John King and Southern Insurance Agency
creatively meet North Carolina's coastal challenges
By Elaine Tolen
Having lived all of his life around North Carolina's northeastern coast, John King has a special interest in providing insurance products that meet the area's unique needs. John, who is Vice President of Southern Insurance Agency in Elizabeth City, North Carolina, enjoys being at his home on the Pasquotank River with his dog, Copper.
After attending college, John K. King, CIC, moved back to his hometown of Elizabeth City, North Carolina, and considered several different career paths. He began to seriously contemplate insurance as a profession after family friend Bill Tadlock suggested the industry. John remembers: "Bill, who was a bank president, told me, 'John, everyone will always need insurance. During the Depression, about all you could buy was insurance.' That stuck with me, so I decided to give it a try." Today, John is agency vice president and one of Southern's owners.
Growing up in the coastal town of Elizabeth City and the Albemarle Region (area population is around 100,000) has afforded John an extensive network of friends, family and business associates from which to solicit. Being involved in business organizations such as the Elizabeth City Downtown Business Association and the Chamber of Commerce has resulted in many new relationships/clients for the agency. Other referrals have come from associations such as the North Carolina Homebuilders and Restaurant Associations, two of Southern's niche markets. John's business involvement has also included raising funds for the North Carolina Small Business PAC and InsurPAC. Active in the Albemarle Area Independent Insurance Agents Association, John served as president in 1994.
In addition, over the years John--as well as other Southern employees--has belonged to a variety of civic-minded groups. "We try to be the best corporate citizens we can be. We want to give back to the community," he explains. John has also taught a pre-licensing insurance course at a local community college--an opportunity to promote the insurance industry at the same time.
Being an agency principal and producer is more than a full-time job, but in addition to his responsibilities at Southern Insurance Agency, John and his wife, Todd, co-own a real estate company, Todd King Real Estate. "There are a lot of networking opportunities and contacts through both companies," John explains. Acknowledging the significant time commitment that both jobs require, John muses, "We say we're working 'half-days'--seven to seven. And that's on a short day!"
Coastal challenges and innovations
There were no short days around Southern Insurance after Hurricane Isabel hit the Albemarle Region, which is near the Outer Banks, on Thursday, September 18, 2003. After Isabel moved through, Southern Insurance employees spent that Saturday in the Elizabeth City office beginning to process claims--without electricity or phone systems. They sat in the dark, taking cell phone calls, filling out loss forms by hand, and helping clients who were able to find their way through the wreckage to come to the office. Southern Insurance Agency has five offices in the state: Kitty Hawk, Elizabeth City, Greenville, Corolla and Columbia. According to John, claims from Isabel kept the agency busy for several months afterwards.
In an interview with the local The Daily Advance newspaper John said, "People seem to have been better prepared for this storm than they were for others. They prepared their property by boarding up and by taking down trees damaged in the last storm that could have caused problems in this one."
According to the Property Claim Services (PCS) unit of the Insurance Services Office, Inc. (ISO), insurers expect to pay about $1.17 billion for insured property losses from about 458,000 claims in eight states as a result of Hurricane Isabel.
"We are a beach and coastal agency, with two offices on the barrier islands and two offices within miles of the barrier islands," John says. "Many companies won't write insurance here because of the potential wind exposure. We went to each of our companies and asked, 'What if we can show you how to do profitable business here?'" John explains that after catastrophic wind losses, the North Carolina Joint Underwriters Association accesses every carrier based on their pro rata market share. As a result, carriers can get credit from their assessments by accepting wind coverage in these areas.
Besides his demanding career in the insurance industry, John and his wife, Todd, co-own Todd King Real Estate in Elizabeth City, North Carolina.
Also, Southern has been able to demonstrate how carriers can write coverage excluding direct and indirect losses for wind, ceding the coverage to the pool, hence having profitable business. "We have also explained to them how they can accept business with wind and write themselves out of the wind pool assessment. It's a win-win situation," John says.
Another one of Southern's innovations in meeting clients' needs is its First Flight Insurance Group, which Southern Insurance Agency President Robert Wells started in 1996. "Being a coastal agency, especially near the Outer Banks, the need for recreational water sports coverage and vacation/leisure insurance products continues to grow," explains John. "There was almost no market for these products, so Robert created a market by starting First Flight." (See sidebar on page 70.)
