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Marketing Agency of the Month True synergy Agency and credit union benefit from customer loyalty By Dennis H. Pillsbury While there have been quite a number of agencies that have been purchased by banks, the hoped-for synergies that would boost business for both entities have rarely been realized. The differences in culture and level of customer loyalty almost always result in the merger being less than expected, although the financial benefits often allow the merger to go forward successfully. However, in Alaska, an interesting partnership seems to be realizing greater benefits. That state’s largest independent agency, Ribelin Lowell and Company of Anchorage, was acquired in 2004 by Alaska USA Insurance Brokers, LLC, a wholly owned subsidiary of Alaska USA Federal Credit Union. For the first year of operation, the agency did business as Ribelin Lowell Alaska USA Insurance Brokers. In 2005, the name was permanently changed to Alaska USA Insurance Brokers (AUIB). In that same year, Randy Pugh was brought in to run the agency, which is based in Anchorage and has branch offices in Soldotna and Fairbanks. Alaska USA knew Randy because the credit union had been one of his clients when he worked for Willis in its Anchorage operation. Alaska USA Federal Credit Union had been in the insurance business since 1986, when it formed Alaska USA Insurance Agency to provide credit union members and others with property/casualty, loan protection and other types of insurance. The 2004 acquisition was undertaken in order to expand insurance options and coverages for credit union members and to expand services to include all types of insurance for businesses. When Randy joined the agency, he found that the credit union had “very loyal customers. The emphasis on relationships and strong service was similar to the insurance agency’s. There was a real synergy that allowed us to benefit from those good relationships. “There were also resources that an agency wouldn’t normally have,” he continues. “Alaska USA is approaching $3 billion in deposits, making it one of the largest credit unions in the country. Alaska USA Federal Credit Union has a professional HR department, strong marketing department and great IT capabilities. All of which the agency has utilized and benefited from.” Seizing opportunities Agency expansion has occurred in some interesting ways, according to Randy. “In mid-2006, Jim Ferguson, the surety manager at Willis, called and said he wanted to leave and felt AUIB provided better opportunities. After Jim was hired, he asked if he could contact Willis about purchasing the book of surety business. “We agreed, thinking that nothing would come of it, but just in case, we brought in Marsh, Berry & Company to make contact,” Randy recalls. “Surprisingly, Willis responded positively and asked Marsh Berry if we would be interested in buying the Anchorage Willis office. Even though Willis of Alaska was around $10 million in revenue, it was mostly middle market business, and that didn’t fit with the large account model Willis favored. “We responded in the affirmative and Marsh Berry helped negotiate the deal,” Randy continues. “When the sale closed, the agency offered jobs to all 29 employees in the Willis Anchorage office. Some had expertise in larger risk management accounts. We also gained a successful employee benefits team specializing in larger self-insured clients. “The strong core of talent already at AUIB and the former Willis employees complement each other in providing value-added services for clients every day,” Randy says. “We still lost a few accounts that wanted to deal with a large national broker. However, some of those have come back as we’ve shown them we can perform as well or better than any of the national brokers.” Recognizing the entire team “One of the first things I learned when I started out in this business as a special agent for The Hartford in Orange County, California, was to make certain that the efforts of everyone at the agency are recognized, not just the producers,” Randy says. “After about one year on the job, I had great results, won a few awards and was feeling my oats. “The sales secretary took me to coffee one morning and explained in no uncertain terms that I had had a lot of assistance achieving these successes and I really had no idea what I was doing! She reminded me that a lot of people had helped me achieve these results,” Randy remembers. “But if I didn’t recognize their help on the way ‘up’ they would remind me as I went ‘down’ the corporate ladder. Sometimes, we agents forget that our clients usually spend more time talking to our service personnel than to our producers. We need to recognize and reward the whole team.” With that in mind, Alaska USA Insurance Brokers instituted a team-selling and retention bonus program under which account managers share in the production team’s success. “We had a hard time recruiting and keeping experienced people, and the bonuses have really helped turn this around,” Randy notes. “Our account managers can make 15% or more of their salary base in bonuses if