MARKETING
Sport fishing boats, luxury vehicles, and race cars
mean fun and profits for The Flood Group
By Elisabeth Boone, CPCU
Building relationships is key to building profits at The Flood Group, based in Flushing, New York. The agency's relationship with a local Land Rover dealership, for example, has resulted in a number of referrals and new clients, who buy not only auto insurance, but also homeowners and umbrella coverage. The agency's executives (from left) are Terrence C. Flood, President; Dennis J. Kelly, Account Executive; and Brian G. Flood, Vice President.
Whoever said work can be fun must have been thinking about The Flood Group, whose producers are following their passions to profit--and loving every minute of it. Located in Flushing, New York, and now in its third generation of family ownership, The Flood Group is a leading insurance and financial services organization that serves more than 3,500 clients in New York, New Jersey, Connecticut, and beyond. Flushing is located in the borough of Queens, just east of La Guardia International Airport and close to both the East River and Long Island Sound.
The Flood Group was established in 1950 as the Flood Insurance Agency by Francis J. Flood, who was joined by his son, Gerard, in 1956. Gerard's sons, Terrence (Terry) and Brian, now own and operate the agency and are proudly continuing the tradition of excellence pursued by their grandfather and father.
With premium volume of some $10 million, the agency offers a full complement of property/casualty and life, health, employee benefits, and financial products and services.
The staff is composed of four commercial producers, one personal lines producer, and four service
and support employees. The Flood Group's key company partners include Travelers, Chubb, Utica National Insurance Group, and Merrimack Mutual Fire Insurance Company. The agency also places a substantial amount of business through the wholesale market, including a program for the Electrical Apparatus Service Association, which is comprised of wholesalers and distributors, and programs for not-for-profit organizations like churches and a support group for children who lost a parent in the 9/11 terrorist attacks.
Although he's not yet 40, Terry Flood has 20 years' experience with his family's agency, starting in college when he worked part time. Immediately after graduation he became a full-time producer and, today, as president, he divides his responsibilities between producing and administration. Younger brother Brian, who is vice president, came on board in 1990 after serving as a commercial underwriter for four years, first with Michigan Mutual and then with AIG. Dennis Kelly just celebrated his first anniversary with The Flood Group. A long-time friend of Terry and Brian's, he joined the agency as a producer in January 2003 after several years' experience as a high school teacher and later as an information technology specialist.
From passion to profit
Young, motivated, and hard working, these three producers seem to have found the magic formula for success: Following your passion can open the pathway to profit. For Terry, that passion is sport fishing off Montauk on the eastern tip of Long Island, and he readily acknowledges that a big factor in turning his passion to profit was serendipity. "One day I was at my marina and overheard a conversation in which the owner's wife, who was an insurance agent, said she was going to retire and didn't know who would handle all the boat insurance after she left," Terry says. "This marina is the leading dealer for a particular brand of boat. I walked up to the owner and his wife and said, 'I've bought several boats here and I'm an insurance agent, so how about giving me a try?' That's how it got started, and it's really taken on a life of its own." As proof of the agency's success in this market, for the past two years it's been recognized at the Travelers Leadership Conference as one of the top volume writers of boat insurance.
Terry Flood (right) with James Farrell, Manager for Travelers Boat/Yacht Personal Lines, and a typical luxury boat covered by The Flood Group.
The average value of the sport fishing craft Flood insures is about $100,000. "Since last February we've written about 100 boats through various boat dealerships," Terry says. "The largest one we wrote was a 71-foot craft valued at about $2.2 million that generated an annual premium of $20,000. That was definitely more the exception than the norm."
Boats aren't big business for Flood, but they're definitely good business. "We don't make a lot of money on boats, but this niche is extremely profitable for us," Terry says. "We ended 2002 with a 22% loss ratio on premium of $67,000 with
87 policies in force. For 2003, our loss ratio was 6% on written premium of $144,000 on 175 boats." These extremely low loss ratios, he points out, have increased the agency's overall profitability with Travelers while bringing down its loss ratio with the insurer. "Right now, our personal lines loss ratio with Travelers is under 35%," Terry says. He has high praise for Jim Farrell in the Travelers yacht unit. "He does an exceptional job, and he's been instrumental in helping me get this program up and running."
