MARKETING AGENCY OF THE MONTH
The Cambridge Group leverages legal and insurance expertise
to reach $120 million in premium in 28 years
By Dennis Pillsbury
Cambridge Underwriting Alliance, Ltd., (CUAL) brings together a diverse cross-section of entrepreneurs intent on building their own agencies: back row (from left to right) Dennis Shallal, Quest Insurance Agency; Council B. Irwin III, Irwin Insurance Agency; Maurice Evans, E&A Insurance Services; Gerry Prysock, LUTCF, LIC, Prysock & Associates Insurance. Front row standing (from left to right) Denise McHenry, CIC, AAI, LIC, president, CUAL; Kenneth R. Hale, JD, CPCU, CIC, AAI, LIC, chairman, CUAL; LaDell Mobley, The Mobley Group; (seated on edge of chair) Nawal Shallal, Quest Insurance Agency, Melissa Hall, A&M Insurance Agency. Seated (from left to right) Sandy Poole, Poole & Jackson Insurance Agency; Asya Vardanova, A&M Insurance Agency.
In 1974, Kenneth R. Hale, JD, CPCU, AAI, CIC, LIC, founded an insurance agency--Cambridge Underwriters, Ltd.--and a law firm--Hale, Stein & Murphy, P.C.--in an effort to provide clients with risk management services that combined legal and insurance expertise. And that was the start of The Cambridge Group, Livonia, Michigan.
Today The Cambridge Group has 120 employees in four Michigan offices (Livonia, Troy, Lansing and Grosse Pointe) and premium volume of around $120 million. The group is comprised of eight profit centers that provide property/casualty coverages, employee benefits, life insurance, pension and profit-sharing plans, and association management and insurance. In addition, one of the profit centers--Cambridge Underwriting Alliance, Ltd., (CUAL)--is an SIAA Master Agency with 34 member agencies on the property/casualty side. There are four principals--Ken Hale, JD, CPCU, AAI, CIC, LIC; Michael Hale, JD, CPCU, AAI, CIC, LIC; Kathleen B. Gelardi, CIC, AAI, LIC; and Denise McHenry, CIC, AAI, LIC.
Ken, who is CEO and owner of Cambridge Underwriters, Ltd., as well as co-chair of The Cambridge Group, explains his decision to enter the insurance agency business: "It's a more positive business. Our mission as agents is to solve problems and help people protect their assets.
"When I practiced law," he continues, "I didn't really like it, but I love the agency business. I love coming to work (which for Ken begins at 5:50 a.m. and includes weekends). I'm just surprised that more lawyers don't make the jump. (At least four others have. The Cambridge Group has five attorneys working as account executives for the agency and is looking to add 10 more.) The happiest day of my life was when I handled my last divorce case."
High-touch relationships
The Cambridge Group specializes in high-touch, relationship-driven business. "We start off looking for a relationship that puts us on the same level as the client's CPA or corporate attorney," Ken points out. To accomplish that, the agency focuses on risk management, looking for ways to transfer or mitigate a client's, or potential client's, risk. "It takes a long time to put a deal together," he continues. "We always start from scratch. We'll never quote based on what another agent has done. We don't feel comfortable unless we've reviewed the employee documents, lease agreements, subcontractor agreements and any other pertinent documents. We also insist on visiting every location. We sometimes run into people who don't want to share that information. We tell them there probably won't be a match."
In 1974, Kenneth Hale founded an insurance agency and a law firm in a successful effort to provide clients with risk management services that combined legal and insurance expertise.
Ken adds that the account executives work hard to show the business owners that their insurance agent is one of the most important people with whom they will deal. "The agent is responsible for protecting each client's business and personal assets. What could be more important?"
He continues by noting that account executives at the agency focus first on risk avoidance--"stuff that doesn't make us a dime." For example, they will review all subcontractor and/or independent contractor agreements to make certain there is a hold-harmless agreement. If not, they provide clients with a sample indemnification and hold-harmless agreement. They also review employee manuals and will help clients rewrite a flawed manual or even write the entire manual for clients that don't have one. And they don't charge clients for legal services. "That's part of what we do to earn our commissions," Ken says. "The only time we charge an attorney fee is when someone asks us to be an expert witness."
