MARKETING AGENCY OF THE MONTH
The Web and a contrarian attitude boosts this California
agency to $4.3 million in revenue
By Dennis Pillsbury
Members of the Tegner-Miller Insurance Brokers management team are (seated from left) Chris Czuzak, CPCU, principal and Dave Nelson, principal. Standing (from left) are Suzanne A. Matheson, ACSR, managing director and Ken Miller, CPCU, principal.
One hundred years ago, the agency was operating out of this building in downtown Santa Monica.
Bill was fresh out of California State University-Northridge, and the agency was only a short walk from the beach. What better place to work?
Following the real estate mantra--location, location, location--Bill Aspinwall decided that the Chas. A. Tegner Company looked like a good place to start his career.
"I had a buddy whose father was in the insurance business and it seemed like a pretty good business," Bill explains. "So I started looking around." He went to a few insurance companies but quickly realized that the fact that he "liked to talk" made the agency side of the business a better fit with his talents. In his search for gainful employment, he visited the Chas. A. Tegner Company in downtown Santa Monica, California, and wound up working there.
"When I joined the agency in 1980, that brought the total number of people to four," Bill remembers. "There were the two principals, a receptionist/secretary and me. The two principals were looking forward to retirement--one was 65 and he actually retired a few months after I joined. The other principal was in his late 50s and wound up retiring 10 years later."
"It was a sleepy, old-fashioned agency that had been in business for nearly 80 years" Bill continues. "We didn't have any computers or even our own copy machine when I joined in 1980. If we had to get something copied, we went to the bank and used their machine. Our annual revenue was about $220,000."
Despite the sleepy nature of the agency, Bill recognized the enormous potential that it represented, so much so that he invited his college roommate, Dave Nelson, to join. Dave had entered the fascinating world of accounting but already was finding it not particularly to his liking. Bill talked to Dave about the agency business and Dave joined Tegner in 1982 and they started to grow the business.
When the older partner retired in 1990, revenues were just below $1 million. This year, the agency--now known as Tegner-Miller Insurance Brokers--celebrates its 100th anniversary with well over $4 million in revenue and 39 employees. And not only does it have a computer system and its own copy machine, it has implemented cutting-edge technology, including imaging, paperless faxing, "thin client" server access, carrier downloads and Internet access from every work station.
Bill & Dave's excellent adventure
"We owe an awful lot to Aetna," Bill and Dave both admit. "Bill and I went to the Aetna home office sales school to learn about insurance. And Aetna basically was financing our salaries through their Pro-Power program," Dave continues. "At the same time, we were giving them a really good, profitable book of personal lines business. In fact, we grew to become their largest personal lines agency west of the Mississippi. Our first computer system was their Gemini system, which they pretty much gave to us for producing business."
One event that proved pivotal was the approval by California voters of Prop 103 in 1988, an event greeted by the insurance industry in much the same way as a vampire attending Buffy the Vampire Slayer's birthday party. Some companies and agencies got out their stakes, preparing for a battle already lost. They declared Prop 103 Armageddon for the business, and a number left the market once they realized that the field had already been taken.
Bill and Dave took a contrarian view. Armed with garlic, holy water and a commitment from Aetna, they decided that this was the perfect time for even greater penetration of the private passenger auto market in California. And guess what? You could still find good business. Good risks remained good risks, and bad risks remained bad risks. The rules had changed a little, but the need for careful risk selection remained a constant. Tegner continued to provide a profitable book, enhanced by acquisitions of other agencies that had decided to sell out, and continued to enjoy substantial contingency income.
Bill Aspinwall, principal of Tegner-Miller Insurance Brokers.
Another pivotal year for the agency was 1994. "The year started out with some major plans under way," Dave says. "We were closing on the purchase of another agency and moving to the Sagitta system on March 1. It clearly was going to be a busy time." Then on January 17, Mother Nature intervened. The Northridge earthquake rumbled through the area. Tegner sustained major damage. A parapet wall fell through the agency's ceiling and took out their phone system. The front window, a huge sheet of non-tempered glass, shattered. Fortunately, the quake didn't happen during working hours so there were no injuries at the agency, but it did leave a mess in its wake. Although Tegner was taking claims the next day, it took more than a week to return to normal.
The quake also served to set several things in motion. "We were in a 100-year-old building," Bill says. "The quake made it clear that this probably was not the best location for our business and we started to look around. The quake also produced a huge surge in requests for earthquake insurance."
Adding the commercial lines component
In August 1995, "the consultant who had helped us set up an ESOP to fund our retiring partner's buyout came to us with an opportunity," Bill remembers. "Miller & DeCray Insurance Brokers in Santa Monica was looking for a merger partner. The consultant told us that Ken Miller had expressed an interest in merging with us. We were also looking for a merger partner and were very interested. Miller & DeCray had an excellent reputation and was primarily a commercial lines agency, while we were mostly involved in personal lines."