their production team has a good year, thereby recognizing their importance to the production service team. Our results reflect the positive buy-in from our staff. Internal growth of 17% last year combined with the Willis purchase could push our revenues into the $15 million range. We also renew 97% of our commercial clients and 92% of personal accounts.” Learning from others Alaska USA Insurance Brokers has continued its relationship with Marsh Berry and is a member of its APPEX group. “Our membership in APPEX gives us an opportunity to talk with other successful agencies and compare our numbers and strategies with theirs,” Randy points out. “It’s a great sounding board with the opportunity to share and learn from other successful agents facing the same challenges.” “We’re also a member of the Sitkins 100. Roger has been real helpful with training new producers and account representatives,” Randy says. However, he goes on to note that the relationship got off to an iffy start. “The first time he blew that whistle in my ear, I almost walked out of the meeting. But it’s worked out well for us. I did have one complaint beyond the whistle and that was that the meetings were all on the East Coast. Several of us suggested to Roger that he needed to have some meetings on the West Coast. I’m glad to report that there’s a meeting coming up in Seattle.” Attracting companies “We moved to the next level with the purchase of the Willis business,” Randy notes. “We added additional income, opportunities and challenges. Major challenges were met by our brokers and national agency company partners. The response and assistance from Ohio Casualty, Firemen’s Fund, Liberty Northwest, Wausau, AIG, and Berkshire Hathaway has been first rate. Our largest market is still Alaska National, an A rated carrier that has a great reputation locally and the Pacific Northwest, and is a true partner in our success.” Of course, it doesn’t hurt that Alaska has become an attractive market for many of the large carriers. According to Randy, the market offers higher premiums because of the higher risk profile than in the lower 48 for similar risks. “Workers comp rates are pretty substantial,” he adds. “And there can be heavy exposure, which gives us an opportunity to apply our local knowledge and loss control services. We have a reputation for being a very conservative operation, and that sits pretty well with our carriers. We provide them with consistently good business.” Being able to represent large national and international carriers has been very important for AUIB, Randy explains. “We do substantial business outside of Alaska; we lost a few large accounts because they were worried about our ability to service business nationwide. The fact that we’ve been able to partner with the best major carriers has allowed us to get back some of these accounts as well as write new business opportunities. “We do a lot of business with Alaska Native Groups that operate subsidiaries throughout the United States and foreign countries,” Randy continues. “For example, we have a client owned by one of the native corporations that is building irrigation systems in Northern California. Another one provides building and ground maintenance services for the Air Force Academy.” Randy adds. “Most of our business is in the middle market, with our largest niche being construction. Several of these construction companies have done business in Russia, and we’ve had to work with our international carriers to handle this business.” Plans for continued growth While the middle market and upper middle market represents the majority of the agency’s business, “we also want to expand in the small commercial and personal lines arena,” Randy says. “We have a select department for commercial accounts under $2,500 in income. The department currently has five account managers, each handling a portion of this book, with over $1 million in income. The model works well for us—leveraging the market in Alaska with the needs of our clients and credit union members. “We’re also working hard to increase our personal lines writings,” he continues. “Currently, 10% of our revenue comes from personal lines, and the growth rate is 20%. Given our partnership with the credit union, we know there’s an opportunity to increase this business, and companies such as Ohio Casualty, Fireman’s Fund, Safeco are very interested in partnering with us. “Our continued success depends on a strong team effort. We’ve instituted a strong training program for producers and service personnel that will help maintain momentum and move the agency to the next level. The agency is not built around one person or group of people,” he concludes emphatically. Alaska USA Insurance Brokers has grown by allowing its people to succeed and prosper. That has been one of the hallmarks of the successful agencies we have featured in Rough Notes magazine. The willingness to share success has allowed the agency to enjoy substantial growth. We are pleased to recognize Alaska USA Insurance Brokers as this month’s Rough Notes Marketing Agency of the Month. * |
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