MARKETING AGENCY OF THE MONTH
St. Louis brokerage Daniel & Henry proudly serves its home city
while doing business around the world
By Elisabeth Boone, CPCU
If you drive east toward the city of St. Louis on U.S. Highway 40, you'll see much more than the typical exurban clutter of billboards, gas stations, and fast food joints. On your left spreads the lush expanse of Forest Park, designed a century ago to house the wonders of the 1904 World's Fair. On the right you'll see the soaring modern planes of the Science Center, which is connected to the park by a graceful footbridge that leads to the city planetarium. And your eye is sure to be caught by a gleaming structure of green glass and steel whose principal occupant's name is spelled out in simple aluminum letters: Daniel & Henry. Located on a site that once was home to the area's beloved amusement park, The Highlands, this elegantly simple building is headquarters for the area's largest privately owned insurance brokerage and 52nd largest in the country.
Since its establishment in 1921 by St. Louis entrepreneurs Carl Daniel and Jesse Henry, Daniel & Henry has balanced a deep commitment to its home city with a measured expansion of its facilities to meet the needs of clients who operate both nationally and internationally. From the start, the agency has distinguished itself from competitors by adopting an operating structure under which individual brokers share common facilities to reduce overhead. Although such arrangements are more common today, they were far from the norm when Daniel & Henry opened its doors in the early years of the Roaring Twenties.
Today, 25 directors, each of whom heads an independent business unit, occupy Daniel & Henry's handsome new headquarters just a few miles west of downtown St. Louis. The firm employs a total of 220 persons, of whom about 60 are producers representing more than 50 highly rated insurers. In 2002, Daniel & Henry posted commercial and personal premium volume of $140 million and took in premiums of $50.6 million on employee benefit and individual financial services business. Personal lines accounts for 12% to 15% of the firm's total income; many personal lines clients are the CEOs and partners of the major firms Daniel & Henry insures.
Experience and commitment
Family tradition is a hallmark of Daniel & Henry. Bob Harrison, chief operating officer, joined the firm in 1985 to work with his father as a broker. He continues to manage a book of business and also serves on the executive committee. "In my role as COO, I'm responsible to the board and to the executive committee, helping oversee insurance operations, human resources, and financial activities," Harrison explains.
Celebrating a quarter century of service with Daniel & Henry is Executive Vice President John Drew, who began his career as a broker and continues to act in that capacity. His unit handles both commercial property/casualty and group coverages. "My main focus is to grow a book of business," he says. "That's basically what all of our producers do. Our job is to get a book and grow the book." Drew has served on the firm's executive committee for 12 years; his father, Charles S. Drew, Jr., is chairman of the board.
Heading up commercial marketing for Daniel & Henry is Colleen Signorelli, also a 25-year veteran of the firm, who managed the personal lines department for 17 years until being appointed vice president and commercial marketing manager in 2002. She directs a staff of 14 who handle marketing for Daniel & Henry's small and middle market commercial accounts.
Entrepreneurial spirit
As mentioned earlier, Daniel & Henry was established as a cluster agency when such a structure was far less common than it is today. "Each of our producing units controls its own book of business," Harrison says. "Our objective is to leverage the capabilities of those brokers and reduce overhead, to make our firm very entrepreneurial. We operate under common guidelines and rules, but we allow a lot of independence within the firm."
The heads of the agency's 25 production units are responsible for managing their own staffs: CSRs, account executives, other producers. The firm assists in hiring and training support personnel. The agency has four profit center departments: commercial marketing, group benefits, financial risk, and personal lines, as well as service centers for claims, accounting, human resources, information technology, loss control, quality control, and training. Production units share commissions with the house to cover administrative costs. "Each production unit is responsible for producing group and personal lines business, but their main focus is commercial lines and group sales and service," Harrison explains. The heads of Daniel & Henry's 25 production units comprise the firm's board of directors. The board elects nine of its members to serve three-year terms on the executive committee.
Competitive edge
Large, established, and well known, Daniel & Henry nonetheless strives to differentiate itself from competitors. The agency's mission is "to serve our clients by providing high-quality risk management programs and unparalleled service." Says Drew: "Most of our customers operate without a full-time risk manager on staff, and we fulfill that role for them. We use our expertise to develop insurance programs and risk transfer programs on our clients' behalf. In that respect, we differ from other firms that work with risk managers to place coverage based on what they recommend." Adds Signorelli, "From a management standpoint, I think we're much stronger than our competitors. We have an E&O coordinator who takes her job very seriously. Mike Moore, vice president for market relations, ensures that we maintain quality relationships with our carriers, and that we're matching our submissions with carriers that have an appetite for those risks. We have a very high-caliber management team."