Opening the door
Although The Flood Group clearly is enjoying impressive results in the sport fishing boat niche, Terry says, it's really just a door opener to more lucrative commercial accounts. "In Marketing 101 we learn about loss leaders, which are attractively priced items designed to get customers in the door, with the idea that, once there, they'll become interested in big-ticket merchandise," he says. "In studying the demographics of the people who buy these high-end boats, I've learned that 90% are self-employed, and that the average income of this group is $150,000 a year. Most of these people live in affluent areas, and many own secondary residences. They also drive luxury cars. There's a tremendous opportunity for us to cross-sell these accounts, not only for personal lines but also for commercial business," he asserts. "For example, I gained entrée to a commercial account worth $250,000 in premium as a direct result of the fact that I insured the client's boat. I fished with him half a dozen times over the summer and built a good rapport with him, so I'll have an above-average chance of getting the account when it comes up for renewal."
Brian Flood (right) shares a fine vintage with Mario Franchi, general manager of Manhattan's Trattoria Dopo Teatro, one of the agency's clients.
"Roger Sitkins (management coach) says that people like to do business with people who are like them, and that's absolutely true," Terry observes. "It's easy for me to talk with other sport fishermen because I speak their language and can build rapport quickly."
As Terry pointed out, the owners of big-ticket boats also tend to drive luxury vehicles, and that's where Brian Flood comes in. "Several years ago, I developed a relationship with the owner of a local dealership that sells Range Rovers," he says. "Sometimes a deal would get stalled because the customer was having trouble getting insurance placed. The dealer needed a reliable source for the coverage, and I told him we could be that source. Since then we've arranged insurance for a number of Range Rovers, and also for other makes of luxury vehicles."
Once he brings in the auto policy, Brian says, "I target other personal lines, like homeowners and umbrella coverage. When the client is a business owner or a top corporate executive, it's very likely he or she is a decision maker. This opens up huge opportunities for us to write some really good commercial business." He offers an example. "About six years ago, a customer of a dealership who had bought a luxury vehicle was having difficulty getting it insured. I worked with him to place coverage, and we ultimately acquired all of his business, including several high-end New York City restaurants he owned." Affluent people tend to know others like themselves, Brian observes, "so when we do a good job for one customer, he or she is usually happy to introduce us to other prospects we can help."
Based on the success of his efforts in the luxury car market, Brian has already planned his next initiative. "One of my hobbies is collecting wines, so I'm planning to attend a lot of wine tasting events and get to know fellow collectors. Again, these people tend to be high net worth individuals with lucrative personal lines business and possibly commercial coverage needs as well."
The Flood Group producers aren't shy about asking for referrals, Terry says. "When we arrange coverage for a client we've met through a boat dealer or a luxury car dealer, we always say, 'If you're happy with what we've done for you, please go back and tell the dealer we did a good job for you,'" he explains. "The next time we visit that dealer, he'll thank us and say, 'That client said you were great.' That positive reinforcement really helps with referrals."
The Flood Group's success, Terry notes, wouldn't be possible without the efforts of the agency's dedicated support staff. Dianne O'Connor, small business account manager, has been with the agency for 20 years. Serving as personal lines account executive is Joan DeLeo, a four-year veteran, while claims specialist Rona Burke has been with the agency for 10 years. Accounting is handled by Wendy Kramer who has nine years of service; and Melissa Miller, records, has been with Flood for two years.
Racing for profits
The agency's newest producer, Dennis Kelly, has a passion for fast cars. "I grew up around regional racing, so pursuing race car owners seemed like a no-brainer," he says. "When I went to an event last year, Porsches, Ferraris, and Corvettes were at least 60% of the cars participating. These cars cost from $50,000 to $200,000, so anyone who can afford to race one obviously has quite a bit of change to spare. I traded in my car and bought a Volkswagen GTI that I can race, and I'm in the process of getting ready for this year's weekend events," Dennis says. Like Terry and Brian, Dennis says, "I'm already thinking about where I can go next. I'm researching who insures race teams and where I can find these people." Weekend racers, he notes, transport their cars on trailers or flatbed trucks, which also need coverage. From there Dennis moves into high-end personal lines and also begins to pursue his clients' commercial accounts.
