The Changing Face of the Independent Agent

The road less traveled—Todd Jackson starts
agency from scratch

Todd Jackson starts agency from scratch

By Elaine Tolen

Todd Jackson, CIC, cut his insurance teeth in southern California in 1995, joining the family agency, Jackson & Jackson Insurance, after graduating from Point Loma Nazarene College with a bachelors degree in business administration. The state was still picking up the pieces from the Northridge earthquake a year earlier.

“My job was to re-write homeowners policies for a carrier that had pulled out of California. It wasn’t easy; there were a lot of older homes and homes near the brush, and we had to deal with FAIR plans and floaters and such. But it was a great way to learn insurance in a big hurry,” Todd recalls.

After writing personal lines for about three years, Todd moved into commercial lines and benefits, “where I really fell in love with the insurance business.” Over the next 12 years, Todd’s book of business and responsibilities grew. “I was a vice president as well as a top producer,” he says. “I loved being a producer, but it was always my dream to own my own agency.”

Forget the easy route

The natural (and easier) path for younger generation members of family-owned agencies is to take over when their parents or aunts/uncles or grandparents retire. But Todd Jackson took a different path. In July 2007 at the age of 34, he left the family firm to start Preferred Specialty Insurance Services, LLC, in Glendora, California, from scratch. No clients, no carriers, but a lot of confidence.

“My goal was to specialize in certain industries in which I had developed expertise. That is why I named my agency Preferred Specialty. I had great relationships with carriers who wrote these types of accounts and I had a good handle on the marketplace. So I decided to go after those types of clients,” Todd recalls.

“I was fortunate that several of my previous clients contacted me and wanted to do business again. Relationships with these long-term clients, carriers, peers and centers of influence have made it possible to build a successful agency.” Todd says that the majority of his key former clients eventually followed him to Preferred Specialty.

Todd has zeroed in on five niches—construction, manufacturing, wholesalers, health care organizations, and property owners. Some of these niches developed from markets looking to write certain types of accounts; others came from relationships and networking.

For instance, “Within the construction niche, I concentrate on union electrical contractors,” Todd explains. “A few years ago, my wife and I were in a group of young married couples at our church. One of our mentors was Stan Lazarian, president of a union electrical contracting company who asked me to review his insurance needs.

“After becoming a client, Stan invited me to attend his association’s golf outings, monthly meetings and other events,” Todd continues. “I’ve learned about this industry and issues that are important to union electrical contractors. This knowledge has allowed me to be an advisor to them and has opened the door to opportunities such as speaking at their industry events and writing for the association’s monthly newsletter.”

Todd says that he wants to continue to focus on niche markets because “with my expertise, I can provide a higher level of service to my clients. Plus specializing is a more cost effective way to operate. When you really know a market, your key clients will refer other clients to you. I haven’t made one cold call since starting this agency; new clients have come through referrals.”

Partnering for success

With a successful formula for growing a book of business, Todd wanted to be able to offer his clients the best markets, service and value-added products. Combining forces with another agency while maintaining independence would be the ideal solution.

Enter Rick Dinger, a fellow young agent and president of Crescenta Valley Insurance in nearby Glendale, California. “Rick was the first person I met when I attended my first young agent conference in 1998,” Todd says. “Rick has really been my mentor. He is active on the state and national level in insurance as well as in politics, serves in the community, and has encouraged many new producers like myself. This relationship is a testament to the power of networking.”

Rick and Todd formed an informal cluster to streamline operations (i.e., sharing a computer system and the servicing of certain accounts) and increase market access. “Rick has an established personal lines business and wants to grow the commercial lines side. I have a good commercial lines base and a small personal lines base, which Rick’s staff can service out of his office,” Todd explains.

“In fact, as agency owner and the only P-C producer, my plate is full with my commercial lines business. So now when my commercial lines clients need assistance with personal lines I refer them to Rick and know that he will take great care of them,” he explains.

“Combining forces has created a synergy that has opened up many opportunities for both of our agencies,” Todd continues. “For instance, as soon as Golden Eagle Insurance—a regional Liberty Mutual company—found out that Rick and I had formed a partnership, they asked if we’d be willing to be appointed with them. This was very encouraging and was the missing link in our portfolio of carriers.”

In another partnership, one of Todd’s friends owns a life/disability agency. Todd says, “He’s a great guy and was looking to expand his business. I needed to find an employee benefits producer, so I approached him with a plan.

“I’d train him as an employee benefits producer and eventually he’d run our employee benefits division through Preferred Specialty. I send life and disability clients to him and he writes the business through his agency. It’s a win-win situation for both of us,” Todd says.

