For Insurance Service of Asheville,
niche marketing paves the way to profits
By Elisabeth Boone, CPCU
 James W. Stickney, IV, is President of Insurance Service of Asheville, Inc., which has arranged insurance for (from top) the Biltmore Estates in Asheville; J.L.J. Trucking, Inc., of Marion, North Carolina; the Asheville City Hall; and the Biltmore Estate Winery. |
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Nestled amid the breathtaking beauty of the Blue Ridge Mountains, Asheville, North Carolina, combines gracious Southern charm with 21st century sophistication in commerce and industry. A city of some 65,000, Asheville boasts a solid and diversified business community as well as a thriving tourist trade. This picturesque city is home to Insurance Service of Asheville (ISA), an independent agency that was established in 1958 by James Stickney, III, father of the agency's current president, James Stickney, IV, AAI.
"Dad had no capital, a good reputation, and a lot of contacts," the younger Stickney says, "and he built ISA into a small but sophisticated agency. From the very beginning, he had the desire to get involved in the more complex and challenging accounts."
"Complex" and "challenging" are accurate descriptors of the kinds of business Insurance Service of Asheville writes today. Key target markets are trucking, municipalities, health care, and self-funded group and workers compensation accounts. The agency also arranges insurance for the lavish Biltmore Estate and for a large cooperative for Coca-Cola bottlers. Nearly 50 years after it was founded, pursuing profitable niche markets is still at the heart of the agency's philosophy.
A family affair
Insurance Service of Asheville is very much a family affair. The younger James Stickney started out as a CSR in 1978 and rose to president in 1996. He also gained valuable experience by establishing the agency's group and employee benefits department. As president, his responsibilities include management, mentorship, production, and building client relationships.
In 1985 Jim's brother, Sam, joined the agency. "He took over a book of business from a small agency we acquired around that time, and he's now our executive vice president, specializing in health care," Jim says. "More recently my sister, Mary Alice, joined the agency after a career in government. She serves as our business manager and has done so well that she was promoted to vice president of administration," he adds. "My dad now has the pleasure of having all three of his offspring working in the agency as officers and owners." Although he and his siblings own and manage the agency, Stickney notes, "we consider our employees family as well."
Insurance Service of Asheville is a family affair. Pictured with a portrait of their father, ISA Chairman James W. Stickney, are (left to right) Executive Vice President Samuel M. Stickney; James W. Stickney, IV; and Mary Alice Stickney Arthur, who is the Vice President of Administration.
ISA has a staff of 16 employees, of whom five are producers. Although the agency's principal operating territory is Buncombe County, many of its accounts conduct operations outside the county. Some 80% of the agency's $18 million property/casualty premium volume is commercial risks. Twenty percent of the firm's overall revenue of $2.5 million is generated by group health accounts. "Group definitely has been a growth area for our agency," Stickney observes. "This business nicely complements our larger commercial accounts. We've successfully cross-trained some of our producers in P-C and group, so when we call on a commercial account, we can wear both hats."
Stable and flexible
How does Insurance Service of Asheville seek to position itself in the marketplace? "We work primarily from referrals," Stickney responds. "We're now debating whether we should raise our profile through advertising and become a more aggressive sales organization. We enjoy good visibility and good positioning in the community by virtue of our longevity," he notes. "We've maintained my dad's vision and reputation and values, and a key advantage for us is local family ownership. That's becoming a rare thing, and we've protected it. We've had opportunities to merge or be acquired, but our structure works, and we intend to keep it," Stickney asserts.
"Our closely held ownership also gives us the ability to make decisions and take action quickly," he says. "We enjoy the confidence of our underwriters, and it's extremely important to us to maintain personal relationships with these partners. That makes a major difference when we're trying to distinguish ourselves from other brokers. When we're representing a particular risk in the market, that level of trust is absolutely critical," he says. "We nurture and protect our relationships with underwriters very strongly."
Another factor that contributes to the agency's success, Stickney observes, is its independence. "We're not an agency that traditionally has been motivated by trips and deals from our carriers," he says. "We place a piece of business with the carrier that fits it best, and it stays there. This principle is very important to us, and it's becoming increasingly important as we diversify our book of business. Because our book is so diverse," he adds, "we're required to maintain relationships with a lot of specialty underwriters and other nontraditional markets. About 40% of our total commercial volume is in nontraditional markets. We need these markets so we can serve our more complicated risks."
Trucking for profits
A major growth area for Insurance Service of Asheville is trucking. The agency's location in the heart of North Carolina's vast furniture-making industry positions it ideally to write a wide variety of trucking risks, and over the last few years the agency has developed considerable expertise in this challenging market. What's more, the agency has a secret weapon that gives it a significant edge over its competitors: Gary Perry, who serves as commercial lines marketing manager and as a producer, actually has experience as an over-the-road trucker.
