Repath McAuley Woods handles unusual risks, including
revenue-producing opportunities for agents' clients
By Phil Zinkewicz
Repath McAuley Woods executives are (left to right) Derek J. Repath, chairman; Loti C. Woods, CPCU, co-CEO/president; and Robert W. McAuley, co-CEO, president.
Imagine this. In a small community somewhere in the United States, there is an outbreak of E. Coli, which results in the death of two customers of a national pizza chain. Nine months after the outbreak, the pizza chain continues to report financial hardship. The firm cites sluggish new customer traffic, weak sales of high-markup meat toppings and a decline in home delivery orders in the region where the incident occurred as factors in a 3% revenue reduction in the past quarter. At the same time, advertising and coupon promotion costs have skyrocketed as the firm attempts to restore customer confidence.
A serious situation, to say the least. But there's no need to imagine such a scenario. The fact is that outbreaks of food-borne contamination threaten food-handling businesses every day. Reports of accidental or malicious food poisoning are on the rise and more people are susceptible to food-borne illness than ever before. Adverse media exposure can topple a reputation that has taken years to build, and one serious incident involving tainted food can cause significant business interruption.
That pizza chain case history and the food industry assessment above came from the West Palm Beach, Florida-based Repath McAuley Woods (RMW), one of the largest independent insurance wholesalers in the United States, with annual premiums exceeding $100 million. Determined to "push the boundaries of conventional business insurance," RMW offers retail agents the solutions they need for their clients to protect against losses ranging from excess & surplus coverages to beyond-the-norm events, such as the E. Coli scare. In the case of food poisoning, the firm's trade name restoration insurance program offers coverage for loss of business income and incident response, accidental and malicious contamination, food product recall, extortion, crisis management and media handling. These are coverages that are not in the mainstream of traditional commercial insurance products.
Bob McAuley says one of their clients, a power regulator manufacturer, is utilizing an RMW-designed product to guarantee energy savings for its customers.
"Our products are not 'demand' products in the sense that agents' clients are demanding them. But ... our agents must educate their clients on how these products can improve their business results."
--Bob McAuley
The principals of RMW are Derek Repath (who has just announced his retirement effective April 1), Robert McAuley and Loti Woods. They describe their firm as an "agency opportunity center." Their mission, as they see it, is to "offer creative risk management solutions" through a select network of independent agents and brokers who share a common focus--using intelligent insurance strategies to improve clients' business performance. They base their success on innovation, expertise and service to provide cutting-edge solutions to improve clients' bottom line results.
"Bob and I started our own agency, McAuley Woods, back in 1998, after having worked with a national wholesaler and after having decided to go out on our own," says Woods. "At the beginning, we quickly realized we had to differentiate ourselves. We saw that providing a full range of basic coverage is only a starting point in the agent-client relationship, so we decided to look for the gaps in those basic coverages and become innovators. In a year's time, by offering alternative products along with the traditional property/casualty products, we built our venture into a $35 million operation."
Repath started his own brokerage and MGA operation in 1984. In 1998, Repath says he realized that, while his business was growing, he needed to "take another step forward." He recognized the success that McAuley Woods was having in the alternative market area, a niche that he admits his firm had not entered. After a meeting of the minds, Repath McAuley Woods was born.
Coverage for the food industry is only one example of the alternative products that the organization offers. RMW also has extensive expertise in providing product warranty coverage. For example, their "Field Turf" client surpassed a major competitor as a leading manufacturer of artificial turf for sports stadiums only after RMW wrote warranty coverage for them, which allowed Field Turf to guarantee, through an insurance policy, that their product would meet certain durability standards.
Another client is a power regulator manufacturer that, through a product warranty provided by RMW, was able to offer an energy cost reduction guarantee to its customers as part of an insured product. "Under this arrangement, customers who purchase their power regulator equipment from this utility receive an insured guarantee that savings on their energy bill will be at least 10% as part of their product warranty," says McAuley. "The company offering the guarantee feels this feature will set their product apart from all their competitors. They expect sales growth to be off the charts. This is just one example of how a retail agent can assist his or her client to grow and to compete more effectively. It goes beyond basic commercial insurance."
Involuntary unemployment coverage is yet another of RMW's alternative products. Written through mortgage lenders, homebuilders, auto dealers & many other industries, this coverage makes monthly payments for someone who is involuntarily laid off from work and can't make those payments. Another "involuntary unemployment" coverage the company has spearheaded involves state-mandated coverage for child support. This insurance provides child support payments if the person responsible for making the payments loses his or her job.