Inviting infrastructure
John credits Agency President Robert Wells with the agency's progressiveness, not just in creating markets and serving clients, but in restructuring the 114-year-old agency. According to John, "When Robert became president of Southern Insurance Agency 11 years ago, he really turned it around. Rather than having everyone do nearly everything, he created departments and specialties. For instance, after I meet with a new client about their commercial coverage, the life producer goes in after me. It eliminates errors and is more efficient in the long run."
John (left) credits Southern Insurance Agency President Robert E. Wells, CIC, with innovations that have improved operational efficiencies and created new markets for the agency.
Another operational change at Southern, implemented in 1992, was the producers' compensation package for all 40 employees. "Everyone is on commission, even the CSRs," John says. "Salaried people many times are not motivated, for instance, to renew accounts. The commission structure gives more incentive to bring in new accounts and to renew them. Everybody can make more money with this system."
Besides giving all employees the ability to make more money, key employees--not just producers--have the opportunity to become agency owners, John reports. "It's important for key employees to have stock options available to them. It demonstrates that the agency views them as significant to the organization. We have CSRs who are owners," he says. John has been an owner since 1992.
These internal changes have resulted in growth for Southern Insurance Agency, as evidenced by an average increase of 15% in business volume over the past three years. In 2002, the agency increased by more than $3 million in P-C premiums. "Southern enjoys an extremely profitable loss ratio with its carriers, and maintains an outstanding retention ratio," according to John. The agency's book of business is 50% commercial lines, 45% personal lines and 10% life/health.
What the future holds
John sees several factors that will continue to shape insurance agencies for years to come: automation; revenue per employee ("How much money is going out? What are your labor costs?"); and markets. ("Being a beach and coastal agency, that's always going to be a big issue for us.")
He believes that the trend of larger agencies growing larger through acquisition will continue. "The smaller agencies can't stand alone and satisfy their markets," John observes. "Also, banks will continue to buy agencies."
Education and hard work spell success
The work ethic that John's parents instilled in him extends to the detail and deliberation with which he handles every sale or renewal. As his folks' example inspired him, so he sets an example for the agency. "I think one thing that differentiates my work is the level of documentation at the point of sale. You know what they say: 'The one with the most notes, wins!'"
Although they are not part of continuing education requirements, John believes that E&O courses "are good for agents to take every year. And required continuing education "brings a lot to agency ranks," he says. "One of the finest education vehicles available is the CIC [Certified Insurance Counselor designation]. It is the most professional and fulfilling insurance education. It keeps you above the average agent on the street."
That, John King certainly is. *
WHEN YOU CAN'T FIND A MARKET--
WHY NOT JUST MAKE ONE?
Operating a retail agency in a hurricane-prone coastal area in eastern North Carolina poses many challenges, but the same topography has provided great opportunity for Southern Insurance Agency. The Outer Banks region, where Southern Insurance is located, is a rapidly growing resort area.
Needing markets related to recreational water sports and other vacation/leisure insurance products, Robert Wells, president of Southern Insurance Agency, founded First Flight Group, Inc., in 1996. The national and international program-oriented wholesaler has evolved into a reliable market for operations such as parasailing, hang gliding, underwater instructors, kite boarding and water ski instruction. It also provides a liability market for recreational businesses, like jet ski, kayak, canoe, sail and pontoon rentals. Hull coverage is available as well.
According to Wells, First Flight Group works closely with recreational associations to develop products which meet customers' unique exposures. The company insures the U.S. Hang Gliding Association and the National Association of Underwater Instructors, and provides coverage for members of the Professional Air Sports Association. First Flight is also developing several programs that will address investment property management and ownership exposures.
"We are proud to represent Markel Syndicate 3000 at Lloyd's. The key to First Flight's success is a solid underwriting philosophy," says Wells. "Realistic, yet competitive pricing and well thought-out policy language result in offering a responsive, viable and reliable market for customers."
For more information:
First Flight Insurance Group
Phone: (252) 261-1903