What's more, Dennis notes, his father owns a gas station. "This past year, I've begun to develop relationships with people who own body shops and repair shops," he says. "I know their business, so I can build rapport with them."
Not every insurer is equipped to handle the personal lines needs of the high net worth individuals targeted by The Flood Group. Million-plus-dollar homes, second residences, luxury vehicles, high-end watercraft, fine arts, valuable jewelry, rare wines, and other costly items usually are beyond the scope of traditional personal lines carriers. For coverages tailored to the needs of their affluent clients, The Flood Group turns to the Chubb Group, which is noted for its expertise in serving this market. "We were appointed by the Chubb Group just last year, and their expertise in the high-end personal lines market is exactly what we need for our clients," Terry says.
Going to the next level
When an agency has been in business for half a century and has enjoyed steady growth by sticking to the basics, the principals may have little impetus to institute major changes. As the new generation, Terry and Brian respected their father's experience and success yet at the same time were eager to explore new growth strategies. A key driver in moving The Flood Group to the next level, Terry says, has been its membership in the Sitkins 100. "I met Roger in 1999 at an AMS convention," he says. "I was scheduled to take four or five classes after the convention, and his class was the first one. I sat there, and what he was saying just hit me like a ton of bricks. I decided I wasn't going to attend any of the other classes because I wanted to listen to everything this man had to say."
Back at the agency, Terry says, "I was all fired up to start implementing the ideas I'd learned. But my father looked at me like I was crazy. After
41 years in the business, he wasn't interested in new ways to run the agency. He said, 'If you want to do this, you're on your own.'"
The Flood Group serves more than 3,500 clients in New York, New Jersey, Connecticut, and beyond. The agency's staff includes: (front row, from left) Dianne M. O'Connor, Small Business Account Manager; Joan DeLeo, Personal Lines Account Executive; (second row, from left) Rona Burke, Claims Specialist; Wendy Kramer, Accounting Representative; (back row, from left) Terry Flood, Dennis Kelly and Brian Flood.
Terry took the challenge, enrolling in Sitkins' Producer Training Camp at the end of 1999 and graduating in April 2000. After their father died in November of that year, Terry says, "We were faced with making some important choices. A lot of our competitors looked at us as a good acquisition target, and that wasn't something we wanted to pursue. We thought we had a strong foundation and a good vision for the future, and we wanted guidance to help us steer the agency in the right direction. I thought it was important for Brian and me to agree on implementing the ideas I'd been learning, so in December we decided to join the Sitkins 100. It was a great group of people who were not competing against each other, so we had a terrific sounding board for sharing ideas. Also, the template Roger gives us to grow our agencies is of tremendous value. In the three years that we've belonged to the Sitkins 100, our revenue has almost doubled," Terry says enthusiastically.
The entire agency is involved in Sitkins 100 events and activities, Terry says. Service staffers use Sitkins' CSR Online training programs. "We make a habit of attending the monthly sales meetings, and I attend the CEO Forums to get feedback on what we're doing to make sure I'm following the guidelines correctly."
What's ahead?
With its 50-plus-year tradition of excellence and its energetic young team, The Flood Group seems to be making all the right moves to build on its success. Even for the best managed agencies, however, both the present and the future hold some formidable challenges. One such challenge, Terry points out, is the ongoing trend toward consolidation among both insurers and agencies. "Since all of our competitors are selling pretty much the same homogenous products, and in light of the consolidation of insurers, the market's becoming extremely competitive," Terry observes. "We have to learn how to differentiate ourselves from the pack."
On the agency side, the trend toward consolidation also is strong and ongoing. To expand its base of operations and build on its 50-plus years of success, The Flood Group is currently engaged in talks to acquire another agency in its area. The transaction is expected to be completed later this year and will enhance the agency's position in the highly competitive New York metropolitan area.
With respect for the past and a keen eye toward the future, the savvy young producers of The Flood Group are ideally positioned to profit in a marketplace that each day grows more complex and challenging. And if success demands regular visits to the marina, the Range Rover dealer, or the racetrack, Terry, Brian, and Dennis are more than equal to the task. *