These joint ventures “are a way to have big agency benefits within a smaller agency,” Todd explains, and free up him and his full-time account manager as well as another part-time account manager to concentrate on other sales and service issues. Todd’s wife, Sheri, “has been very supportive” in Todd’s career and, “after seven years of being a stay-at-home mom, has jumped back in to the work force as the agency’s part-time bookkeeper/accountant.”

Creative solutions

The current economic environment—especially in Southern California—presents many opportunities to think outside the box and find creative solutions to problems, according to Todd.

“We’ve made a large investment in managing workers compensation claims for our clients,” Todd says. “As this is the Achilles’ heel for many of our clients, we knew this was an area that needed to be addressed.”

Recently, for example, one of Preferred Specialty’s construction clients came to Todd with six open claims. “Since implementing our claims service, we’ve been able to close five of those open claims, which has been a tremendous relief for the employer and the injured employees.

“For another construction client, we were able to estimate their renewal experience modification before it was published,” Todd explains. “When we received their published mod it was 19% higher than we anticipated. After reviewing their WCIRB X-Mod Worksheet and Loss Runs, we noticed that a claim on the loss runs (which was closed) was a fraction of the amount on the worksheet.

“After inquiring with the carrier, client and WCIRB we determined that that was a fraudulent claim that had a huge reserve, but had been closed out for little payment,” Todd continues. “We then had the carrier fax a revised unit statistical filing to the WCIRB, so they could amend their experience modification. We were able to do this even when we weren’t the broker at the time of the claim. The client was thrilled.”

Being an agency owner has presented many challenges as well as rewards for Todd. “I’ve been stretched in all areas. I wear many hats, including being the only P-C producer, so I have to be very efficient with my time. The payoff is worth it, though. I can take off for a few hours in the middle of the day to volunteer at my daughter’s school. Not many industries are so flexible.

“And while I don’t think every producer needs to own an agency, I do think some type of ownership is important,” he continues. “I’ve been on both ends of the spectrum—a producer with no ownership interest as well as an owner. I think agents need to have ownership in the business they produce. This not only gives them a vested interest in the agency, it allows them to build an asset to help fund their retirement.”

As he mentioned, Todd’s involvement in the California Big “I” association (Insurance Agents & Brokers of the West) was a catalyst for career-changing relationships. “I had only been at my dad’s agency for about six months when I was asked to be on the board of the Burbank, Glendale and Pasadena IBA West chapter,” he says. “I didn’t even know what ‘IBA West’ was!”

Eventually serving as president of the chapter, Todd said the experience “allowed me to dive in ... to gain a better understanding of how important it is to be an active part of our industry. I have gotten to travel to Washington, D.C., to meet with congressmen and congresswomen to discuss important issues that affect our clients and livelihood.”

Todd currently serves on the IBA West Service Corp Commercial Lines Committee, which oversees products offered to IBA West members. He is also involved in the IBA West Young Brokers & Agents (YBA) Committee.

The IBA West YBA group does a good job of encouraging young agents in the industry, but recruiting younger producers and owners should be more of a priority for the industry as a whole, Todd cautions. With millions of Baby Boomers retiring in the next few years, Todd says that “perpetuation planning needs to be a priority.

“We need to educate agency owners and potential owners on how to plan, set goals and develop timelines to make an effective transfer. Agency owners have worked so hard to build a successful business; they don’t want to see that turned upside down when they retire.

“People think that it’s tough to start an agency,” Todd notes. “But it can be done—I’m living proof. It’s all about experience and timing. You also have to have strong relationships with others in the industry and carriers. If you have experience in specific areas, carriers will want to work with you.

“Technology has made it easier to compete,” he continues. “We can outsource many services—safety programs, claims management, to name a few. This allows smaller agencies to compete with the bigger firms.”

Looking forward

“One of my goals professionally is to be on the cover of Rough Notes magazine,” Todd quips. “These agencies are on the cutting edge of our industry and are able to achieve substantial growth regardless of market conditions. I want to be like that.

“I also want to grow my agency in a smart, profitable way, allowing me and my employees to have a good balance of work and family life,” Todd explains.

“Family life” includes spending time with Sheri and their eight-year-old daughter, Claire. They like to go snowboarding, golfing and surfing together. Todd has also competed in several triathlons, “which helps satisfy my competitive drive and keeps me in shape.”

That competitive drive has brought Todd Jackson far, from being a brand-new producer to an agency founder. “When I left my dad’s agency, it was a real eye-opener for me. I had to ask myself if this is the career I wanted to commit to,” he says. “I soon realized what a great business and industry this is, and there’s not another job I’d rather do.”