Commercial Accounts Manager Gary Perry (right) works with James L. Johnson (left) of J.L.J. Trucking, Inc., Marion, North Carolina.
Perry began his insurance career in 1979 with the Factory Mutual System, and in 1985 he moved to the agency side, where he had responsibilities in the sales and marketing areas. He joined ISA in October 2001 as marketing manager. Perry helps oversee the agency's commercial accounts and prepares submissions for both renewal and new business. A key responsibility for Perry is developing trucking business for the agency. Since coming on board he's helped build the agency's trucking niche into premium volume of some $3 million.
"In April 2001, I decided to obtain my Class A CDL (commercial driver's license), and I became an over-the-road truck driver for a company that's now one of our clients," Perry explains. "I spent about six months driving from this area, hauling furniture to the West Coast and bringing produce back. That gave me knowledge of the trucking industry from the inside--everything from daily operations to dispatch to administration--in addition to seeing what actually happens on the road. I gained a solid understanding of how a trucking business operates and the problems associated with it," he says. "In October 2001, when I joined the agency here, I wanted to use my knowledge to develop trucking business. I started as a safety consultant with my former employer; later I reviewed the insurance program and placed the coverage. From that point, all of our trucking business has come from referrals," Perry says.
John P. Miall, Jr. (left), Director of Risk Management for the city of Asheville, and ISA Vice President Jonathan S. Nelson outside the Asheville City Hall building--one of ISA's municipal risks.
Within its trucking portfolio, Insurance Service of Asheville currently handles almost exclusively long-haul trucking operations. "We're open to any size risk from one truck to 100-plus trucks, and we have accounts all along that range," Perry says. "Most of our clients haul furniture, operating from this area to the Pacific Northwest and back. Our clients have very sophisticated operations and do extensive long-range planning," he continues. "The trucking industry is changing rapidly with respect to market segments and market conditions. The new restrictions on the number of hours a driver can be on the road are putting a lot of strain on owners, and they're also affected by the extended waiting times at warehouses before a truck is loaded. All of this will have a major impact on the trucking industry over the next 12 to 24 months," Perry observes. "Trucking is a cash-in, cash-out business; time is money in all aspects of a trucking operation."
In the popular press, horror stories abound of truckers staying behind the wheel for 24 hours or more, taking amphetamines to remain awake and endangering themselves and others on the road. Also common are accounts of drivers who hold licenses in numerous states, so losing a license in one state is no barrier to unsafe drivers' remaining on the road. "From my observations, trucking company owners are cracking down and doing everything they can to have safe and legal operations, because unsafe driving has a significant impact on owners' insurance premiums and on their ability to secure coverage so they can run their trucks," Perry comments.
In addition to placing insurance for trucking companies, Perry says, "We work with their safety departments and their driver recruiters, because concerns about drivers continue to be an issue for the trucking industry, in terms of both a shortage of drivers and the challenge of finding qualified drivers," he explains.
Jim Stickney speaks with pride about Perry's success in building the agency's trucking business. "He's a rare class act in a very tough and cynical market segment," Stickney says. "What's unique about what he's accomplished is the level of trust he's been able to achieve with underwriters. They're confident of his integrity and his knowledge of the business. Having been a driver, he identifies with his clients and understands their needs," Stickney continues. "To parlay that knowledge into a $3 million book of business is an outstanding achievement. Gary's market knowledge and underwriting integrity are invaluable, and we're glad he's with us."
Tough market
Even in the best of times, trucking is a challenging line of business. How does Perry characterize current conditions in the market? "From a capacity standpoint, it's been tough," he responds. "Recently we've noticed an increase in capacity, with a few more players willing to entertain the better risks: those trucking companies that can show improvements in their safety records. As a result, there's increased competition for these risks. We're finding that pricing is stabilizing, again for the better trucking operations. Those operations that continue to experience claims or are not cracking down on safety are continuing to pay the freight from a premium standpoint," Perry remarks. "Overall, as far as fleet liability and physical damage, what I'm seeing in this geographic area is some welcome stabilization in the pricing for our accounts."
When the overall market is soft and competition is intense, most trucking risks can easily find a home with standard carriers. For the last few years, however, that's definitely not been the case. "Some standard markets do provide coverage for trucking risks, but I have found, over at least the last couple of years, that the specialty markets have been the most competitive," Perry remarks. "We place a large amount of our business with companies that specialize in trucking. That's where we concentrate on building relationships with underwriters. Because of the trust and confidence our underwriters have placed in us, they know we'll bring them good accounts. They understand the trucking industry, and they do a better job than most standard markets," he says.
Members of the ISA team are (seated left to right) Cindy Scollin, Personal Lines Manager, and Gary Perry. Standing (left to right) are Jonathan Nelson; Sharon L. Robbins, Life and Health Manager; and Pat Ferguson, Team Manager.
