Marketing Agency of the Month

Unique ownership plan fuels teamwork

Growth and independence are assured as new people enter the ownership ranks

By Dennis H. Pillsbury

Seubert & Associates, Pittsburgh, Pennsylvania, was started in 1975 by Tom Seubert as a commercial lines agency specializing in trucking and franchise car dealerships. As the primary rainmaker and sole owner, Tom built the agency to around $1.6 million in revenue by 1990 when misfortune struck and Tom died suddenly. That could have been the end of the agency, but some of Tom’s drive and love of the business had rubbed off on his employees and they decided to save the agency. The strong foundation was there and they wanted to build on that legacy and create something that would last well into the future.

And they have apparently been successful, since the agency now boasts $12 million in revenue and employs 75 people, 30 of whom are shareholders.

Brian Long, president, admits that they had “a lot of luck” along the way. However, when one looks at the facts, it is readily apparent that much of that “luck” was the result of hard work and perseverance on the part of a growing and energetic group of employees.

Change

“Everybody stepped up,” Brian says. The agency had a strong presence in the trucking and franchise car dealership markets. “We started looking at other areas where we could grow and develop an expertise,” he points out. “What became immediately clear was that we had a serious need for surety expertise. We were providing property and casualty coverage to some contractors in the area, but we needed to have the whole package in order to compete successfully and in order to fully respond to our customers’ needs.”

The agency hired surety managers from Chubb and Great American to jump-start that effort. Today, the agency’s expertise is envied by the competition. The surety department includes “the youngest 89-year-old I know,” Brian notes. “Richard Enders brings a depth of experience that only comes with time. He also brings a youthful energy. Last year, he took up skydiving. And he isn’t just an important resource for our clients; he’s also involved in providing seminars to our employees.”

The employees also recognized the need to fill all the risk transfer needs of its clients. “We had to be in the employee benefits arena,” Brian says. “We developed a philosophy that involved going beyond traditional service to corporate wellness. It was like a complete physical for our clients that included diagnosis and recommendations for change. And one of the first steps we took was to apply it to ourselves.”

Change Rx

Statistics show that lifestyle is responsible for 70% of all medical claims. But just as significant is the impact that both the employees’ lifestyle choices and lost time can have on the people who stay in shape and continue to work. There can be a serious drop in morale as healthy people begin to feel that they are having to work harder to make up for those individuals who are away from work and as health insurance premiums rise due to increased claims activity.

On the other hand, facing up to that challenge can result in improved morale, which translates to a healthier and safer workplace. It is an interesting fact that workplaces that have low morale don’t just have a higher incidence of lost time due to illness, but also have, on the average, a greater number of accidents resulting in lost time. As morale dips, people just stop caring about what happens and become more careless at their own job and less alert in watching out for other employees.

Seubert decided to find out if there was an effective way to change those lifestyles and, in the process, lower the costs of workers comp and health insurance for its clients. Since those have always been the lines of business where businesses experienced the most pain, Seubert realized that an effective program could be the strongest value-added service it could provide to clients, resulting in a clear competitive advantage.

“What better place to start than right here at home?” Brian says. “We decided to implement a program designed to encourage a change in behaviors in the agency. We told our employees that they could continue to engage in unhealthy behaviors but that it would result in a higher contribution from them for their health insurance coverage. We also provided numerous opportunities and support for changing those lifestyles.

“At the time, we had about 40 employees working at Seubert,” Brian continues. “We agreed to improve our eating habits and increase or start exercising. To help with that effort, we installed workout stations at the agency and offered moral support to each other.

“Ultimately, we wound up losing a total of 750 pounds,” he says, “and proved that a concerted effort to change lifestyles could work. Maybe more important, however, was the improvement in corporate morale. It was already high to start with, but was boosted by the fact that we had accomplished something important as a team.”

If you want to see just how dramatic the results have been, check the Seubert Web site (www.seubert.com) where employees talk about the change. One employee says the program saved her life, pointing out that if she had continued in her lifestyle at the time, she would probably not be alive today!