Having attorneys as account executives "appears to really help in selling commercial accounts," says Michael Hale, president of Cambridge Underwriters and Ken's oldest son. "We provide potential clients with an attorney's analysis and opinion that identifies areas that need to be fixed in order to mitigate or eliminate risk of loss. That has been very successful for me in terms of developing new business."
Mike, who joined Cambridge about three years ago after working for six years for Plunkett & Cooney, P.C., one of Michigan's largest law firms, adds that the legal aspect gives the agency "a big advantage. We know the coverage language because we've litigated the issues. (Mike represented insurance companies at Plunkett & Cooney.) We know how to look at lease agreements, understand employment practices issues, and so on. We also can help our clients when there are questions about claims. We can go to bat for them when there are questionable claims."
Like his father, Mike also enthuses about the insurance business. "I like this so much more than practicing law. It's much more positive."
Personal lines gets same high-touch service
Cambridge Personal Underwriters (CPU), the profit center that focuses on personal insurance, offers the same high-touch service to its clients as Cambridge Underwriters provides to commercial lines customers. Kathy Gelardi, president of CPU, explains how the unit has changed over the years. "At first, we were eager to write everyone. But as we started progressing and began analyzing the types of accounts we wanted to write, we decided to focus on executive coverages for the commercial account executives, which is a high-touch business. It meant dealing with higher acquisition costs but we were looking to develop long-term relationships and provide a complete portfolio of coverages that protected all their assets. We weren't looking to write single policies, and eventually we got rid of that type of business."
She continues that the personal lines group focuses on "building a relationship of trust. We won't compromise on coverage needs. We explain that it's our job to provide the best protection. We even tell them that we can't save them money. We're not here to compete based on price but are looking to provide excellent service and coverages."
Kathy adds that "we make it part of our job to read competitors' policies and our own to make certain that we are providing the best, most complete coverage. We always look over the assets that are being protected to make certain we aren't missing something. I'll go to a client's house and take pictures of the interior. That's an important part of my job. It often gives me an opportunity to meet the spouse and further build the relationship.
"We don't look at customers as numbers. They have names and faces and every one of them is important to us. We also provide legal review for our personal lines customers. We advise them of the need for hold-harmless agreements if they have independent contractors working on their house or grounds. We make certain they have workers comp coverage for maids or housekeepers. We also work with them when there's a claim that is not clearly defined.
"We lose very few customers," she concludes.
Denise McHenry, whose 25 years of experience led her to the point where she could be a mentor of new agents entering the business, is president of Cambridge Underwriting Alliance, Ltd.
Reaching other markets
"Because of our high-touch approach," Ken says, "we can't afford to handle small commercial and other-than-commercial-related personal lines." But that didn't mean that Cambridge had given up on that business. The agency was looking for effective ways to reach that market when Jim Masiello of SIAA (Strategic Independent Agents Alliance) approached Cambridge about becoming a Master Agency.
"I just knew we had to do this," Denise McHenry says. "Every experience I had had in the insurance industry led me to the point where I was able to and wanted to mentor new agents. This is the most excitement I've had in my 25 years in the insurance business. It was just a perfect fit."
Ken agrees that it was "a perfect fit," noting that the SIAA approach "gave us access to the small commercial and personal lines markets through entrepreneurs who were intent on succeeding. We could hire people to focus on these markets, but they would never have the same drive and hunger."
Cambridge Underwriting Alliance, Ltd., was formed in May of 1997, with Denise as president. "I really enjoy the diversity," Denise continues. "Every one with whom I work has a unique story. Some are just starting out in the business, others are converted direct writers, and recently I've been getting people who had been in business for a number of years but lost a major company because of the hard market."
CUAL provides these agencies with markets, but "even more important is the mentoring and training," Denise says. "We offer underwriting training and commercial lines training on a regular basis. We'll show them how to put a commercial account together. Help them identify all the exposures and coverages needed. We also work with every member on preparing a complete submission, which is especially important in this hard market. Companies are starting to underwrite much more carefully."
