Table of Contents 

Marketing Agency of the Month

On the same side of the table

Cottingham & Butler aligns its interests with those of its clients

By Dennis H. Pillsbury

For its first 70 years, Cottingham & Butler, Dubuque, Iowa, was a small mom-and-pop agency that served its community and environs, primarily writing personal lines coverages. The agency was founded in 1887 as D. Cottingham by John Butler’s (the current chairman & CEO) great grandfather, Dixon Cottingham. In the early 1900s Dixon’s son, John Cottingham (John Butler’s namesake), joined the agency and it became D. Cottingham & Son. The next generation entered the business during the early stages of the Depression. Ellis Butler, who had married John Cottingham’s youngest daughter, Barbara, joined the agency, which took on its current name. Ellis eventually took over the business and began to expand into commercial lines.

In 1957, John Butler began what is now a 50-year career with the agency, when he joined his father’s office. “My job was to watch my father’s secretary and learn the business,” John remembers. “I had just come out of the service and had an MBA in insurance from Wharton.”

John’s brother, Peter, joined the agency right after John, and they created a niche in the poultry business. The agency grew to become the largest underwriter of poultry insurance in the country. They continued to grow the commercial lines business and life insurance business as well. When Ellis passed away in 1964, the two brothers took over the business. About 15 years later, their visions diverged. They agreed to go their separate ways with Peter taking over the poultry insurance niche and John taking over the rest of the business.

Since that time, John has watched the agency grow exponentially, with the number of employees burgeoning more than a hundredfold to reach 340 today, with revenues reaching $49 million. The agency last year was ranked by Business Insurance as the 57th largest brokerage in the country. And it’s in the smallest city for any broker in the top 100. Dubuque has a population of around 60,000.

A simple philosophy

“I’m enormously proud of the team of people who have helped us reach this level,” John says. “They’ve been great fun to work with and watch develop. When I look back at what we’ve done and where we are today, it’s just astounding. And it all stems from our ability to understand our clients’ needs and to serve them. We’ve built this on a very simple philosophy—we always try to get behind the desk solving problems with our clients rather than on the other side of the desk selling policies. By doing that, we are able to custom tailor their risk transfer solutions in a way that best serves their needs. That keeps us ahead of the competition and builds a relationship with clients where they see us as a true business partner.”

While the philosophy may be simple, the solutions are not equally simple. Cottingham & Butler has become an organization that provides a plethora of risk transfer solutions and risk mitigation services that include captive management, loss control expertise, safety consulting, claims management, an employee benefits TPA, a managed care facility, and so on—all established with the goal to find the right solution for each client.

“It’s an exciting environment,” President & COO Dave Becker points out. Dave, who is part of the next generation of leadership, joined the agency about three years ago from McKinsey & Company, continues: “I grew up in Dubuque and what attracted me about the opportunity at Cottingham & Butler was the entrepreneurial spirit that permeated the agency. The people saw being in a small community as an advantage. They had to be creative to attract and retain clients who are located more than 50 miles away from here. In fact, 96% of our business is outside what might be considered that traditional marketing territory. We have clients in 47 states, and two airplanes that are almost always in the air, bringing producers to clients and prospects. Through our Assurex partnership, we’re even able to provide coverage and services for clients that have international exposures.

“We are extremely aggressive at managing the long-term drivers of their insurance-related costs,” Dave continues. “With each of our clients, we work to reduce their overall cost of risk. So it really doesn’t matter where they are located, because the basic principle of service and partnership doesn’t change.”

Chris Patrick, senior vice president and transportation practice leader, notes: “That was the reason we got involved in the alternative risk transfer market in 1993. One of our largest niches is the transportation industry and that has been buffeted by insurance market fluctuations that made it very difficult to budget. These clients wanted better control over their costs so we set up three trucking captives, as well as a heterogeneous captive for our non-trucking clients. They are all based in the Cayman Islands.

“This is not to say that we view captives as the solution for all our clients,” Chris adds. “We don’t. But the captives have provided us with another tool that we can bring to the clients’ side of the table when we help them decide on the proper risk management technique for their risk profile.”