Corporate wellness

The agency had a tiger by the tail. Here was a value-added that could really reap enormous dividends. Seubert established a model built around improving each customer’s total wellness. For corporate clients, that meant protecting and improving both the health and well-being of the client and its employees as well as the company’s financial wellness. It was enterprise risk management before that became a buzzword.

To accomplish that lofty goal, the agency recognized that it needed to ramp up its service side. “We needed expertise in all areas in which we did business,” Brian says. “And we needed to provide that expertise to our clients in tangible ways that would improve their bottom line.”

The agency began offering seminars on safety-related issues and coverage concerns. At the same time, they began providing diagnostic services to their corporate clients, going in to the client’s place of business and identifying areas where they could improve safety procedures or could create a better work environment. “We became business partners with our clients rather than insurance sales people,” Brian says.

In order to make certain their expertise continued to keep pace with changes in the insurance industry, Seubert encouraged all employees to continue their education by paying for 100% of any employee’s educational endeavors. “We also offer learning lunches once a month that will offer presentations by some of our own people, like our surety guru, Dick Enders, or our commercial casualty expert, Al Olshenske, who is known around here as ‘wise old Al’; or we will bring in expert speakers from outside the agency.”

Training the next owners

Education and training also play a key role in developing new employees. “We are big on long courtships,” Brian notes. “We test and interview heavily. We even interview spouses as well so we can find out whether they understand just what is involved in a career at an insurance agency. That’s especially true if we’re interviewing someone to become a producer. That’s just not an 8-to-5 job. The spouse has to understand this and support the decision. We hate making the wrong choice. It’s no fun for us and no fun for the prospective employee.

“We also rely heavily on our company partners to train our new employees,” Brian continues. “We recognize that we just don’t have the time and are not very good at training. Our companies are. So we start off by sending new hires to insurance companies for a year or two and split the salaries with the company. On average, we wind up bringing the person to the agency after about 18 months. That has worked very well for us. Our average employee has been with us 16.5 years.”

And each one of the new employees has an opportunity to become one of the agency’s owners, thanks to a unique ownership structure that has resulted in 30 of the current employees being owners. Employees who stay with the company for 10 years receive $10,000 in stock and a gold pen.

When an employee reaches 65 years of age, he or she must sell the stock but is welcome to stay on with the agency, a choice that many have made. Producers and managers of the agency’s 11 profit centers also have other paths to ownership.

That ownership opportunity really helps to cement the team cohesion that permeates Seubert & Associates. “There’s a strong feeling that we’re all in this together,” Brian says. “We share our financial results with everyone in the agency and they work together to support all our efforts. They’re also very careful of the agency’s bottom line. The fact that we have had only three E&O incidents in 33 years indicates that we are doing our job well and that we have an excellent relationship with our clients. And only one of those resulted in an actual claims payment. That can happen only when every one of our 75 employees places the customer first.”

Brian adds, “Technology has played a key role in enhancing our service to customers. It allows us to offer true 24/7 service, but we don’t just rely on technology to provide that service. Our Web site also includes the office and cell phone numbers of each employee so clients can talk to a live person whenever they need to. Accidents don’t happen just during the work day, and we recognize that we need to be available at any time of day or night when they do occur.”

The agency belongs to Marsh Berry’s APPEX program and to Intersure. “The relationships we have developed with agency members have been terrific,” Brian says. “We have certainly gotten more out of the membership than we give. We have ‘borrowed’ several new and inventive ways to provide better service to our clients.”

This emphasis on outstanding service has resulted in a retention rate that is always in excess of 90% for both commercial and personal lines customers. “All we sell is a piece of paper and a promise,” Brian concludes. “We consider it a privilege that clients buy from us and make certain that we honor that privilege with service that is second to none.”

We at Rough Notes are privileged to honor Seubert & Associates as our Marketing Agency of the Month.