in and fill up without having money flying out of their wallet.”

This concern for people has been a hallmark of Daly Merritt, Inc., since it was formed in 1971 through the merger of the Harley S. Merritt Agency and the Daly Insurance Agency. Harley Merritt founded his agency in 1928. His son, Wallace Merritt, was in charge at the time of the merger and served as president of Daly Merritt until his retirement in 1986. Thomas J. Daly, who founded Daly Insurance in 1956, served as vice president until Wallace’s retirement, at which time Tom bought out Wallace’s ownership in the agency. Tom served as chairman of the agency until his death in 2006.

The company now is owned by four of Tom’s eight children—Marty; James P. Daly, CIC, LIC, vice chairman; John L. Daly, J.D., LIC, executive vice president of the Life and Benefits Division; and Joseph S. Daly, J.D., chief financial officer.

Joe’s son, Tom, who currently serves as the assistant to Melissa Armatis, vice president in charge of technology and agency operations, recently completed his master’s degree and will be joining the agency full time as a sales consultant in the Select Services Division which handles personal lines and small businesses. He will concentrate on high net worth personal insurance clients.

Focus on profitability

The Select Services Division grew out of a careful perusal of the agency’s accounts and their con-tribution to its overall profitability. “We started working with MarshBerry about 12 years ago,” Joe says. “As we began to look at the lessons we had learned at the MarshBerry meetings, we decided we needed to bring them in to help us focus on profitability. We found that we were not doing well on small accounts—those with less than $2,000 in commission.

“We were averaging 22 touches a year per small account,” Joe continues. “In addition, we’ve had only a couple of E&O losses and both of them came from small accounts. That’s when we determined that we needed to handle this business using service centers. It seems to be working out well. In fact, MarshBerry completed an analysis for us a couple of months ago that reaffirmed our decision to use service centers as a correct one.”

Marty adds: “We also realized that we needed to better focus our personal lines growth. One of the hallmarks of our agency is the excellent service we provide to clients. So it made sense for us to focus on the high net worth clients who would appreciate the focus on service. We’ve already had excellent results in this area. Clients tell us they are thrilled with our level of service, and we are thrilled with the select service approach to this business.

“The division accounts for 8% of our revenues and we would like to see that increase,” Marty explains. “That’s a dramatic turnaround from how we initially felt about small account business after our study of profitability. This has been a real win-win for our agency and our clients—better service and better profitability. That’s one of the reasons we’re looking forward to Tom’s transition to full time and coming aboard to work in the division.”

Spending smart

Another area that came under close scrutiny was the expense side of the ledger. Was the money being spent wisely?

The agency had been spending a significant amount on advertising designed to get people they didn’t know to call about their insurance needs. When management started to think about this, they realized the money could be much better spent on improving service to clients so they would do the advertising for the agency. Wasn’t it really better to have clients out there recommending the agency to their peers because of the excellent service rather than driving people to call for a quote? Wouldn’t you rather deal with a warm prospect than a cold shopper?

It was determined that technology would be one of the key differentiators the agency would leverage to the benefit of its clients. “We’d already committed to technology many years before that decision, but it hadn’t become a line item in our balance sheet,” Joe points out. “We brought in Melissa 13 years ago to oversee our technology needs but only began to allocate resources for technology about five years ago. Having a point person inside the agency who is responsible for technology really helps the employees take full advantage. They’ve always had someone to turn to if they had a problem or if they found a better way to use our technology.”

“We use AMS 360 for nearly everything,” Melissa points out, “with the exception of CBDDoc for scanning and storage, and BenefitPoint for benefits administration. We also offer a number of value-added resources for our clients, like the ZyWave product.

“Until about five years ago, whenever we decided on the need for a technology enhancement or upgrade, we always had to find the money to pay for it and it always seemed to come as a surprise,” Melissa continues. “Because of this, we sometimes felt constrained to go to the well and would wait another year to upgrade or put off adding an enhancement.