A mini-United Nations
CUAL member agencies now produce more than $750,000 in property/casualty premium a month, with the majority (80%) coming from personal lines production. "It has become one of the fastest growing profit centers in The Cambridge Group," Denise notes, adding: "More important, however, is the success it has achieved in diversifying and perpetuating the independent agency system. It is very important to the continued success of the insurance business that we reach all communities with professional insurance agencies. Our group represents a bi-lingual, multi-ethnic, mini-United Nations that reaches into the numerous ethnic communities in Michigan."
This includes people like Vlad Safir, who left a very successful career in automotive sales to build his own business. He set up Midwest Insurance Underwriters & Advisors, LLC, in Southfield, Michigan, last year. "I decided on insurance because it is always going to be there. It's very stable, but also very challenging. It takes a lot of energy out of you and I know it's going to take three to four rough years before the agency can turn the corner. Denise is very professional and well organized. She's really helping us." Vlad primarily works with the Russian community and gets most business through referrals.
LaDell Mobley set up The Mobley Group, Inc., in Livonia with a book of business she had developed with a large Detroit-based agency. "I wanted to build my own agency and started looking for a way to do that," she remembers. "I found Denise on the Internet and was so impressed with their approach that, within 30 days, I gave my notice. I left in June of 2000, with a book of $1.5 million that belonged to me under an agreement with the agency. However, the paperwork belonged to them. I was able to keep about 85% of that business, primarily because most of the carriers were available through CUAL.
"It has not been easy," she admits. "It requires long hours. In fact, I have no free time. Clients need things and I have to be available. There's also a lot of overhead. But I'm confident that I'm going to make it. I'm concentrating on developing a commercial lines book, working on keeping the business
we've already developed and writing some new.
"I really like the Cambridge set-up. They welcomed me with open arms and they're always available whenever I need help. They offer continuing education. It's a very good thing for me and keeps me up to date with what is happening in the insurance marketplace."
Dick Newton, sales executive with Safeco in Walled Lake, Michigan, started working with CUAL in January 2000. "This allows Safeco to reach a lot of under-served markets and to work with a number of quality minority agencies," Dick says, noting that Safeco had wanted to reach these market segments but hadn't found a effective way to penetrate the market.
"We're very comfortable with Cambridge because they epitomize professionalism. They took an idea and turned it into something that really works. The only reason I got involved was because of Denise. I place a great deal of value and trust in her and the type of business we are getting from the member agencies has proven that my trust was well placed," Dick explains.
"We just finished a key marketing program here in Michigan and mailed to a number of areas that we probably would not have reached before we started working with CUAL."
A decentralized environment
In many ways, Cambridge has defied conventional wisdom to achieve success. But more often than not, those agencies who operate outside the box are the ones that exceed expectations. In the case of Cambridge, that includes:
* Decentralization--Every person is an island. Each account executive is a mini-profit center.
* No meetings--Ken hates meetings so he doesn't have them. Instead, he walks around the office and learns what is going on.
* Service from the top--The account executive, including Ken, provides nearly all the service to the client. Ken's expectations are that the most experienced person is also the most responsible person when it comes to client contact and service.
* Open books--The sales and profitability of all divisions are published every month.
* Education--Professional designations are encouraged and expected. As Ken notes: "When I'm looking to hire new people, I look for experience and education. If someone has been in the business for a number of years and doesn't care enough to get professional designations, then we're not interested."
"They know their clients and communicate their needs to us," says Mary Foucard, commercial underwriter with Chubb in Troy, Michigan. "The people at Cambridge are scholars of the business. They're extremely professional and understand what we as a company need to write the business. They've been supportive of underwriting initiatives in the current market, explaining to clients the need for increases and working with them to develop creative solutions that will ameliorate those increases. These include deductible and coverage options. There is nothing that they do with which I would take issue. What they say is what they do. It really is fun working with them. They're constantly introducing new opportunities for us. Each profit center is a new business opportunity."
She concludes: "The Cambridge Group has embraced the community. Detroit is a community of entrepreneurs and Cambridge has that spirit."
The Cambridge Group exemplifies the combination of a client-first, entrepreneurial agency that distinguishes itself in all environments. It is for all that they have done that we recognize them as our Marketing Agency of the Month. *