MARKETING
Compliance Check™ helps this Florida agency differentiate itself from the competition
By Len Strazewski
Kim Carr, employee benefits specialist with Wallace Welch & Willingham, is the national marketing director for Compliance Check training services.
The client exposure list gets a little longer each year: commercial and personal property, comprehensive general liability and workers compensation are the standards, along with marine and transportation risks.
Then there may be directors and officers liability, fiduciary and ERISA liability. In the 1980s and 1990s, risk managers, lawyers and underwriters added other special liabilities, including environmental protection liability and employment practices liability, among other needs excluded from traditional property/casualty insurance policies.
At Wallace Welch & Willingham, Inc., in St. Petersburg, Florida, being a full service independent agency means understanding, auditing, analyzing and providing protection against all risks, as well as meeting employee benefits and personal lines needs, its executives say.
But providing comprehensive service isn't just a burdensome necessity for its producers. The commitment to risk management has paid huge dividends in the agency sales and marketing, says Chief Operating Officer Stan Shreve, fueling more than 20% annual growth in revenue since a formal risk management audit process and marketing strategy was adopted three years ago.
Founded in 1925, as a small, traditional property/casualty and marine insurance agency, Wallace Welch & Willingham has grown to
55 employees and nearly $6 million in operating revenues, up from $3 million five years ago. In that period, annual revenue per employee has grown steadily, exceeding $100,000 for the first time this year. The agency business mix has also evolved to about 60% property/casualty insurance and about 40% employee benefits and personal lines.
The cornerstone of the agency's sales and marketing is Compliance CheckTM, a risk management audit process that incorporates 18 separate checklists covering traditional property and casualty risks as well as human resource management and other less traditional business risks related to regulatory compliance.
The roots of the Compliance Check program are deep within the agency culture, notes Senior Vice President Scott Gramling. In 1988, the company adopted a formal agency perpetuation plan that would maintain the private ownership of the agency and provide incentives for producers and key employees.
Wallace Welch & Willingham has grown to 55 employees and nearly $6 million in operating revenues.
The original agreement created 14 original shareholders, 11 of whom eventually sold back their ownership shares and have been succeeded by 10 new partners. As the ownership evolved with new producers joining the agency, Wallace Welch & Willingham executives realized they needed to incorporate programs that would support new producers and new business development.
"The biggest challenge that we faced as an agency was differentiating our company from our competition," explains Senior Vice President Keith Gramling. "Our observation before developing our new business acquisition tool was that our competition was just as competent at traditional insurance placement and marketing for large commercial accounts as we were. The question was, how do we raise the bar?"
In 1992, the agency began reviewing new and old accounts for workers compensation rate modification information and discovered the sales and marketing power of auditing. As a result, the agency began to build a formal process that would provide added value to the insurance and independent agency process.
The agency expanded its auditing to include a broader range of risk management concerns, including human resource management and employee relations best practices. Kim Carr, national marketing director for Compliance Check training services and an agency employee benefits specialist, was an entrepreneur and manager of her own marketing company before joining Wallace Welch & Willingham. She brought her management expertise to the program.
"To avoid the plethora of state and federal fines, corporations are forced to seek competent, professional advice from teams of attorneys, certified public accountants, risk managers and human resource consultants," she says. "The expense associated with this endeavor is great to say the least. However, consider the alternatives--huge penalties and fines that could be incurred as a result of noncompliance with regulations and laws of which management may be unaware."
Executives at Wallace Welch & Willingham (from left): Stan Shreve, chief operating officer; Keith Gramling, senior vice president; Scott Gramling, senior vice president; Andy Wallace, senior vice president; and Weyman Willingham (seated), president.
Carr perceived this exposure as a new market for the agency and an opportunity for producers to meet with human resource managers, chief financial officers and other executives in prospective client companies. Wallace Welch & Willingham invested in a solution to the human resource risk compliance issue, compiling audit materials from a variety of government and consulting sources, adding a series of new checklists to the agency's audit process.
