Marketing Agency of the Month

Insurance with attitude

This Philly agency practices "extreme" service

By Dennis H. Pillsbury

If risk management were part of the X-Games, then Bartlett & Company, Inc., Philadelphia, would be a leading contender for a gold medal. The agency has an attitude that focuses on challenging the status quo for the benefit of its clients. This "extreme" approach to client service occasionally forces the agency to stand up to its insurance company partners and work with them to change what has become standard business practice.

Here's an example. The agency has a niche in real estate and its clients include the owners of shopping malls. "For years, insurance companies have simply paid slip-and-fall claims because the cost of defending such small claims was more expensive than settling," says agency President Richard F. Bartlett, ACA, ACII. "Of course, the costs of these settlements were passed on to the insured and became an accepted cost of doing business. But not to us."

The people at Bartlett looked more deeply into the situation and found some startling statistics. In total, these claims accounted for about one-third of the total insurance costs for property owners. They also found that 70% of these "slips and falls" occurred on flat surfaces. It became clear from their study of the situation that something more than simple accidents was happening.

Unlike the insurance companies, which saw each "accident" as a relatively small claim that was easier to pay than fight, Bartlett looked at the whole picture and found that what was happening was that "injured" people were telling their friends about hitting the "insurance lottery," and more claims followed. Once Bartlett persuaded its company partners to fight claims that looked iffy, the number of claims dropped precipitously. And once the insurance companies saw and appreciated the reduction in claims, they changed from reluctant followers of the Bartlett philosophy to strong advocates.

At the other end of the spectrum, Bartlett worked with every client to increase their limits by explaining the real purpose of insurance—to protect the insured against those losses that could potentially bankrupt them. "We don't sell insurance," Rich says proudly. "We are advocates for our clients, educators about insurance, and risk managers for those middle market clients we represent. Teaching our clients about the need for higher limits is part of that process. We often see real estate owners who are failing to carry adequate limits because their brokers have not advised them about the potential costs of litigation.

"When you consider the fact that a recent case in Philadelphia (Marcus Gustafsson vs. Trigen-Philadelphia Energy Corporation, Alexander Evans, the City of Philadelphia, Roman Security Systems, Inc., Allied Barton Security Services, PNC Bank N.A., et al., No. 060601182) resulted in a jury award of $85 million that was later reduced to $22.9 million under a pre-verdict high/low agreement, it's easy to see that high limits are a necessity. And it is relatively inexpensive to add more coverage at the top end," Rich points out. He also points out that, in addition to high awards, the frequency of premises liability cases also has been rising. In 2011, premises liability cases saw significant increases of the mean (up 48.1% to just over $2.0 million) and median (up 6.9% to $215,718) plaintiff's awards.

The process

Of course, the higher limits and increased scrutiny of slip-and-fall claims are not simply pulled out of the air. They are part of a complete risk management package that Bartlett puts together for its clients and prospects. It starts with risk identification and analysis via an in-depth audit of the insured's current coverage to identify any coverage issues, as well as a review of the management program to see where additional risk mitigation techniques might be appropriate.This would include an analysis of claims trends, a review of the valuation of the real and personal property using commercial valuation software to determine if the property limits are adequate to pay for rebuilding in the event of a catastrophic loss, and analysis of any contracts to determine their role in risk transfer.

Bartlett then designs a customized risk management and insurance program that would include loss prevention strategies that would minimize third-party liability claims, as well as ensure a robust defense against such claims when they occur. A dedicated claims team is established and claims handling protocols are put into place.

Perhaps most important, however, is the follow-up. Bartlett meets with clients regularly throughout the year to make certain the program remains pertinent to the client's needs. Regular risk management bulletins and advice specific to the client's business are provided. Bartlett also monitors regulatory changes to make certain that coverage reflects those changes. Claims are carefully monitored with an eye toward quick resolution.

"Our ultimate goal is to create a win-win-win situation," Rich says, "where our customers see a reduction in their risk management costs, where our company partners enjoy profitable business and where our brokerage maintains good, long-term relationships with both of these parties."