“Our employees have always been very involved and supportive of our use of technology and are always pushing for enhancements that will improve service to our clients. Oftentimes, they were the ones who expressed disappointment at what seemed like slow response to a need,” she observes.

Dedicating resources for technology

Joe says: “We realized that, by failing to have technology as part of our standard expense allocations, we were not dedicating sufficient resources to technology, causing us to fail to take advantage of oppor-tunities for improved efficiencies or enhancements that would benefit customers and improve our competitive advantage. So we decided to set aside 4% of revenue for technology every year.”

Tom adds: “It’s been a terrific improvement. When we need an upgrade, we just do it. There’s no guilt or anxiety. The money is there.”

“Of course, the decisions don’t happen in a vacuum,” Melissa continues. “Tom and I run the technology division, but the employees are involved in most decisions that involve more than simple upgrades. We have regular meetings within the agency to discuss technology problems and ideas. These meetings are held before regular work hours and employees are paid overtime for attending. It’s a relaxed atmosphere, where we discuss our technology needs over breakfast. The meetings have been really successful.

“One of the ideas that was discussed and approved was using Outlook for unified messaging,” explains Melissa. “Employees can access everything through their hand-held devices. That’s especially important for people who are on the road a lot. But, we also introduced a system where their e-mails are read to them electronically so there’s no texting or reading while driving.”

“We also have an in-house help desk that employees can come to if they are experiencing problems,” Tom notes. “Employees also post items on SharePoint about ways they have overcome problems or found new, more efficient ways to use our technology.

“One side benefit of CBDDoc is the reduction in paper,” Tom adds. “Mail is scanned and routed electronically. For most of our employees, their default is now PDF, not the printer. We’ve had at least a 50% reduction in paper. And that has translated into some real savings. We recently cancelled off-site storage to the tune of $2,000 a month.”

Benefiting benefits

“Technology has been a huge differentiator in my area (life and group benefits, which represents about 22% of revenues),” John points out. “There is very little competition in the group health arena. Clients could go anywhere. We partner with our select group of clients and leverage technology for their benefit. For larger groups, we do most of the work for them, such as adds and deletes. New technology makes it possible for us to do this efficiently and accurately.

“Of course, technology provides only part of the service. Our people also are key differentiators in helping us retain current clients and land new accounts,” John continues. “They are always ready to assist clients with any problem, even if it does not involve insurance. We recently had a client with 600 employees that had experienced turnover in the human resources (HR) area. We heard about the problem and met with the client and said, ‘Before you replace the person, let’s talk about what we are doing and what we can do.’

“After that discussion, the client decided not to replace that person and to rely on us to fill the gap. The client is very pleased with our staff and our HR assistance. We can leverage our expertise and work more efficiently on their behalf. Everybody in the department is excited about what we can do for our clients. Every day we are looking to do more,” John says.

Of course, the commercial property/casualty business, which represents 70% of revenues, remains a very important area for Daly Merritt. “Many of our clients have experienced a tremendous downturn in their businesses,” Marty says. “This has put significant pressure on their bottom line as well as ours. But, at the same time, it has made our risk management services even more important for them.

“Eliminating or mitigating losses is crucial in hard times, and we have always been an important partner with our clients in their risk management efforts,” he adds. “Thanks to this, we continue to enjoy excellent retention from our current clients and they regularly recommend us to their peers, which has allowed us to grow our business. Even with the soft pricing and economic downturn that reduced premiums for most of our clients, we were still able to increase revenues in 2009, and we’re on par to do so again this year.”

The future

Daly Merritt is committed to its independence and fully intends to be around for generations to come. As Marty concludes: “Upon the advice of our carriers and trusted advisors, we have focused on the continued perpetuation of our business by transitioning through three generations of management. The owners’ ages now range from 25 to the early 50s. Although we have received several offers to acquire Daly Merritt from respected financial institutions and national brokers, our energy levels remain high and we intend to continue to expand our operations as long as we possibly can.”

Rough Notes is proud to recognize Daly Merritt, Inc., as our Marketing Agency of the Month.