In 1997, the comprehensive program became the agency's new business acquisition model. Wallace Welch & Willingham producers apply the Compliance Check audit for no charge to all new business prospects, usually beginning with a meeting with a company's human resource management executive.
With permission, producers begin the audit several months before any insurance renewal date. Since the audit does not focus on renewals and existing insurance policies, but rather exposures and compliance, deadlines are not a serious concern, notes Keith Gramling.
The producers begin by learning about a prospective client, including its organization, philosophy and business practices. The producer then chooses relevant modules from the Compliance Check program to customize the audit.
As the producer proceeds through the audit process, he or she usually meets other executives in the firm, including the chief executive officer and other leadership--building recognition for the agency, Keith Gramling says. The audit identifies exposures and, in particular, identifies how well the company complies with the multitude of laws, including COBRA, Fair Labor Standards Act and the Family and Medical Leave Act.
"Most companies have never had this level of review from anyone--especially an insurance agency," Carr explains. "Just completing the process establishes the expertise of our agency and differentiates our service from other agencies."
After identifying problems, the agency and the producer develop a series of recommendations that outline areas of improvement and the rationale behind any alteration in business practices. The agency then helps the company create an implementation schedule and a plan for regular reviews and updates.
How does all this extra, free service sell insurance? By the end of the process, the agency has built recognition within the prospect company as an expert in a wide range of risk management concerns, including human resource compliance. The process also builds a level of dissatisfaction with the service provided by other vendors, Carr notes.
"The property/casualty insurance market has certainly helped us in this regard," says Keith Gramling. "Companies are already unhappy about rate increases from their insurers and raising the question about whether or not their present agency has done enough to control their costs."
The result could be a new agency of record letter by the next renewal, or at least a piece of new business. In particular, Compliance Check has spurred rapid growth of the agency's employee benefits business, executives say.
"Compliance Check has not only contributed to the growth in revenue, but it has also helped improve the overall efficiency our agency," Shreve says. "We have been able to accomplish extraordinary growth without increasing our headcount.
"In fact, we have actually reduced our staff size. Because our sales approach focuses on relationship building and agency visibility well before renewal, our marketing efforts are now more streamlined. The efficiency continues well into the renewal and customer management process."
Agency executives say that client retention in the critical middle-sized client market is near 97%.
Compliance Check and other audit tools developed by Wallace Welch & Willingham are also available to other agents who want to broaden their risk analysis resources. In 2000, the agency created a separate division to market the Compliance Check sales and risk management audit process. By the beginning of this year, the division had trained more than 200 producers in 55 agencies.
The Addis Group, an independent agency based in King of Prussia, Pennsylvania, has used the Compliance Check audit for about six months, according to principal Scott Addis. The Addis Group specializes in comprehensive risk management service for a wide range of business insurance clients.
"We've been incorporating bits and pieces of the Compliance Check tool into our existing account audit procedures," he explains. "We have always employed a risk management approach to our account analysis and always review our clients' exposures.
"But, in particular, we have found the employee manual review and human resources procedures review materials to be a very valuable tool and have built it into our audit procedures," he says. "It is certainly a well-prepared process that can reveal a level of exposure that other reviews may not. And there's no question that a successful review can be used to document discounts from underwriters."
What's next for Wallace Welch & Willingham? Compliance Check will continue to evolve as regulatory compliance and other risks evolve, notes Scott Gramling; and the agency will develop new risk management tools, as their clients need them.
The agency already offers Professional Employment Organization (PEO) services through an equity participation with AvanTech Solutions in Tampa, to provide human resource management, employee leasing and employee benefits services to corporate clients.
PEOs were originally formed as an alternative risk device to generate better workers compensation and health insurance rates for small employers, Scott Gramling notes. He expects the agency will continue to use PEOs and other alternative risk vehicles as the insurance marketplace creates a need.
The agency also manages the South Pinellas Medical Trust, a risk retention group; and agency executives expect to increase the agency's role in risk retention as client needs change, notes Keith Gramling. *
For more information:
Wallace Welch & Willingham
300 First Avenue South, 5th Floor
St. Petersburg, FL 33701
Phone: (800) 783-5085
Fax: (727) 521-2902