The beginning

Bartlett & Company opened its doors in Philadelphia in 1997 to serve middle market businesses involved in real estate ownership, the technology sector, and multinational enterprise. Its affiliate, Bartlett & Company Ltd., Leeds, England, was founded in 1940 by Rich's grandfather, Fred, who brought an interesting philosophy to the firm that continues to be reflected in all the members of the Bartlett Group today: "Never over-sell." The philosophy stressed the importance of providing a client with something he wanted or needed. That was the way to earn future business and establish long-term relationships.

Fred's son, and Rich's dad, Michael, joined the firm in 1965 after training with the Royal Insurance Company. He later took over leadership of the firm and was instrumental in expanding the Bartlett Group into international markets as the needs of the broker's clients required multinational experience. Today, the group has nine offices in five continents and is able to offer a unique level of international expertise to the growing number of companies expanding beyond their national boundaries.

As Linda DiLeo, vice president, points out, "more than a quarter of the middle market businesses in the United States are engaged in international markets and that number is growing rapidly. Thanks to our international presence and expertise in international insurance needs, we are uniquely capable of putting together a global insurance program for businesses based in the United States.

"And many companies don't recognize just how important it is to have a broker who understands the insurance requirements of other countries," she continues. "There are a number of countries that take a dim view of non-admitted insurance. Businesses need to know when they need to acquire insurance coverage from a local insurance company and how to do so. The penalties for failure can be significant." She points to an example where, in 2009, Argentine insurance regulatory authorities fined an insured eight times premiums paid, and a broker 15 times premiums paid for transacting life insurance business with a foreign life insurer.

"But that is only the tip of the iceberg," Linda adds. "It is vitally important for companies operating overseas to have local claims representation and loss control. They also need to have a broker who can make certain that there are no gaps in coverage for employees operating in overseas locations." One example is workers compensation, which may not fully extend to injuries which occur outside the United States, so an endorsement to the workers comp policy is needed or coverage needs to be provided through an international package policy.

"Thanks to our global reach," she says, "we are able to put together an international insurance program that is comprehensive and takes advantage of economies of scale so we can offer a program that is both complete and fits the budget of our client. Probably more important, however, is our regular monitoring of legal and regulatory changes in countries throughout the world so our clients will be quickly advised whenever a change in coverage is needed."

Rich goes on to say, "We're also very proud that our U.K. affiliate has recently become a Lloyd's Broker. This represents the next step in our development. Being a Lloyd's broker will open up new markets for us and will be particularly useful for our London office. It is also a significant advantage for our overseas offices to have access to a Lloyd's Broker within the Group—the Lloyd's name is known and respected throughout the world."

The best of both worlds

Rich took over leadership of the Philadelphia firm three years ago after working at PricewaterhouseCoopers. (Rich's ACA designation is the equivalent of a CPA, hence his tenure at PwC, and the ACII indicates he received an advanced diploma from the Chartered Insurance Institute where he specialized as a consultant in corporate governance, risk and control.) He found his transition to the United States insurance milieu quite easy and told us he embraced America's "Can-Do Spirit" and sense of optimism.

"There is a strong movement here to elevate the insurance broker to the level of a business's lawyer or accountant and I am fully on board with that. Our entire philosophy is built on our becoming a key partner in each of our clients' businesses, providing them with important risk management advice that will ultimately improve their bottom line. Our culture of doing business emphasizes strong technical skills and high service standards, tailored towards the niche markets we serve.

"I am certainly convinced that our clients view us as partners. We have made it very clear to them that we don't sell insurance; we provide a risk management service that will help them reduce overall risk transfer costs.

"We certainly can't take credit for a trend that many other independent brokers here in the United States have been instrumental in creating. But we are quite happy to play a small part in changing public perception. After all, this is an important profession that provides an essential service to virtually every business in the world. From California to Kampala, we're proud of what we achieve day in and day out for our clients and the relationships we have built with our carriers."

Rich concludes by noting that "although our firm has British origins, we are definitely are very much Philadelphians and Americans in the way we view our role."

Bartlett exemplifies those virtues that have made the independent agency system so successful over the centuries. Rough Notes is proud to recognize Bartlett & Company as our Marketing Agency of the Month.