RMW also offers a variety of enhancement insurance options that give companies a competitive edge with their customers. These cover credit card usage, product purchase guarantees, emergency travel insurance, and more that 100 supplemental protection options that can be structured into a customer service package. "Enhancement options meet the needs of many consumers who want peace of mind and fast service when unexpected events disrupt their schedule or activities. With the relentless time pressures on today's families, it makes sense for companies to bundle convenient services with their products to help with these very real concerns," says McAuley.
Loti Woods looks over a billiard table that is part of RMW's pub and poolroom at the company's West Palm Beach, Florida, headquarters.
The firm's principals say they also can provide customized property/casualty solutions to cover a wide range of businesses. These solutions include product liability, workers compensation, umbrella, general liability, excess auto, large layered coastal property accounts, and DIC coverage for California earthquake or Flood Zone A. They specialize in health care, medical malpractice insurance and coverage for distressed doctors. RMW also offers builders risk insurance in all states for general contractors, homebuilders, construction managers, project owners, and residential real estate development companies. "Again, we don't follow the mainstream," says Woods. "We develop tailored solutions to handle builders risk insurance needs for national and regional builders who need customized coverages such as debris removal on vacant lots."
Derek Repath, who retires from RMW effective April 1, ran his own brokerage and MGA operation for 14 years before teaming up with Loti Woods and Bob McAuley in 1998.
The firm recently opened a professional liability department. "Every firm faces potential allegations or lawsuits aimed at the company or its officials," says McAuley. "A comprehensive directors and officers program is essential to managing this risk while attracting senior management talent and experienced outside directors. We offer protection for public corporations, privately held firms, partnerships, not-for-profit organizations and membership organizations. We can structure a cost-effective policy that responds to a wide range of situations including: lawsuits, arbitration and written demands for relief; and claims naming the corporate entity, officers, directors, partners, employees or former employees. Policies are tailored to include defense costs, judgments, appeals and investigative costs."
The principals of RMW agree that their success to date is not only the result of its specialized products, but also the result of the close working relationships that they have established with their agency forces. When they first formed RMW, they met with the recognized "guru" of independent agents, Roger Sitkins, to re-examine the efficacy of their operation.
"After that meeting, we closed some of our offices and let go about 650 agents who were producing roughly 18% of our business. We retained about 150 agents, 30 of whom are members of our Private Client Group," says Woods. "Initially we lost about $1.4 million in revenue but within a year we recaptured far more than that amount by teaming with our Private Client Group. We were able to increase service to this consolidated group of agents while cutting expenses. With the agents that now remain in our network, we have established very strong, collaborative relationships."
McAuley says that the strategy the firm has adopted is to educate its current agency forces on the importance of selling the products they offer. "Our products are not 'demand' products, in the sense that agents' clients are demanding them. But those clients will benefit from these products and our agents must educate their clients on how these products can improve their business results."
Woods agrees wholeheartedly. "In a sense, we are creating the demand. We see the gaps that exist out there and then help our agents understand those gaps and how we can fill them so that the agent can better inform his or her client. And, we show them how to be successful. We've invested in a proprietary section of our Web site (www.rmwins.com) for our Private Clients that contains product information, qualification tools, presentation material, and all the 'how-to's' they need to recommend our innovative insurance solutions to their insureds."
"We have a true business partnership with both our agents and our carriers," adds McAuley. "We have regular meetings with them where we discuss how they are performing, how we are performing, and what will best serve our respective needs. We have impressed on our underwriters that we have an exclusive agency base, so all of our submissions are pre-qualified." With this strong relationship model, RMW is able to assist its Private Clients in getting an increasingly scarce commodity--the underwriter's attention and time.
Asked how a rapidly hardening market and insurer retrenchment due to the September 11 terrorist attacks might affect RMW future business opportunities, McAuley says he does not see the hard market affecting their firm in a negative fashion. "We offer specialty products in addition to the property/casualty lines," he says. "We have great people as part of our team, a culture where we work hard, play hard and where we don't even know where the box is as far as traditional rules go. If anything, as standard market insurers retrench, there will be more business coming into the surplus lines arena. With much of our consolidation and transition work behind us, we believe we are poised for record growth." *
For more information
Web site: www.rmwins.com