William Rothwell (second from left), president and managing partner of Universal Insurance Services in Grand Rapids, Michigan, is presented with the 1999 Marketing Agency of the Year plaque by Tom McCoy, Rough Notes editor in chief. At left is Elisabeth Boone, CPCU, associate editor of Rough Notes; and at right, Nancy Doucette, senior editor.
Universal Insurance Services (UIS) of Grand Rapids, Michigan, is the RoughNotes Magazine Marketing Agency of the Year, winning the honor by an overwhelming number of votes from Rough Notes readers. UIS, featured in last September's issue of the magazine, is an 18-year-old firm with 65 employees, five divisions and revenue per employee of $110,000. It has undergone a transformation of its income stream over the past six years--and, in the process, gained confidence that the soft market is nothing to fear.
"We believe that the agency brokerage side of the business is the place to be--we're in the catbird seat right now," says UIS President and Managing Partner William J. Rothwell. "There are a whole lot of opportunities out there as long as you keep your eyes open."
In 1994 Rothwell began his search for new opportunities. At that time the agency had been in business for 12 years and 93% of its business consisted of commercial lines accounts being written in traditional ways. Rothwell and the other owners decided that diversification was their best hope for gaining control over the soft market. A breakdown of their revenues today, across five divisions, shows how far they've come:
Commercial Lines (50% of revenues); Personal Lines and Small Commercial (10%); Marine (12%); Life, Health & Benefits (8%); and a third-party administrator division (20%).
This latter division is where the diversification process began. In 1992 Gary Cheesman one of the UIS partners, had a golf course conversation with a senior executive at Amway Corporation, a major manufacturer of consumer products based in Ada, Michigan. It led to the opportunity to quote on the life, health and disability business
of hundreds of thousands of independent business owners (IBOs) affiliated with Amway nationwide. Universal got the account.
Then began an 18-month process of setting up the new Universal Distributor Benefits (UDB) division. The person tapped to run it, Pamala Bannick, had been with the agency for less than one year, having started as a temp in personal lines before moving into the claims department. "One of the owners, Dave Drake, remembered that my resume had listed experience in group life and disability," Bannick recalls. "They asked if I'd like to join them in a start-up program and manage the division."
Bannick began by working with a contract computer programmer to build software to customize the needs of their newly established call center. The call center was initially staffed with only four employees. After a year and a half, dental coverage was added to the program, followed in 1997 by homeowners and auto. In 1996 they also expanded the life/health offerings to IBOs in the Canadian market which also later expanded into auto and homeowners.
The division grew to as many as 23 employees, working two shifts from 8:30 a.m. until 10:00 at night. Eventually, streamlined workflow and increasing operational efficiencies resulted in paring staff to its current level of 10 highly qualified and cross-trained employees working one shift.
UIS currently insures about 17,000 lives via the TPA. The department is a fully functional sales, underwriting, policy issue/service and accounting team. "It is because of this team's dedication and commitment that we are the success we are today," Bannick adds. "All team members take shifts on the phones, even our optical imaging technician."
"It's a business with a lot of transactions and transmissions," Bannick continues. "We now refer to our call center as a communications center, to emphasize that the Internet is a growing part of the account handling process." IBOs can now choose to set up their own Internet-based companies powered by Quixtar, Inc., a sister company to Amway that launched last September. According to Bannick, "Quixtar provides us the opportunity to allow Independent Business Owners to link to our site, which receives some 50,000 hits per month."
Bannick maintains personal contact with large numbers of IBOs by attending 10 to 15 of their conventions each year. The close tie between UIS and the IBOs pays dividends for both UIS and Amway. "When we receive notification that an IBO is not renewing his/her Amway membership, which results in the loss of insurance coverage, we contact the IBO," Bannick says. "In 80% of the cases, we're able to convince the IBO to renew the membership and maintain the valuable insurance coverage."
As for other possible TPA opportunities, Bannick says, "We would welcome the opportunity to develop more TPA programs, especially since the Internet now allows us to operate more efficiently. However, we will look only at new markets that will not compete in any way with the Amway program."
While UIS was building the TPA business into a significant profit center, it also was expanding its penetration of the Marine market. This is an important class of business in western Michigan because of the proximity of Lake Michigan and many smaller bodies of water. The agency already had the endorsement of the Michigan Boating Industries Association (MBIA) when in 1996 it received the endorsement of the Marine Operators Association of America (MOAA)--a nationwide network of marine businesses. A year ago UIS formed an agency-owned captive in order to provide another coverage alternative to marina owners who are MOAA members. "Already the captive has produced $1 million in premium," Rothwell notes.
With its new divisions providing increasing revenues in niche markets, the UIS owners turned their attention toward bolstering the business that has been the agency's bread and butter since 1982--traditional commercial accounts. "We're still a generalist agency," says Randy Phelps, vice president and one of the firm's nine partners. "We do have important niches, but three out of our four biggest producers would consider themselves generalists."
To bolster the market penetration and retention of commercial business, UIS hired a marketing manager, Kim Ross, in 1998. She installed a system of contacting clients and prospects at least six times a year--"meaningful contacts," Ross emphasizes, "such as sending them newsletters and risk management articles."
