Major stockholders in MBAH include (from left): John B. Willis, CIC, Executive Vice President; Jay G. Smith, CPCU, President and CEO; and Daryl E. Clute, Senior Vice President.
MARKETING AGENCY OF THE MONTH
80-year-old MBAH focuses on core competencies to move ahead
By Dennis H. Pillsbury
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Major stockholders in MBAH include (from left): John B. Willis, CIC, Executive Vice President; Jay G. Smith, CPCU, President and CEO; and Daryl E. Clute, Senior Vice President. |
The MBAH Insurance Agency, Lafayette, Indiana, traces its origins back to 1924 when the Insurance Agency of Butz-Burnell was formed. But much has happened since then that has helped it grow into a unique entity that has been able to differentiate itself from its competition and reach $4.5 million in revenue with 44 employees.
The agency has always focused on a “customer is always right” philosophy, but it more recently enhanced that perspective by focusing on customers for which it could provide unique competencies that could not be duplicated by the competition.
“We’ve always understood that we are only as good as the problems we can solve and the service we can provide,” points out Jay Smith, CPCU, president and CEO. “But it became clear that some of our competitors also recognized that fact. We needed to find a way to move to the next level by focusing on those areas in which we offered service and knowledge that our competitors were incapable of providing.
“In the fall of 2000, we started a strategic planning process using Michigan State University. The program involved simplified strategic planning for small and mid-sized companies and helped identify competencies as a way to identify what to sell, whom to sell to and how to beat or avoid the competition. The program identified unique competencies as those areas where we could add value, be different and be difficult to copy. When we placed all three criteria over our book of business, we noticed that we had a number of areas where we added value and were different, but were not difficult to copy.”
He continues, “We found that we had a unique combination of expertise and service in the construction area, particularly homebuilding, and redefined our commercial area into construction and all other. We also went through an 80/20 process where we chose those customers on which we would focus our strongest efforts. More recently, we have determined that agribusiness is nearing a strategic competency for us.”
This refocusing builds on the service-oriented strengths that have characterized MBAH and its four predecessor agencies as they each sought to serve the community and their clients. As mentioned above, Butz-Burnell was the earliest established. It became the Burnell Insurance Agency in 1928 when George W. Burnell, Sr., purchased Paul Butz’s interest. In 1934, Ralph M. Mayerstein entered the general insurance business, operating a one-man agency, the R.M. Mayerstein Company. Burnell and Mayerstein merged in 1948 to form Mayerstein-Burnell Company. R.E. “Buffy” Mayerstein, CPCU, who currently serves as chairman of MBAH, joined Mayerstein-Burnell in 1964. That was followed in 1978 when Heath-Shook Insurance, Inc., merged into Mayerstein-Burnell and William W. Heath, who had established the agency in 1952, became a principal. Two years later, in 1980, the Adams Agency, Inc., was merged into Mayerstein-Burnell and MBAH Insurance came into existence. The Adams Agency was founded in 1926 by two brothers, Ray and Ralph Adams.
The owners
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R.E. “Buffy” Mayerstein, CPCU, Chairman, joined the agency in 1964 and is now preparing for retirement. |
Buffy, who has served on many insurance company agency advisory boards and is a past president of the Independent Insurance Agents of Indiana, has turned over the reins to Jay Smith and is getting ready to retire by selling his ownership in the agency under the agency’s buy-out plan.
Jay joined MBAH in 1986, after working with a major broker in Florida. He was named president and CEO in July 2000, after serving as vice president of operations for six years. He became a stockholder in 1992. The other major stockholders are John Willis, CIC, executive vice president, and Daryl E. Clute, CIC, senior vice president.
John joined MBAH in January 1991 as a property/casualty producer. He became an owner and vice president of sales in 1996. He assumed his current position in June 2000. Daryl entered the insurance business with MBAH in 1982 after eight years in the real estate brokerage and appraisal business. He became a stockholder and corporate secretary in 1996, and sales manager in 2000.
In addition, the two individuals who head up the strategic competency areas have begun to purchase stock: Mary Ellis, CPIW, LUTCF, construction division manager, and Michael Brummett, agricultural producer.
Mary began her insurance career in 1979 at another local independent agency. She has both a property/casualty and life/health agent license. She joined MBAH in 1989. She has developed “an expertise in insurance for the construction trades that is unparalleled,” Jay points out, noting that she teaches an insurance class for construction trades at Purdue University. Mary focuses on the insurance program for members of the Indiana Builders Association and serves on their state insurance review board.
Mike is a property/casualty and life/health agent, who joined MBAH in December 1991. He has more than 15 years of experience in the farm insurance industry, a personal family farming background, and is an expert in the area of Federal Crop Insurance. He has completed a wide range of continuing education courses and has a multi-peril crop insurance certification. Prior to joining the agency, Mike was a futures broker for Merrill Lynch.
