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A question of values Kevin Westrope uses his personal credo to build a top-five wholesale brokerage By Elisabeth Boone, CPCU When Kevin Westrope founded the wholesale insurance brokerage firm that bears his name in 1992, he intended to own it for five years, sell it and move on to other endeavors. Instead, as president and CEO, Kevin has built Westrope into the fifth largest privately held wholesale insurance brokerage in the country, with premium volume that exceeds $500 million. And it is expanding into new lines of business that have strong potential for further growth. Based in Kansas City, Missouri, Westrope also has offices in Atlanta; Dallas; Los Angeles; Short Hills, New Jersey; and Jacksonville and Orlando, Florida. The firm’s brokers have extensive experience in both retail and wholesale brokerage and insurance and reinsurance company underwriting. The firm specializes in property, casualty, construction, executive liability, agribusiness, workers compensation, and health care, and also provides claims services. Right from the start, Kevin was determined to create a brokerage that would stand out from its competitors. He combined his years of specialty underwriting experience with his passion for organizational development to build a team of seasoned, motivated brokers and a back room that provides unparalleled service to clients. Kevin began his insurance career in 1982 as a property underwriter in Los Angeles for Sayre & Toso, which was a managing general agent for Mission Insurance. He subsequently held underwriting and management positions with such firms as Cravens, Dargan Pacific Coast, Allianz Underwriters, and McAlear Associates, for which he started a property operation in his home town of Kansas City. In 1991 Kevin bought out McAlear’s Kansas City facility, and in 1992 he launched Westrope as an independent wholesale brokerage. “I started the business with seven others, including two casualty brokers and myself as a property broker,” Kevin says. “We made money the first year; we doubled our business the second year, and we never looked back.” A new vision Indeed Kevin never looked back—but he definitely looked forward. What vision did he hold for his new venture? “I was very interested in organizational development, psychology, and sociology,” Kevin says, “and quite frankly my goal was to build the business as fast as I could in five years, then sell it and get a doctorate in psychology so I could go into private practice.” Clearly, that’s not how it worked out—but Kevin isn’t disappointed; quite the opposite. “In the process of building a book of business, I had the opportunity to do some of the things that interested me within the framework of this wholesale insurance brokerage business,” he explains. “I had a certain set of values about how to treat other people and how I could organize a successful business that would be based on individuals’ abilities, not on their pay grade or tenure,” Kevin continues. “I’m a believer in excellence and competence, and I support that wherever I find it. I also believe in treating people as I want to be treated.” Westrope’s senior management team is made up of five individuals plus his business partner, Joe Timmons. Serving as chief operating officer is John Klag. The balance of the management team is comprised of three executive vice presidents: Brenda Ballard, who heads up the property operation; David Brinkerhoff, in charge of the casualty operation; and Mark English, who manages sales and marketing for the southeastern region. The firm now employs some 140 people at its headquarters and branch office locations. Broker back room In recruiting brokers for his new firm, Kevin made a bold break with tradition: He decided to employ two kinds of brokers. The outside brokers call on retail agents, and the inside brokers assist in the negotiation and placement of each account. “When I was building my firm, I looked at the things other firms didn’t seem to do well or that got in the way of their success, and what things were in the traditional business model,” Kevin says. “One of those things was that when the broker was traveling or indisposed or on vacation, there was nobody to take care of his or her book of business. That’s not an effective model. So I began to build a back room with highly competent insurance people whose personalities are not necessarily suited to being out on the road. They prefer to go home at night, and at the same time they are consummate insurance technicians. When I’m on the phone or traveling, there’s someone working on my book of business who is fielding calls and making sure our customers feel comfortable.” Because Westrope identifies brokers who fit the respective personality types that are suited to the inside and outside broker roles, there’s no animosity between the two sides. “The outside or production brokers are totally responsible for their books of business, and the inside brokers are here to assist them,” Kevin says. “I tell the outside people, ‘This is not a job; this is a lifestyle, and you’d better be prepared to live it 24/7, 365 days a year, because there is no time off.’” His firm offers a full complement of claims services, Kevin says. “We have a team of claims professionals to assist our clients on all claims matters. The claims department is in constant contact with our markets to keep current on their claim services and personnel. This enables us to act promptly in case any claim dispute or issue arises.” For accounts with special requirements, Westrope can work with the retail broker to establish claims handling procedures specifically for the insured with the carrier and/or third-party administrator, and will monitor compliance with these procedures. Teamwork trumps all Throughout the Westrope organization, teamwork trumps everything, and Kevin believes that gives his firm a strong advantage over competitors. “Teamwork is ingrained in our culture, so we don’t have a lot of the divisiveness internally that I’ve seen in other firms,” he says. “We’re here to solve our customers’ problems, so in our firm, anybody picks up for anybody at any time to help a customer. In evaluating employees, we pay attention to whether they’re helpful to colleagues,” Kevin declares. “Producers are compensated according to standards that are common in our industry,” Kevin says, “although we don’t have a formula, which makes us somewhat unique as well. How much our producers make is based on the performance of their team. My concept is: If I can get our brokers thinking about the team and working for the team, I know they will write more business and make more money. If we come up against a broker on a given deal, we win more often than we lose,” Kevin asserts. “The competing broker isn’t just dealing with one or two of us; he may be facing four or five of us who know the account.” In fact, the firm’s commitment to teamwork is so strong that, Kevin says, “Our teams cross-sell for one another. Our casualty brokers don’t worry about whether