THE CHANGING FACE OF THE INDEPENDENT AGENT

Michigan native Michael McCarron heeds the call
of the Rockies to build his career

By Elaine Tolen

For most young producers, the journey to agency ownership follows a well-trodden path. They start at the bottom (usually in personal lines) then, over the next several years, prove themselves and move into commercial lines (and perhaps life/health). They are given more responsibility--perhaps overseeing a specific department or specializing in a niche. A dozen or so years later, when the principal(s) are ready to retire, they finally have the opportunity to buy into the agency.

Michael McCarron, 27-year-old owner of Lakeside Insurance Center, LLC, in Arvada, Colorado, admits that he likes to take the road less traveled. That road took him from his home state of Michigan to Colorado, where he moved in 1998. In 1999--at the age of 23 and with one year of insurance experience under his belt--he bought an agency.

Go west!

A lover of the outdoors, Michael began hearing the call of the mountains--but not necessarily insurance-- while a student at the University of Michigan. As the son of an agency owner (Dennis McCarron, his father, owns McCarron & Associates in Chesterfield Township, Michigan), Michael could have taken the easier road and worked there, establishing a cozy life in a familiar setting.

"But I wanted to get out and be adventurous," he explains. He and his future wife, Gillian, "packed up a
U-Haul and moved out here after we graduated. We both wanted to be in the outdoors and we love to ski and hike. We both had a good education and degree; we knew the jobs would come."

Before going to Colorado, though, Michael saw that Safeco had underwriting positions available in Seattle and Denver. His father encouraged Michael to "give insurance a try," so he interviewed and got the job in Denver. Michael says the year with Safeco gave him a solid education in underwriting and an understanding of the company side, both of which have served him well as an agency owner. During that year, though, the entrepreneurial and adventure urges grew. "I wanted to be able to steer the ship and help people," Michael says; so when a small agency was put up for sale, he took the opportunity.

According to Michael, Lakeside Insurance Center, founded in 1962, was "small enough to afford and run." However, this new owner had no small business management experience, no established insurance background or network, and no family ties to the industry in Colorado.

"Right away, I got involved in PIIAC [Professional Independent Insurance Agents of Colorado]. It was a 'fast track' way to learn and get to know others who have been successful in the industry," explains Michael. "Getting to know these people has been invaluable. They have taken their time [to share their expertise]. Without the association's support, the agency wouldn't have progressed as it has."

His first PIIAC position was as a member of the legislative committee, during which time he attended the Independent Insurance Agents & Brokers of America (IIABA) Legislative Conference in Washington, D.C. At the conference, he got better acquainted with Big I staffers as well as company people, building relationships that have continued to benefit him.

Since 2001, Michael has served on PIIAC's board of directors. As vice president, he is part of the executive committee. While he has never been on PIIAC's young agents committee, he provides input to the board on behalf of young agents and attends young agents events.

Besides representing young agents on the PIIAC board, Michael says, "I can represent small agencies and give a voice to people who are just getting started. You know, typically boards are comprised of people from large, established agencies."

Family and international affairs

Michael met Gillian, who is from England, while they were both students at the University of Michigan. Her father had been transferred to Michigan when she was 15 years old. Michael has a
bit o' the Irish in him and studied in Dublin while a student at the University of Michigan. Their four-month-old son has an Irish name, Kiernan. With both of them having family overseas, the McCarrons have made several trips across the Pond. And certainly more trips will be planned in the future, Michael points out, now that a baby is in the picture.

Gillian, who was a recruiter with Price-Waterhouse-Coopers before becoming a full-time mom, now handles Lakeside's accounting a few days a week. "It's been a big help to have her doing that," says Michael. "Before, I was the guy who did everything, from taking out the trash to signing the checks."

As previously mentioned, Michael's father, Dennis, is in the insurance business. In addition, Michael's sister, Stephanie McCarron, has worked in the industry for eight years. She was an underwriter in the Chicago office of Ohio Casualty when, in 2000, Michael asked her to join him as co-owner. Besides Michael, Gillian and Stephanie, the agency's staff also includes Yoli Vega, who is a licensed agent and Joseph Trahey, who is a producer.

Climbing strategies

Michael believes that the underwriting experience he and Stephanie acquired while working at insurance companies has been key to Lakeside's "responsible growth" and is why the agency is "popular with companies." He says that at first, "the challenge was getting a company to believe in me, trust that I would succeed. Now I have a track record that they can look at."

Michael McCarron with his wife, Gillian, and son, Kiernan, at home. Gillian works several days a week at Lakeside Insurance, handling the agency's accounting.

Another key to success is building relationships with companies, says Michael. "With companies merging and consolidating, it's a little more challenging but is still possible."

