And too much needs help to be usable—a risk management opportunity

Many of you reading this may not be old enough to remember when you could dip your hands in a stream and drink the water without fear. For the most part, if the water was moving and looked clean, it probably was. And, for me, that was in New Jersey, where I grew up in the county closest to New York City.

Today, we wouldn’t think about drinking water from a stream without putting it through some type of purification system, and the water we get in our cities and towns often smells and tastes like the chemicals used to make it potable. Is it any wonder that sales of bottled water in the United States reached $11.8 billion in 2012, according to the International Bottled Water Association (IBWA), a 6.7% increase? Consumption jumped 6.2% to 9.67 billion gallons, or an average of 30.8 gallons of bottled water per American.

An independent agency in Indianapolis, The McGowan Group, saw this trend years ago and recognized the opportunity it represented to bring its knowledge of risk management to the water treatment industry—and to be one of the first to do so. What became quickly obvious was that the quality of water was not just a concern for drinking water but for the water used in commercial endeavors—so-called “processed” water—and the people responsible for assuring the quality of that water were in need of risk management help.

It was a propitious decision. As it turned out, the agency was partnering with a recession-proof business just before the onset of the recession. Agency President Hugh M. McGowan, CPCU, points out that it took “a serious commitment to become part of the industry. We attended their conferences and conventions, starting out with a group of water treatment professionals whose meeting was primarily for networking and exchanging information. There were no exhibits. Nearly everything took place at informal meetings over lunch or dinner or drinks. And we were the outsiders. We started out by listening and learning what their problems and concerns were and eventually started offering solutions. It took between seven and eight years for us to be accepted as their risk management partner. I can remember how great it felt when they started coming to us with questions and seeking our advice.”

Doing business the right way

Michael J. Highum, CPCU, vice president, picks up: “This ft in perfectly with the way we do business. Our approach is steady and thoughtful, with a significant personal touch.

Our goal is to become a partner with every one of our clients, regardless of size. They are all important to us.”

The “steady and thoughtful” approach dates back to the agency’s founding in 1930 by William K. McGowan Sr., Hugh M.’s grandfather. And while that was always the approach with clients, there are some who might question William’s decision to start up a new business during the Great Depression. But the results speak for themselves; the agency has grown and prospered, enjoying positive growth nearly every year of this latest recession.

“The positive growth is a testament to our decision to identify areas of specialization,” William’s son and chairman of the agency, Hugh B. McGowan, CPCU, maintains. “But that doesn’t mean that we have abandoned those clients who have been with us from the beginning. We continue to provide the excellent service that has kept them as loyal clients. In fact, to show how important we consider renewing our current clients is, we pay the same compensation on renewal business as we do on new business. That’s part of our culture and we’re very proud of that.”

A resource for clients

“We see our most important job as being a resource for our clients,” Hugh M. says. “That’s really the reason we were able to become a partner with the water industry. They saw that we were there to help them solve problems, not to sell insurance. And that has paid off as, not only do we have clients from this industry across the country and internationally, we also insure the Association of Water Technology (AWT), an international organization representing water treatment professionals around the world.”

“There are not a lot of carriers that write this business,” Mike adds, noting that, as a resource, finding the right carrier for each client is an “important part of our job. We purposely aren’t centered around one carrier because they can be fickle. After all, our ability to market to our companies is key and part of the value-added we bring to all our clients. We have to be trusted advisors for them as well as for our clients. We want them to understand that when we present them with a piece of business, it should move to the top of the pile. And we hope for the same treatment when one of our clients has a claim.”

Mike continues: “One of the great things about this niche is that we’re mingling with bright, energetic entrepreneurs. They’re a lot like independent agents. Most of the businesses in this area are family-owned. Of course, there are a few well-known jumbo accounts, but that’s not our target.”

“The fact that we are a family business as well really helped us relate to the people in this niche,” Hugh M. notes. “We’re dealing with chemists and engineers and didn’t really speak that language—although we are learning the more we discuss their concerns—but they are also independent business people and that is where we are able to immediately establish common ground.”

He continues by pointing out that this first niche has led the agency into related areas where the expertise developed over time helped out. “We’re working with a number of businesses that are concerned with pollution liability. Even though the water treatment businesses are dealing with the ‘lighter’ chemicals that have minimal pollution risk, we still have had to deal with that potential and that has given us an entré into businesses that have greater risks.”

Mike says that “another area where we have become trusted advisors is with what I like to call ‘serial entrepreneurs.’ These are people who like to start up new businesses. Our focus is on entrepreneurs who work within information technology, life science and alternative energy fields. They do have similar risk concerns and we have been able to identify those areas and help them solve problems.” He points out that McGowan Insurance serves on the board of the Venture Club of Indiana, which is an organization that brings start-ups and entrepreneurs together with investment firms and private funding opportunities.

A genetic inclination?

While the McGowan Insurance Group prides itself on being very deliberate and careful with their clients’ risk management needs, it would seem that there is a risk-taking side to the family that emerges when times are at their worst. As noted above, William started the agency in the Great Depression. Well, his son and grandson built their own building during the height of the current recession.

The agency was committed to remaining in downtown Indianapolis, but had outgrown its location. So, in 2008, they bought land downtown and started working with the town planners to find an affordable way to build a 19,000-square-foot building on that land. With some help in the form of abatements and a lot of guts, since it was their personal money involved, the McGowans went ahead with the project. And this included finding tenants for the first floor and learning how to be landlords. By providing some incentives to the aforementioned tenants, McGowan was successful in bringing two firms (both of which have been successful) into space on the first floor and late last year, actually started receiving rent as the incentives ended.

“We were busting out at the seams at our previous location,” Hugh B. says. “We now have 29 employees, a far cry from the two that were here when I started.” Twenty-eight are licensed agents, with 20 on the support staff and eight producers. “We have 8,150 clients,” he adds, with a tone that suggests that he knows each one of them. “Each one is important,” he says. The agency finished last year with revenues just shy of $4 million.

“This is our city,” Hugh B. concludes proudly, “and we work hard to support it, not just by locating our agency here, but by volunteering our time and resources as well.”

Hugh M. notes that the agency established its “Do Crew,” a group of employees that coordinates projects such as donations for holiday food baskets for needy families, Adopt a Family, and adopting a classroom at a local school. Other “pay it forward” activities include serving as a corporate sponsor for Meals on Wheels, TCM International, Family Service of Central Indiana, and many others. A number of employees deliver for Meals on Wheels. In total, McGowan employees are involved in volunteering for more than 35 different organizations in the Greater Indianapolis area. Most recently, McGowan began focusing its charitable efforts on Dream Alive, a mentoring program for at-risk youths, which was established by Tarik Glenn, who played for the Colts for 10 years.

Rough Notes is proud to recognize the McGowan Insurance Group as our Marketing Agency of the Month. They have shown that they can successfully grow their business by finding niche markets, while still remaining trusted advisors for those people who contributed to their success from the beginning. They truly exemplify what is best about the Independent Agency System.