they should sell the property piece or whether they’ll get credit for it, because they know the property brokers are doing the same thing for them.” Closely tied to the teamwork ethic, Kevin says, is the concept of giving back. “We have a responsibility to share our knowledge and expertise with the younger people coming up so we can continue to build our organization,” he explains. Wide risk appetite Westrope places coverage for a wide array of risks. What are the criteria the firm uses to determine whether to enter a particular class of business? “For the first 10 or 12 years, our decision to write a certain class was made totally on the basis of personality and expertise,” Kevin says. “We’d run into a broker somewhere and feel like that person would be a good fit for us and then discover he or she had specialized knowledge. When those two things came together, we hired the person.” Beyond the broad areas of property and casualty, he continues, “We didn’t have a grand plan to go into this or that class of business. Later we started writing professional liability, then work comp came along, and later we started hiring brokers with experience in agribusiness. We developed an agribusiness expertise that not very many people have on the wholesale side,” Kevin says. “Today we still hire on the basis of personality and expertise, but we’re more directed in terms of the classes we want to become involved in. A lot of it is what the market dictates to us, because we are in an overflow industry,” he explains. “Wherever we see opportunity, we try to move in. A few years ago, we were doing very little in the construction business with wraps, and we saw an opportunity. We educated ourselves and secured the right markets, and now we’re a fairly big player in construction.” Open brokerage The lifeblood of any brokerage is strong relationships with quality carriers, and Westrope is no exception. “We are 99% an open market broker, and we represent in excess of 120 carriers,” Kevin says. “In 2006, 96% of our volume was done with our top 50 carriers. There are always specialty niches and companies that do only one thing, and we’re not going to write $10 million worth of that business, but we might write $500,000 or $600,000 of it, and it’s a service that our customer may need, so we maintain those relationships,” he says. The same is true of Westrope’s agency plant. “Our top 50 customers comprise 75% of our book of business,” Kevin says. “We’re currently contracted with 500 to 600 retail agents. Given our size, we simply are not capable of being all things to all people. We’re very directed about whom we do business with, and that’s how we’ve built our business from day one. As we moved into new cities, we identified six to 10 retailers and said, ‘We know one or two of you are going to be significant customers for us, and we’re going to give you semi-exclusivity in this area.’ That’s been an effective model for us. “Unlike most of our competitors, our model is centralized,” Kevin continues. “That means we’re going to push in excess of $500 million of premium through one office. This makes us important as an individual producer to our carrier partners. This centralized model allows us to control the quality of the product that we are providing to our carriers and also to our retail customers. “With today’s technology, our branch offices are essentially sales teams around the country, and their support teams—marketing specialists, account specialists—are here in Kansas City,” Kevin says. “Everything comes here electronically, and we’re effectively a paperless firm. Technology makes it fairly easy to do business in many locations without a lot of bricks and mortar, and without losing control of what we’re trying to achieve as a firm,” he observes. Looking ahead Kevin Westrope has achieved both personal and professional success in building his firm into one of the top five privately held brokerages in the wholesale insurance arena. Not surprisingly, he never allows himself to become satisfied with the status quo. “We’re constantly training young people; we currently have five or six in broker training right now,” Kevin says. “We also have an intern program where we bring in college juniors to spend the summer with us. We have four students now, and we’ll probably extend offers to all four of them.” In line with his philosophy of finding the right person for the right job, Kevin says, trainees aren’t told they’re going to be brokers. “We train them in the business, and we find that some of them are more suited to be internal brokers and others are more suited to be external.” Westrope also plans to expand its risk appetite. “We’re getting ready to enter the transportation arena,” Kevin says. “We’ve already hired a team of people who fit the criteria we talked about earlier—personality and expertise—and we think transportation is going to be a huge growth opportunity for us. It’s an area our customers tell us they are eager for us to become involved with,” he says. Once the transportation operation is up and running, Kevin says, “Our next initiative will be to look into the energy arena. We’re already fairly involved in alternative energy because of our agribusiness expertise, and we think this is going to be a huge growth area over the next decade.” Kevin is strongly focused on such growth opportunities for his firm, and at the same time he’s well aware of the challenges that confront a wholesale brokerage like his. Perhaps surprisingly, competition is not at the top of the list. “We rarely compete against other brokers,” Kevin remarks. “Our customers are comfortable with our style, and that also tends to be true for our competitors—some business moves around, but we each end up with our customer base. “Our biggest challenge always is the unpredictability of the standard markets, and all of the money flooding into the insurance business from the capital markets,” Kevin declares. “What are the markets doing or not doing, and where are they headed?” Despite the ongoing uncertainty, Kevin observes, much has changed since the historic capacity crisis of the early and mid-1980s, which followed an orgy of price slashing. “I find now that the standard markets are getting a lot more educated about things that we in the wholesale business have been doing forever, like layering and taking pieces of an account instead of taking 100% of it,” Kevin comments. “They’ve become much smarter about that, and in fact they have mimicked the specialty lines marketplace. In many cases,” he adds, “our largest markets are owned by the big stock companies, and 20 years ago you couldn’t have said that. “In the 1980s,” Kevin continues, “excess-surplus lines represented maybe 3% of the commercial marketplace. Today it represents around 13%, and it’s a $35 billion industry.” In such a dynamic and rapidly expanding market, there’s more than enough room for seasoned wholesalers—and Westrope is firmly committed to being a leader of the pack. * For more information: |
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