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Honorees at Rough Notes' 11th Annual Marketing Agency of the Year award dinner included William J. Rothwell, (top left), managing partner of Universal Insurance Services, Inc., selected by Rough Notes readers as this year's Marketing Agency of the Year. In accepting the Marketing Agency of the Year award on behalf of UIS, Rothwell emphasized the importance of agencies making a determined commitment to growth. Top right, Bill and Sally Rothwell appear with Dennis Pillsbury who wrote the cover story which featured UIS for the September 1999 issue. Center right, editorial advisory board member Greg Belton (left), of Hunter, Keilty, Muntz and Beatty of Toronto, Canada, meets with Larry France, editorial director for Rough Notes' The Insurance Marketplace. Bottom right are (from left) UIS partners Gary Cheesman with his guest Ann Lies and Randall Phelps. Lower left are UIS partners John Chiazza and Kevin Whaley. |
Prior to coming to UIS, Ross had been doing similar work at a competing agency. UIS partners kept wondering why this agency's producers often were able to get in to talk to UIS clients. "The marketing effort was paying off there," Ross says, "so UIS asked me to bring the process over to them." She did so, taking some of her own ideas, formalizing them with the help of agency consultant Jim Cecil and tailoring them to the needs of UIS.
One measure of the success of the UIS marketing effort: Its commercial client retention rate is 94%. "We work as hard at keeping our current clients as we do attracting new ones," Ross adds.
"From day one we let Kim set the marketing budget and decide how the money would be spent in branding Universal," says Rothwell. "It definitely pays off, but it doesn't happen overnight. Some agents set aside a big chunk of money for advertising, spend it once, and then when business doesn't pour in, they discontinue the marketing effort. You have to be patient and allow multiple contacts to work for you."
Ross is paid 20% of the first year commission on any business that a producer lands as a result of her marketing efforts.
What the marketing effort accomplishes, Kim says, is "to keep the producers from spinning their wheels." Phelps agrees. Without such a systematic approach, he says, "You continue leaving voice mails and playing phone tag with a prospect or client for a month. Eventually you fail to follow up. But with Kim's marketing system in place, opportunities never get away."
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| Photos counterclockwise from bottom:
Ron Pitcher of the Pitcher Agency, Palatine, Illinois, with Sharon Gdowski of Rough Notes. Rough Notes employees gather at the Agency of the Year celebration: Left to right are Rachelle Striegel, assistant editor, Rough Notes Magazine; Nancy Doucette, senior editor; Carolyn Pringle, advertising coordinator; Charlene Taylor, controller; and Sam Berman, executive vice president and COO. Lester Allen (left) of Universal Insurance Services, meets with Mark Rollins, The Rollins Agency, Tuckahoe, New York and John Love, AH&T, Inc. Leesburg, Virginia. Walt Gdowski, president and CEO of The Rough Notes Company. Frank Schultheis (left), Schultheis Insurance, Evansville, Indiana, with Bob Bourdeau, Al Bourdeau Insurance Service, Flint, Michigan. Keynote speaker Roger Sitkins, The Sitkins Group, Fort Myers, Florida. |
Growth via acquisitions has not been a big part of the UIS strategy. "We did acquire one small agency to strengthen our personal lines department," Rothwell says, "but we prefer acquiring producers to acquiring agencies. When you buy an agency, you have to re-mold it to fit your culture. We move a little too fast here to spend time doing that."
The agency devotes almost 5% of its operating budget to technology-related expenditures--equipment, maintenance, software and training. "It's the key to our survival and our productivity," says Rothwell. "When I look at Benchmark studies of insurance agencies, I'm astounded at how little the average agency spends on technology."
UIS is characterized by an unusual ownership structure, which features nine equal partners. Rothwell continues to produce business but spends more time in his role as managing partner, overseeing the strategic direction of the firm. He attends meetings of several agency groups including the Sitkins 1%er group and Network 2000. At these meetings, he says, "Agents willingly share ideas with each other. Most of what we have achieved in our agency is simply ideas we've adapted from progressive agents in other parts of the country."
All UIS employees are eligible for annual bonuses that are based 50% on the results of the agency as a whole and 50% on the results of their division. To further enhance employees' buy-in to agency goals, the agency uses an unusual job/salary review process. Each employee is reviewed not only by his/her supervisor, but also by the individual's co-workers (anonymously).
"We call it a 360 degree review," says Rothwell. "It gives us a much truer picture of an employee's contribution and eliminates the biases which a single individual might have."
For an agency that has come so far in the last six years, what opportunities lie ahead? "We're about to add a financial products producer," notes Rothwell. "We want to capitalize on the trust our clients have in us by bringing additional financial services products to them, including 401(k) plans. We've also recently added a third producer to our life, health & benefits department to keep up with the tremendous opportunities in those lines."
With the help of this new producer, Phelps adds, "We plan to be particularly active in the long term care market, including selling the product to companies for their key individuals and on a group basis.
In fact, Phelps says, the agency plans to do an increasing amount of cross-selling of other coverages as well. "We're always looking for new customers, of course. But this year we're looking for 20% of our overall growth to come from cross-selling."
On the management side, Rothwell says, UIS plans to address its perpetuation concerns. "All our partners are between 40 and 50 years old," he points out. "We know that presents a perpetuation problem, and it's one we plan to address. We want to give ourselves some options.
The agent-readers of Rough Notes whose votes made Universal Insurance Services the 1999 Marketing Agency of the Year were impressed and inspired by the agency's game plan and the way it is being executed. One of them described UIS as an organization of "multiple profit centers, vertical growth and employees as true partners--a model agency for the new millennium."
Bill Rothwell is upbeat and assured about the future of independent agents who make a determined commitment to growth. "There are so may different places and different ways that the intermediary can endear himself to the end user of our product that there's no reason not to make a ton of money in this business and have a good time doing so." *
©COPYRIGHT: The Rough Notes Magazine, 2000