Because of Asheville's location in the heart of furniture manufacturing country, the area is home to a large number of trucking operations. "Trucking is a high-profile business," Perry says. "There are a lot of premium dollars involved in each account, so competition among agencies is pretty intense. We believe our success comes from our knowledge of the business and our strong relationships with underwriters as well as trucking company owners. We believe that gives us a tremendous competitive advantage."
Biltmore is big business
Using the market knowledge and underwriting relationships that have proven so successful, Insurance Service of Asheville for the last 20-plus years has arranged insurance for the famous Biltmore Estate, built near Asheville between 1890 and 1895 by multimillionaire George W. Vanderbilt. The 250-room French Renaissance chateau, designed by architect Richard Morris Hunt, is the largest private residence in the United States and is designated a National Historic Landmark. Originally situated on 125,000 acres, today the Biltmore Estate encompasses approximately 10,000 acres, including formal and informal gardens designed by Frederick Law Olmsted, the father of landscape architecture in America.
Inside the house, the walls are hung with artworks by Renoir, Sargent, Whistler, Pellegrini, and Boldini. The furniture includes designs by Sheraton and Chippendale. A chess set and gaming table that belonged to Napoleon when he was in exile at St. Helena are on display in the salon, and Chinese goldfish bowls from the Ming Dynasty can be seen in the library. Other noteworthy features are eight 16th century Flemish tapestries and 50 Persian and Oriental rugs that cover marble and oak floors.
Biltmore Estate Winery, housed in a former dairy barn and also designed by architect Richard Morris Hunt, was opened in 1985. Guests can learn about viticulture and oenology, as well as sample Biltmore's award-winning wines. The estate currently produces approximately 100,000 cases of wine annually. Another Hunt structure on the estate that was also once part of the dairy operation is Deerpark Restaurant. Adjacent to Biltmore House is a large stable area, restored to reflect the original character of the work and storage rooms. The main stable is now a café where guests are seated in renovated horse stalls.
How did ISA acquire the Biltmore account? Not surprisingly, "it was through a referral," Stickney says. "We had known the owners of the estate, who 25 or 30 years ago decided to develop the estate as a museum and a prominent location for visitors and resort activities," he explains. "We were selected by the owners and their consultant. The Biltmore Company is comprised of Biltmore House and conservatory, a full-scale winery operation, and most recently a resort hotel with all the amenities, including horseback riding, rafting, and rock climbing. It's a comprehensive 10,000-acre tourist attraction, museum, and resort. As you might imagine, the account is very complex and challenging."
Equally complex and challenging is a cooperative for Coca-Cola bottlers that is the largest plastic bottling plant in the world. "This account is every P&C agent's dream," Stickney says. "We acquired it through a referral about 23 years ago. We met with the insured, who at the time was the only employee, in a trailer in a ditch." From those humble beginnings, the operation has expanded into eight states with more than 1,000 employees. "Our constant challenge with this account is to balance the demands of the company's aggressive growth culture with safety concerns and insurance costs," Stickney explains. "Add in market cycles and competition, and it's clear we have our work cut out for us."
Yet another profitable niche market for ISA is municipal risks. "We have a talented producer, Jonathan Nelson, who like Gary has a statewide reputation, with excellent underwriter relationships and negotiating skills, in the very tough market of municipalities," Stickney says. Among several large municipal risks across the state, an important client is the agency's home city of Asheville. John Miall, the city's risk manager, recently was selected Public Entity Risk Manager of the Year by the National Public Risk Management Association, Nelson says.
Facing the future
For Insurance Service of Asheville, as for other independent agencies around the country, longevity, growth, and success are not reasons for principals to be complacent. How does Stickney characterize the challenges his agency faces? "Our first challenge is to remain independent," he responds. "We have resisted the merger and acquisition trend. We like our way of doing business, and we are going to stay independent as long as we can in every respect, from ownership to marketing strategy to values."
A second, ongoing challenge, Stickney adds, "is to continue to fight off large brokers. Given the high profiles of some of our accounts, they're targets for large brokers that have a lot of resources to put on the table. That will always be a challenge for us," he says. "Another challenge is to find and develop a new generation of service personnel. We've enjoyed very low turnover, but eventually some of our long-term service employees will retire, and their work product will be very difficult to replace."
Still another challenge, Stickney says, "is what I call the specter of national health care reform. We're heavily invested in the group market, and sometime after the presidential election I believe there will be more of a political solution rather than a market solution to the high cost of health insurance. That possibility threatens group insurance agents like us."
Anticipating future market cycles also will demand the agency's attention, Gary Perry observes. "We have to continually survey the market so we know what's going on and what's available. A key factor in our success is that we find solutions for our clients' problems. The property/casualty industry is changing rapidly, and to retain our clients we have to stay on top of those changes and anticipate our insureds' needs," he declares.
Based on its history of family ownership, its powerful combination of stability and flexibility, and its deeply held values, Insurance Service of Asheville clearly is poised to build on its impressive record of success, both within its community and beyond. *