"The fit was perfect." Dave adds, "Almost none of our markets were the same, so it really added to our ability to offer many choices to our clients. Bill and I brought a lot of technology and management to the table, while Miller, along with his protégé, Chris Czuzak, offered a tremendous amount of experience in commercial lines. We consummated the merger on January 1, 1996, and became Tegner-Miller Insurance Brokers," continues Dave. "It's clear we wouldn't be where we are today without Ken's experience and expertise which have proven invaluable to our growth. Combining our individual strengths has created an environment that has proven to be far more efficient and productive than any of us could have imagined. Today, the agency is 55% commercial lines, 15% benefits and 30% personal lines."
Tai Park, (standing), IT manager, and Chris Czuzak work to continually improve the agency's Web presence.
The Web
"Early on, we decided that the Web was the way to go," Dave says. "SEMCI wasn't going to happen. Why would it? Why would an insurance company come up with a system that would help its competition? But the Web would bypass the whole problem. You can reach a whole bunch of customers and get in touch with a whole bunch of companies and they all have to use it or be left behind."
Bill continues: "In order to reach potential customers, we recognized that one of the keys was for people to find your Web site. You needed to come up high on the search engines to get a large number of hits. We set up quakeinsurance.net, followed by californiaautoinsurance.net and camedicalmalpractice.net. These sites all include online quotes."
Bill adds that they don't view the Web as a way to sell insurance, but rather as a way to bring the agency to the attention of people who otherwise would not know about it. "Some may purchase over the Web, but most people want to deal with a real live person. As we mentioned earlier, Northridge sent lots of people to us looking for earthquake coverage. Today, the current medical malpractice crisis has helped us. We have markets in 24 states and are getting 50 requests a week for medical malpractice coverage. We even get calls from major regional brokers asking us if they can access our markets. We started out just in the nonstandard med mal market but now are writing standard as well."
Leveraging the results
Dave points out that "we're always looking for opportunities to cross-sell. We view the medical malpractice customers as opportunities to write other business as well. One of the accounts that came to us through our Web site has turned out to be a million-dollar account, thanks to our cross-selling effort. We're adding workers compensation, property, liability and benefits. There's a pretty sizable group involved and we never would have even known about it if we didn't have the Web site. It's a real door opener."
He continues by noting that the agency benefits department is "our fastest growing area. We set up the department to take advantage of cross-selling opportunities and it now is producing over 15% of our agency revenue for us. We just hired a new producer who will be bringing in new benefits accounts and then we'll cross-sell the property/casualty. Benefits offers a tremendous opportunity for property/casualty agents," Dave maintains. "However, most do it poorly and wind up wasting a tremendous potential for additional revenue."
Service agreement with clients
One of the niche areas in which Tegner-Miller specializes is e-business, particularly those businesses that combine technology and entertainment. Santa Monica's close proximity to the center of the movie industry has made it a logical location for many of these companies. "We wound up writing the insurance business for an incubator company that found us through our Web site," Bill says. "That company provided service level agreements to the companies that it spawned and were looking for a similar agreement with us. We developed that for them and then pushed it out to our larger commercial and benefits clients.
(From left): Traci Zycha-Garcia, manager, Benefits Insurance Division; Kelly L. Samler, CIC (standing), director of operations; Jan N. Grant, CIC, manager, Commercial Insurance Division; and Lea Yovovich, chief financial officer.
"The agreement lets the client know what they can expect from our agency. We also spell out our privacy policy in the agreement. A lot of our clients don't even know that privacy is an issue. We spend a lot of time educating our clients about the issues in the insurance and risk management arena."
Dave says "the agreement raises us to a higher level. Our clients treat the relationship they have with us as a professional relationship. And we treat that relationship in the same manner. We expect all of our employees to be knowledgeable and helpful. We stress education. All of our account managers, for example, get at least a CISR and many have the CIC designation."
Continuing the tradition of civic and industry involvement
The Tegner Company was founded in 1902, by a young Swedish immigrant, Chas. A. Tegner, as an insurance agency and real estate office. Tegner and later his son and daughters ran the family business for more than six decades. They were active civic leaders who believed strongly in community involvement and Ken, Bill and Dave have continued this tradition.
Employees are encouraged to become involved in community organizations such as Rotary, United Way and other organizations that help make the community a better place in which to live and work.
Ken is involved in many industry and civic organizations. He was appointed national chairman of the CNA Insurance Company's Pacer advisory council, served as president of the Santa Monica Independent Agents Association, was a founding member of the General Insurance Network, and is a Santa Monica Rotarian. "
We're also involved in giving back to the industry that has been so great to us," Dave says. "We work with the state association--IBA West--and have served on many of the committees. Currently, Bill is the chairman of the Personal Lines Committee and I'm chairman of the Finance Committee. The meetings provide us with wonderful opportunities to talk with other agencies and share ideas. They've been very helpful. It's been a really good experience."
Bill and Dave's adventure, now joined by Ken and Chris, has only just begun. Their contrarian attitude and willingness to experiment should lead to additional innovations as this agency moves into its second century. *