NICHE TO BE UNIQUE
Axis Insurance Services and its sister company
PL Risk offer alternatives for underserved
clients and hard-to-place risks
By Lori Widmer
Where there are coverage issues in the market, Mike Smith sees opportunity. Twenty-four years ago, Smith, founder and CEO of Axis Insurance Services, LLC (AIS), a Franklin Lakes, New Jersey-based professional liability insurance retail broker with national reach, decided there was a better way to sell insurance.
When Smith, a self-described “re-covering CPA,” observed the market, he realized that the insurance agents and brokers professional liability market as well as the commercial real estate market had a fair bit of business that simply didn’t fit the standard insurance application. “There were a lot of complicated risks out there that just didn’t fit the mold,” he says.
He cites the example of a large commercial real estate company. Before AIS, that line of business would be written on a form that’s designed for residential real estate agent coverage. “That’s not going to work. It doesn’t work,” he says. So Smith created a path to coverage. The result: customized professional liability solutions for agents, brokers and the commercial real estate market.
It started, he says, as a “vision of doing it right.” What began as a company run out of his basement has grown into a specialty brokerage with nationwide capabilities. “We have a different approach than just selling insurance,” says Smith. “We audit every client. We know what the risk is. We do all those things these other companies say they do but don’t.”
That practice does create a higher degree of risk, Smith says, but it does something else, too. It builds in retention. “Our retention rate is phenomenal—well in excess of 90%.”
Such attention to detail paid off. Axis Insurance was quickly successful, and Smith took on a partner in 2012—his business partner and executive vice president of sales, Javier Gonzalez. Together, the pair started placing two lines of business—retail professional liability for insurance agents and brokers, which comprise about 800 clients today, and the same for commercial real estate, which adds another 350 clients to the roster.
The audits and specialized risk placement seems to be a winning formula. AIS gross premium has risen from a 2008 total of just under $7.6 mil-lion to a 2022 total over $29.5 million. The firm has realized 20% to 30% growth rate year over year.
“We have a different approach
than just selling insurance. We audit every
client. We know what the risk is. We do all those things
these other companies say they do but don’t.”
Founder and CEO
Axis Insurance Services, LLC
That includes growth coming from the firm’s other entity—PL Risk Advisors, Inc., the wholesale division of AIS. It was a business that, much like its parent company, was born of customer need. “We were working with many insurance agents and brokers who were coming to us asking to place risks [in the wholesale market]. I was doing it as a favor for the clients whose E&O business we were writing. I woke up one day and realized that 20% of our business was wholesale,” Smith says.
Yet, there was the dilemma of are tail broker getting wholesale appointments. Hence, PL Risk was formed in 2012 to create a presence in the wholesale E&O market. Today, PL Risk places crime, D&O, E&O, cyber, fiduciary liability, EPLI and professional management lines in the wholesale arena.
Gonzalez heads up the unit and says that, much like Axis, PL Risk operates with collaboration in mind. The business partnership is crucial to the company’s success, he says. “We do not have infinite resources, so we rely on partnership relationships with our retailers and carriers to provide solutions for hard-to-place or complex risks others do not have the expertise or time to evaluate and provide a solution for.”
Those partners are chosen carefully, Gonzalez says. He says for a retailer or carrier to be considered, they must be “willing to commit to production, solutions and competitive compensation. We in turn commit high-quality service, attention to detail, hard-to-place solutions, competitive compensation and high hit ratios with our partners. That creates an experience of professionalism and problem solving our retailer and carrier partners appreciate with an end result of higher quality production and a better business relationship for everyone involved.”
Not only is it a great way to service those customers whose only option might be in the wholesale market, but it serves as an avenue for growing the business. “Just on the retail PL side, we were in a max capacity situation when our premium started to hit $250,000 to $300,000,” says Smith. “By the time we get to that level, we’re competing with large brokers who brought the whole plethora of products. If we were going to compete in larger premiums, we had to go wholesale.”
And compete they do. Gonzalez says that part of the success of AIS comes from those very partnerships he and Smith have formed with carriers and retailers. “Having worked with most of our key carrier partnerships or having personal relationships with their management for 10-plus years allows us to approach them selectively due to our knowledge of their appetite. Those same strong relationships allow us to have them make exceptions where warranted for business they would otherwise decline to quote.”
Because much of the business is hard-to-place risks, Gonzalez says, each submission is detailed and includes as much information as possible for underwriters to see into the risk. The relationships with underwriters, he says, give AIS and PL Risk the ability to explain risks and get exceptions for individual risks that might otherwise be declined. Plus, retailers get plenty of help with such submissions. “Educating our retailers on the information that really matters and helping them put together a completed detailed submission helps put them in a better place with their clients who appreciate the attention of detail to various parts of their business that were likely neglected in the past.”