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Mary C. Ellis, CPIW, LUTCF, Construction Division Manager, is an expert in the construction trades insurance field and teaches an insurance class for construction trades at Purdue University. |
Michael R. Brummett heads up the agricultural division. He is a property/casualty and life/health agent with more than 15 years of experience in the farm insurance industry. |
The results
“We’re very happy with our new focus,” Jay says. “Our renewals and retentions have improved. The only problem we’ve faced is when some of our commercial clients are acquired by out-of-state firms. We have to depend on new business to replace those losses, and we’ve been able to show steady growth, despite the loss of some big commercial clients. Sherry Frey, CPCU, CIC, AU, our director of marketing, has been really helpful in getting our message out to insureds and potential insureds. She is responsible for the distribution of all our commercial insurance products and services and has used her unique abilities to develop our family business group.”
“Prior to 2000,” Sherry notes, “our commercial insurance operation looked like pretty much every other agency’s. There were big accounts and small accounts. After the refocusing, we were basically looking at construction and all other. But we recognized the need to further refine the operation and eventually broke it into five divisions: the Special Construction Insurance Center focuses on large contractors; the Construction Business Insurance Group addresses both the business and personal insurance needs of smaller contractors; the Special Commercial Accounts Department services large non-construction business; the Family & Business Insurance Group serves the business and personal insurance needs of family-owned businesses; and the Commercial Accounts Sales & Services services small individual policies for clubs and associations.”
Sherry continues, “Breaking out the family business, the BOP type accounts, was natural, but it seemed like we were missing opportunities to cross-sell these accounts. For many of these businesses, the personal and benefits needs were as important or more important than their commercial insurance needs. We set up the division to focus on all these areas.”
Jay adds that the unit has been a great place “to develop young producers. We hire people right out of college, some with athletic backgrounds because that seems to indicate a competitive drive that you need to have in this business. By adding personal lines and benefits, it gives these young producers a chance to build a decent sized book of business and allows the agency to continue to write this business because the margins start to make sense. We expect a couple of young men to move from this division into larger commercial, and that’s been very good as well. These are competitive people, and this gives us a way to fulfill that drive by moving them up.” MBAH also has successful personal lines and life/benefits departments which each generate 16% to 18% of the revenue total.
Education
The agency recognizes the importance of educating all of its people so that they remain at the cutting edge.
Sherry has been with the agency 31 years and, as one can tell by the designations after her name, has taken advantage of the agency’s emphasis on providing its people with the chance to educate themselves about the industry. “It’s always been that way,” Sherry says. “The agency has always provided employees with the opportunity to grow and become what they want to be. We pay for people to pursue their CPCU, CIC, AU, MBA, CPA, or whatever designation they feel they need to help them do their job better. We also provide in-house seminars so our people can stay abreast of changes in the industry. We have a brand new training room and routinely offer seminars on E&O, new products, what to look for in contractors’ contracts, how to advise customers on the most effective way to transfer risk, and so on. We want to be better educated than the competition,” she says. “That’s part of our value-added edge.”
Involvement
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Marianne C. Rose, Director of Marketing & Public Relations for United Way in Lafayette, Indiana, and John Willis, who served as United Way Chairperson in 2003. MBAH is a Pacesetter with United Way. |
Jay points out that involvement in the industry and in the community are vital parts of the agency’s philosophy. “We need to be good corporate citizens. We’re a Pacesetter with United Way, for example. We’re also heavily involved in the Independent Insurance Agents of Indiana. Sherry will be president of the association in 2005. We’re very proud of her.”
Sherry says that one of her goals as president of the IIAI will be to push the InVEST Program. “We need to interest more young people in this business. I intend to find at least one school to do a start-up program here in Indiana.”
Jay adds, “This is a terrific industry, and we need young people to find out about it. It can provide an excellent career that is challenging and different every day. There are great people in the business and, most important, it’s fun.”
Investing in people
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“The agency has always provided employees with the opportunity to grow and become what they want to be. We pay for people to pursue ... whatever designation they feel they need to help them do their job better. We also provide in-house seminars so our people can stay abreast of changes in the industry.” – Sherry Frey, CPCU, CIC, AU |
“I know it sounds trite, but it’s very true: Our people make us successful,” Jay says. “We have a wonderful blend of young people and seasoned people. It has kept us on the edge technologically as the young people push us old fogies into doing what is necessary to remain effective and competitive. We have great people in claims who want to help clients. That’s their aptitude and their attitude. We just invested in developing a loss control department that together we call the Claims and Loss Management (CALM) department. We advise our clients to stay CALM when they have a claim because they can rest assured that we’ll be there for them.”
Jay continues: “We’ve actually scaled back on mass advertising and are investing in people. We’re trying to choose our customers rather than have them choose us and that takes relationships. We need young producers out there making face-to-face contacts. And, of course, we reward them. We have goals for people who want to become owners so they can participate more fully in our success. We are committed to perpetuate internally and remain independent here in Lafayette. We just doubled the size of our building. We’re not going anywhere.”
MBAH exemplifies the entrepreneurial spirit, creativity, and care for people that are the hallmark of successful independent agencies. For that reason, we are pleased to recognize them as the Rough Notes Marketing Agency of the Month. *