Of course, being a small agency poses a big challenge. "We don't have large books of business that we can roll over to these companies. Instead, I need to get them to believe in my 'story' and vision that we can aggressively grow internally," explains Michael. He has found some creative ways to open doors and meet "the right people."

For instance, throughout college Michael played rugby and soccer. He still plays semi-professional rugby and travels throughout the country during the spring season. "I have become better acquainted with two CEOs--Safeco's Mike McGavick and Progressive's Glenn Renwick--because they too have a rugby background," he says. "Here I am; I can't offer anywhere near the volume of business to these companies that others can. But I was invited to their functions and began talking with them about social things like rugby, then insurance. If you can get high-level exposure like that and get to tell your story, it pays off." Another result of relationship building is that now Michael serves on several company committees.

The message

Michael tells his "story" not just to companies, but also to clients and potential clients. "You have to show that you're a progressive thinker and risk manager," he says. "I can offer empathy to the small business owner--because that's what I am. I am a 'small business troubleshooter,' a 'trusted advisor.' I can share with clients how I structured a certain area or handled a specific challenge (or how I am handling it), whether it be workers comp, benefits, or human resources.

"As an owner and producer, I bring more depth to the table than someone who is just a producer. It's hard for producers to spend time with clients when they're under pressure to bring in the numbers," Michael says.

"First, I prove myself with the client's commercial business, then go to personal lines. I have my Series 6 and Series 66 licenses, so I can say, 'Let me help you with your 401(k) and investments.' I go for depth and profit margin," Michael says. "I'd rather have 20 good, solid accounts where I handle all of the clients' insurance needs, than 100 monoline accounts.

"Every business needs the Holy Trinity--a lawyer, an accountant and an insurance agent. I don't just sell them insurance, I offer other services and my expertise," he continues. "I may explain to a client, 'Even though you can't afford to hire an HR person, let me teach your accountant how to handle some of the HR function.' I listen to the client to see what else is going on in their business. Even if it's not revenue producing, I do research to help their business run better.

Stephanie McCarron (front row, center) joined Michael in 2000 as a co-owner at Lakeside Insurance Center. Other agency staff includes Yoli Vega (front row, left) who is a licensed agent, and Joseph Trahey (back row, left) who is a producer. Behind Michael and Stephanie is their father, Dennis McCarron, who owns McCarron & Associates in Chesterfield Township, Michigan, and who encouraged Michael to pursue insurance as a career.

"There is a lot of consolidation going on in the industry," Michael observes, "You have these huge generalists who are trying to be everything to everybody. While I understand that these consolidations make sense in terms of economy of scale, I also think that companies will need to find competitive niches. Progressive is an example of that. They've found a niche and are outperforming the majority of the auto market.

"But with many consolidations, the personal touch gets lost, and that's another strength of being a smaller agency," Michael contends. "We don't just give our clients an 800-number and leave it at that. I believe the key to small agency survival is to continue to outperform from a service standpoint on the small to mid-sized commercial accounts which tend to be neglected by the large brokers. The crux is to leverage your account relationships better than any of your competitors, be they large or small."

Emphasizing personal service and relationships has played a vital role in Lakeside's growth through acquisitions. According to Michael: "In most acquisitions, you have some agency owners who are ready to retire from a business they have spent a lifetime building. They want to see an organization which values all of their customers, which I as a small agency owner will do better than bank-owned agencies. Many of these owners do not want 100 CSRs handling their clients. The principals of books that we've acquired like this philosophy of service and relationships, sometimes to the point where they will take less money for their agency than if they had sold to a bank."

The right time, the right place

Even though Lakeside Insurance has been around for 40 years and there was positive history behind him, Michael believes that being a newcomer to the industry and the state presented a hurdle when he purchased the agency. "I really had to prove myself, since I had no connections in the local or state business community or foundation from which to build a clientele. I've often thought that I couldn't have done this in the East, where there seems to be more of an old-boy network, where agencies and businesses may have relationships which can go back generations. Many Colorado residents are young transplants. They're willing to shop around and aren't entrenched with an agency that has served their family or business for generations. If you prove yourself, that you can do a good job and are hard working as well as a progressive thinker, they'll listen to you."

The secrets of success

Michael encourages young producers to listen--to older, experienced producers as well as to clients. "One of the agencies we acquired had three principals, older gentlemen. I sat down one day with them and just listened. I got a crash course on the history of Denver, of how they succeeded in the business. You have to be willing to invest your time in clients also, learn about their business.

"Don't fight change, use it to your benefit," he continues. "There's no time to moan and groan that companies won't do business with a small agency. Get in there and tell them your story and how you can create a mutually beneficial partnership."

Michael concludes, "The United States is an amazing country . . . To think that a person can start a business with a laptop, a contract, and an entrepreneurial spirit!" *