“Educating our retailers on the information that really matters and
helping them put together a completed, detailed
submission helps put them in a better place with their clients
who appreciate the attention of detail to various parts of their business that were likely neglected in the past.”
Executive Vice President, Sales
Axis Insurance Services, LLC
That kind of attention to detail and relationship has helped the business grow. Yet, growth comes with the need for additional staff. In fact, in one of the toughest labor markets in recent history, AIS and PL Risk managed to bring on eight employees in 2022 and four already in 2023, and is looking to add three more employees to its current roster of 41 staff members. Having a virtual workforce, Smith says, has allowed the company to expand its talent search across the country.
No matter where staff is located, Smith says doing right by them is the key to the company’s success and growth. As pandemic-weary workers in all industries looked for change, AIS and PL Risk boast enviable employee tenure, with most employees having been with the company for at least 10 years.
That’s quite an accomplishment amid the Great Resignation and the myriad attempts by recruiters to lure away employees. To counter those attempts, Smith says the company gave raises and increased healthcare contributions. The company, he says, does its best to pay well and to reward its people for their hard work. For example, employees received raises last year, but they also received what Smith calls a “life sucks” appreciation bonus for working hard through pandemic-driven adversities and ensuing economic impact.
Such high employee retention allows the company the stability to explore new verticals, which Smith says are being added as the market demand grows for each one. Two years ago, the company added cannabis coverage to its lines of business and is developing a miscellaneous professional liability program, which is in the process of being finalized. The company is also looking at some acquisitions to grow the company into new areas.
The secret sauce
What does it take for Smith and Gonzalez to be interested in a line of business or an acquisition? “It has to be unique. Where can I deliver something that somebody else can’t?” Smith says. The cannabis industry in particular has a unique set of risks, which is what caused Smith to step outside of his comfort zone and offer placement.
A growing area of risk, he says, is often an area of opportunity. He cites the cyber market, which most insurance carriers were on board with. That is, until the risks began to outweigh the coverage limits. “We figured if we could establish ourselves, when the market turns we will already have established a book of business,” Smith says. Sure enough, as the market tightened and insurers pulled back, AIS and PL Risk brokers stepped up to provide solutions for clients with specialized needs.
When searching for acquisitions, Smith says he and Gonzalez look for those types of niches. “If I saw a niche, a unique broker placing something like allied health workers, for example, that’s absolutely something that we would consider. We force ourselves to go toward those larger risks. Our average client insured is going to be somewhere from $3 million to $50 million in revenue.”
While taking on unique risks is a significant part of the success of AIS and PL Risk, so is the part that Smith calls a lost art—sales. “Other companies are growing by acquisition. But actually knocking on a door or flying to San Francisco to have lunch with a client? I know my clients. I know their kids’ names, where they go to school, we’ve talked about football. People buy from people they like,” Smith says.
It’s a step that Smith says is essential to be able to compete against the larger competitors, who have instant name recognition and proven reputations. “I have to do it better than they are.”
It appears to be working. “What excites me most is knowing how much potential we have for future growth as we expand the relationship and partnership approach that has gotten us to where we are now to all aspects of our company,” says Gonzalez. “We’re also now in a better position to provide those tools, resources and experiences needed to develop new employees and producers to allow them to exceed sooner and with more quality relationships and business than we had in the past. In short, learning from our successes and failures will put our companies in a position for exponential growth following the same model we value today, business relationships vs. trans-actional ones.”
Even so, sometimes doing one’s best isn’t enough and a customer moves on. Smith says the company lost an account that they had had for 15 years, and the disappointment was apparent in his tone. “It was a $9,000 account, and the client moved the account over 800 bucks,” he says. “I had to say to the client, ‘If those 800 bucks is really, truly your gig, I’m not your broker.’”
Instead, Smith and Gonzalez are brokers who know their market, understand their carriers’ appetites, and know which carriers will write a particular program. They also understand how to position client business so that carriers will accept what on paper could look like an unattractive loss history. One client had a $5 million loss that exhausted their policy limits. Smith worked with the clients to glean the details. “I discovered it was a bad loss related to one development related to one thing. We were able to get in and get them reestablished limits for $5 million.”
The same level of service occurs on all accounts, he says. Some cyber clients were uninsurable, says Smith. The reason: The protections were not in place to prevent intrusion. “We went in and said, ‘Let’s back up the renewal process for five months.’” From there, he and his team reviewed the company’s cybersecurity processes and noted that several basic protections were missing. “We proactively went through these accounts. Over the course of a few months, we got them to a point that made them insurable.”
It’s that extra level of service for clients who are struggling to find coverage that differentiates AIS and PL Risk from other brokers. Smith says the goal is to get the customer’s business placed and protected. Because when clients win, so does the business that serves them. n
For more information:
Axis Insurance Services, LLC
PL Risk Advisors, Inc.
Lori Widmer is a Philadelphia-based writer and editor who specializes in insurance and risk management.