Bob Harrison, Daniel & Henry's chief operating officer, stands in Forest Park, located across the street from the agency's corporate headquarters in St. Louis.
Another way Daniel & Henry achieves a competitive advantage is through its membership in Assurex Global. Belonging to Assurex allows the agency to consult with fellow brokers throughout the country and around the world, enabling the firm to handle accounts with multi-state or international operations. "We're the only Assurex partner in Missouri, and we've been a member for about 20 years," Harrison says. "Being part of Assurex gives us access to our partners' expertise in other states. Our Assurex partners step up to the plate and provide a great service to us." What's more, Signorelli comments, "We're connected to an Assurex database and a bulletin board, so if we're trying to place a difficult risk, we can post it on the bulletin board and get responses from 100 U.S. Assurex partners, plus support from a network of international agencies. It's a really helpful tool."
Products and services
As an all-lines, full-service agency, Daniel & Henry offers a wide range of products and services. On the commercial property/casualty side, the firm writes automobile, boiler and machinery, commercial property, directors and officers liability, employment practices liability, errors and omissions, general liability, inland and ocean marine, umbrella/excess liability, and workers compensation. Clients include contractors, health care providers, institutions, manufacturers, municipalities, professionals (accountants, administrators, architects and engineers, lawyers), real estate developers, retailers, service providers, truckers, and wholesalers. The agency also offers a variety of contract and non-contract surety bonds, including bid bonds, court bonds, fiduciary bonds, performance/payment bonds, public official bonds, license and permit bonds, and miscellaneous bonds.
A fully staffed loss control department works with clients to reduce the potential for both financial and human losses. Staff members conduct a comprehensive assessment that focuses on areas of major concern: administration, exposure, injury management, regulations. A dedicated self-insurance division specializes in the design, implementation, and administration of self-funded risk assumption entities for the private and public sectors and for alternative-financed and insured programs for individual clients. The group benefits department offers health, life, disability, dental, vision, voluntary products, long term care, alternative funding, retirement plans, and estate and financial planning. The department also offers value-added products and services for benefits administration, including enrollment and communication. The group department, under the leadership of Scott Stream and Cathy Quinn, has increased production 45% over the past four years. Stream has since been promoted to vice president of insurance operations. The personal lines department, managed by Pam Gettemeier, offers homeowners and auto insurance, coverage for jewelry, art, and valuables, and excess liability. Under the management of Julie Lotspeich, the financial risk department provides an array of estate and financial planning products and services.
A question of values
"Most of our customers operate without a full-time risk manager on staff, and we fulfill that role for them."
--John Drew, Executive Vice President
At Daniel & Henry, relationships and behavior are governed by a set of 10 core values that articulate the agency's commitment to clients, carriers, employees, and the community.
1. Understand the client's business. We strive at all times to fully understand the nature of the client's business, its challenges and related risks. This understanding is the basis for the development of risk management programs that provide both value and stability to those we serve.
2. Innovation. We acknowledge the dynamic nature of our clients' business and recognize the need to continually address this through better risk management programs and services. We also recognize the level of change in our own business and the need to act in a manner that promotes continuous quality improvement.
3. Professionalism. Our greatest strength resides in the members of our team. We provide equal opportunity and support the continuing professional development of all. We endeavor to develop the same relationship with our clients.
4. Integrity. We hold no other value higher. The development of effective relationships with our clients, the members of our team, and the insurance markets demands no less than complete honesty in the conduct of our business affairs.
5. Genuine collaboration. The relationship with our clients and insurance markets is expected to be long term. We believe these relationships are formed and enhanced through genuine collaboration that recognizes competitive forces and strives for the mutual benefit of all parties.
6. Democratic management process. The firm recognizes the unique skills and perspective that each partner brings to the conduct of business. We foster this diversity in the choice of partners and capitalize on it through a democratic process of decision making. This democratic process results in solid decision making and promotes better understanding and commitment among our partners.
7. Respect for the individual. We function as a team but recognize and respect the individual contribution that each makes to the team effort. We support employee development, empowerment, and responsible risk taking. We strive to develop a work environment that fosters these activities among members of the team.
8. Corporate growth. Our firm expects to grow. This growth sustains the critical mass and economies of scale needed to provide risk management services that meet our clients' needs in a cost-effective and efficient manner.
9. Continual learning. The challenges we and our clients face can only be addressed through a willingness to ask better questions, to test our prior assumptions, and to develop more effective answers. This level of interaction requires a commitment to lifelong learning on both an individual and corporate level.