Cottingham & Butler has about 120 clients in their group captives. One of their transportation captives, Traffic Insurance Ltd., has about $50 million in premium and 61 members, making it the largest trucking captive in the United States.

Dean Fair, senior vice president of risk management, is Chris’s counterpart in the non-trucking arena. “We go after large and small national accounts in second-tier cities that don’t necessarily attract the attention of the large national brokers, but have outgrown smaller agencies,” he says. “These accounts usually don’t have their own risk manager so we can step in and become their risk management department. We basically use a four-part strategy to move these accounts.

“The first step is designing a program that best fits their needs. We always look for ways to help them reduce their costs through redesign of their current risk transfer program, as well as deductibles in risk areas where they can better control their losses with our help.

“Once we have determined the program parameters, we go to market to find the right product,” Dean continues. “We have access to every major national insurance company as well as a number of regional carriers, so we can almost always find coverage that fits the insurance needs of the client. In addition, we have access to captives or unbundled services that can provide solutions as alternatives to traditional insurance.

“We then go over our safety and loss control programs and work with our clients to institute programs that will help them reduce or eliminate risk,” Dean explains. “The goal is to reduce their losses and, ultimately, reduce the cost of risk transfer by doing so.”

David Franson, vice president of safety and loss control, supports this effort with 10 loss control professionals. “This service helps us sell and helps our clients cut down on their losses,” David notes. “We develop clients who stay with us by building a relationship based on service that begins even before they sign on with us. We examine a potential client’s risk profile and do a pre-assessment of the prospect’s needs. This includes a particular service plan that we will implement as well as safety and loss control recommendations and solutions. Not surprisingly,” David concludes, “our hit ratio and our retention ratio are quite high.”

Dean continues: “The final phase is claims management, something that both we and our clients hope is rarely needed. However, claims do occur and we are there as advocates for our clients. We also have our own claims handling TPA, C&B Claims Services, for our captive and large deductible clients. For those clients where our TPA doesn’t handle the claims, we provide claims advocacy under the direction of an attorney on staff who has worked as both a defense and plaintiff’s attorney in workers comp cases.” He concludes proudly: “This approach has allowed us to triple our non-trucking business in two years.”

Dave Becker points out that the same approach has been used to develop a large employee benefits book that includes 300 self-funded clients.

“About 40% to 45% of our revenue comes from benefits,” he notes. “We have our own TPA on the benefits side and a managed care company that includes five physicians and more than 20 nurses. It gives us real insight into how the health care system works, and we can translate that into savings not just for our clients, but for the workers comp side as well. Having everything in-house has allowed us to integrate our services. Our nurses work with the P-C side of the house, providing claims review and management of PPO discounts for P-C clients, along with other services.

“The correlation between comp claims and medical benefits is very high,” Dave continues. “We’ve been able to achieve far better results since we started integrating claims management.”

Perhaps the most exciting part of the Cottingham & Butler story is that it’s just starting a new chapter. In the last 18 months, the company has aggressively been expanding its presence outside of Dubuque, opening new offices in Naperville, Illinois, and Chattanooga, Tennessee, and hiring more than 15 sales, claims, and safety professionals across the country. The management team, headed by Dave Becker, is composed of a whole new generation of people in their 40s or younger who are looking to double revenues to $100 million in five years.

Dave says this will be accomplished by building on core strengths and by expanding both geographically and internally through the addition of new people. “There’s still a lot we can do in integration; we’re working on data analytics for the trucking space so we can better analyze the risk and intervene sooner. We’re increasing our push on wellness to support the growing consumer driven health plan and HSA market.

“But most important,” he concludes, “we are working to attract the best and the brightest by being a top employer that people want to work for. We encourage innovation and that attracts people who are ambitious and have an entrepreneurial spirit. We invest an enormous amount of time in new training programs and have developed a culture of meritocracy where new ideas are rewarded. We have moved to a more decentralized, practice-oriented structure that encourages greater initiative-taking and more effective teamwork.”

We at Rough Notes have no doubt that Cottingham & Butler will reach that lofty pinnacle and are proud to recognize C&B as our Marketing Agency of the Month. *

CONTACT US | HOME