10. Community responsibility. We acknowledge the responsibility The Daniel & Henry Company, as a corporate citizen, has to participate in the continued development of our communities and the individuals who live and work in them. We exercise this responsibility by supporting the commitment of individual employees and the company to activities and programs that foster the diversity of our community.
As a St. Louis fixture for more than 80 years, Daniel & Henry has a proud tradition of commitment to and involvement in the community. Some years ago the agency led an initiative to restore the childhood home of Eugene Fields, the children's poet famous for the classic "Little Boy Blue." In partnership with the St. Louis Board of Education, the agency encouraged the city's schoolchildren to collect pennies to help fund the restoration. The historic home is a local treasure that offers a glimpse of childhood in the 1800s.
To commemorate its 75th anniversary in 1996, Daniel & Henry undertook a similar civic effort, this time encouraging every schoolchild in St. Louis city and county to contribute 25 cents to help rebuild the city's vast Forest Park. This initiative raised enough money to renew and beautify the park's popular Steinberg Rink, which is enjoyed by skaters of all ages. Throughout its history, Daniel & Henry has provided insurance and risk management services to many civic and cultural institutions in
St. Louis.
A view of the market
With more than 50 top-rated carriers in its stable, clearly Daniel & Henry is well positioned to have its finger firmly on the pulse of the property/casualty market. "We see most of our markets under intense economic pressure right now. Because of lethargy in the securities markets, commercial carriers are being forced to pursue underwriting profits; they can no longer rely on the financial markets to help bail them out," Harrison observes. "Along those lines, carriers increasingly are being scrutinized by regulatory authorities, who are putting pressure on carriers to operate openly. We're feeling the effects of that; the downgrading of some companies by the rating organizations is forcing us to place business with other carriers, often in mid term. The rating agencies themselves are under such intense scrutiny from the public and the government that they're going to be making some more decisions on our carriers and force us to move business throughout 2003."
Adds Drew: "I think we'll see rates staying firm, because carriers will need to achieve economic growth through underwriting. Reinsurance is a challenging area; most carriers are buying very expensive reinsurance, and that's going to keep rates up. With the fall of suppliers, I think companies will have an opportunity to look at business they haven't seen before."
On a brighter note, Signorelli observes: "We have seen carriers competitively pursuing the lines of business they want. But the niches are pretty well defined. We're dealing more and more in the wholesale market, and that's more challenging because of time constraints and the need to establish a different kind of relationship than we have with our standard carriers."
Like its competitors, Harrison remarks, Daniel & Henry is having difficulty placing medical malpractice business and obtaining coverage for habitational risks like condos and apartments. As for terrorism, "We're not sure yet how our suppliers are pricing for that. We assume that situation will become clearer over the next year or so," he says.
Although most people associate earthquakes with California, St. Louis is situated along the infamous New Madrid Fault, the site of devastating earthquakes in the early 1800s whose magnitude literally exceeded the upper limit of the Richter scale. Since then, quakes have been few and far between, with less injury and damage than often occur in California--but for insurers, Missouri is squarely in the middle of earthquake country. "Capacity for earthquake coverage in our area is a big deal," Drew comments. "We're having a hard time finding standard carriers that are willing to put up good limits for our customers, so we've been forced to go to the E&S market for that as well."
St. Louis's location presents another risk that gives insurers pause: It sits on the banks of the Mississippi River, which is subject to extreme flooding in the springtime and early summer. Residents still trade stories about the Flood of 1993, which went down in the history books as a 500-year flood and which destroyed hundreds of millions of dollars in residential and commercial property. Fortunately, Drew says, "We've been able to secure catastrophic coverage for our customers."
Alternative solutions
Tough times call for smart solutions, and the current hard market has seen a renewed interest in alternative approaches to insurance and risk management. Risk retention groups, captives, and other mechanisms gained in popularity and volume during the market constriction of the mid-1980s, and predictions to the contrary notwithstanding, much of the business remained in those facilities even after the standard market returned to a competitive posture. "I think the reason so much business stayed in the alternative markets is that they have a very stable approach to pricing and terms and conditions for customers, and that eliminated the peaks and valleys in the marketplace," Harrison remarks. "Companies are devising some creative methods for risk transfer, whether it's a captive, a rent-a-captive, or a fully self-insured program. As buyers become more sophisticated, these options become more attractive. We're definitely seeing more interest and activity among our clients in this area."
In today's volatile and troubled world, independent agencies and their clients face far more daunting challenges than a hard insurance market. Terrorism, mold, political instability, economic recession, and the human and financial costs of war in the Middle East all feed into an equation that's increasingly resistant to a solution. Today more than ever, insureds value stability, commitment, and integrity--the very qualities reliably brought to the table by St. Louis stalwart Daniel & Henry. *