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There's strength in numbers

Franchisor provides greater opportunities to agencies

By Phil Zinkewicz

If, as they say, there’s strength in numbers, then Keystone Insurers Group (KIG) gives proof to the adage. A little more than a quarter century ago, four property and casualty independent agencies in central Pennsylvania looked at an overly competitive and difficult market in which individually they had little sway and decided to join forces. KIG was incorporated in 1983 by those four agencies, and their numbers increased with the express purpose of realizing greater opportunities through association than they could realize individually.

“While preserving the entrepreneurial spirit of the American independent insurance agent, the founders recognized that as a profitable, productive group, they wielded significant bargaining power, were provided greater opportunities, and could offer a wider array of products and services to customers and the communities in which they lived,” says David Boedker, president of Keystone.

In 1999, Keystone changed its model from a cooperative arrangement to that of a franchisor and rapidly expanded throughout the Commonwealth to 74 franchise partners and more than 110 locations. With greater executive management resources, Keystone also expanded its then highly successful program division and formed two new subsidiaries—Keystone Risk Managers and Keystone Financial & Benefit Resources, LLC—both designed to provide the depth of opportunity unavailable to an individual agency, regardless of size and sophistication.

In 2003, KIG made its first foray outside Pennsylvania, expanding into North Carolina, then Virginia in 2005, Indiana in 2006, and Ohio in 2008. Keystone will expand into Kentucky later this year. Today, Colin Buzzard, executive vice president, Franchising and Marketing, points out, “Keystone is all about creating greater agency value by increasing and maximizing sales volume, by enhancing business reputations in their comunities and with insurance carriers, and by value-added services that they would not have been achievable as stand-alone independent insurance agencies. Keystone is 100% owned by its partners and employees and has two prime objectives: creating greater stockholder value and fulfillment of partner dreams and wishes.”

Buzzard says that aside from Keystone’s expansion into Kentucky later this year, it is considering expansion into Tennessee, Georgia, Illinois, South Carolina, Alabama and Mississippi. “By the numbers, Keystone currently has 74 partners in Pennsylvania, 37 in North Carolina, 25 in Virginia, 20 in Indiana and 19 in Ohio,” he states.

Discussing other subsidiaries, Buzzard says that Keystone Claim Management (KCM), headed by Ralph Sitterson, 30-year veteran and former vice president of claims for the W.R. Berkley Corporation, is a “tremendous asset” to Keystone partners because they are a claims advocate for policyholders, core carriers and the partners themselves. “Ralph serves as liaison between partners and carriers on troublesome claims and those exceeding $100,000,” says Buzzard. “He assists in subrogation issues opportunities and interprets and resolves coverage issues and questions. He also serves to improve Keystone’s bottom-line profitability.

“KCM,” continues Buzzard, “is also called on by partners in the sale of accounts. A client is ‘buying’ a promise that claims will be handled efficiently, promptly and fairly. When a partner takes Ralph on a sales call, the client achieves a more thorough understanding of what to expect at that unfortunate time of a loss,” he says.

Keystone Profitability and Growth Division (KPG) is headed by Glenn Pletz, formerly with Erie Insurance Group and W.R. Berkley. “KPG has the responsibility of sustaining profitable growth for carriers and of maximizing compensation opportunities for Keystone partners,” according to George Wynne, executive vice president and former CEO of W.R. Berkley subsidiary Berkley MidAtlantic. “Glenn continually monitors production and loss information, analyzes pertinent factors, and communicates progress to both partners and carriers. He negotiates carrier contracts and assures that loss trends are recognized immediately and that corrective actions are undertaken.”

Joe Joyce, executive vice president, Commercial Insurance, discusses Keystone’s activities in the program business arena. “Today, Keystone Insurers Group possesses the resources of a national organization,” he says. “We create, develop, service and manage specialty programs that address the most challenging classes of any of the states into which Keystone expands. The program division introduces several new programs annually.

“The basis for what is needed comes from Program Committees in each state evaluating those classes for which coverage is not readily available,” Joyce continues. “Some of our program offerings include automotive service providers, school and charter buses, community banks, contractors workers compensation, convenience stores, fuel oil dealers, habitational properties, hotels, municipal exposures, libraries, child care associations, public golf course owners, religious institutions, restaurants, used car dealers, volunteer fire and emergency services—and the list goes on.”

Umbrella concept maintains independence

Buzzard likens the Keystone concept to the “Century 21” real estate franchises—each agency is individually owned, with its own local identity and client relationships, yet working under the umbrella of a large corporation that provides an array of competitive services and support and proportionately sharing expenses and profits. Keystone’s member agencies are not acquired or merged with the company. Every agency partner has made an educated, conscious decision to join the franchise that is Keystone.

Agencies come to Keystone a number of ways. Most often they are referred by another partner, and occasionally they seek out Keystone independently. Sometimes Keystone will recognize an agency that has talented people and that is located in an area that is underserved by the company. “We are looking for agencies of integrity, that have earned a high reputation and that are known for the quality of their people,” says Buzzard.

“Keystone is also looking for agencies that are a ‘match’ philosophically in terms of how they conduct business and in their relationships with both their company markets and clients,” he continues. “And while this last requirement may be more difficult to initially determine, the many meetings and discussions, which are a part of the vetting process, ultimately provide Keystone leaders with the ability to make this assessment.”

One such agency was Morrow Insurance in Hendersonville, North Carolina. Rob Cranford put it this way: “Morrow is an ESOP. We thought this might preclude any relationship with Keystone, but it didn’t since they prefer internal perpetuation. We really didn’t have any needs for carriers and our company relationships are excellent, but we did recognize the opportunity to partner with a quality group of agencies and to share ideas like agents did back in the ’80s. We’ve hired a new producer to do nothing but Keystone’s exclusive programs.”

Another Keystone partner, Timothy Ruhl of the Manheim, Pennsylvania-based Ruhl Insurance, described the Keystone experience this way: “KIG is about relationships with agencies of integrity, success through utilization of better business practices, realization of greater independence and providing profitable growth opportunities.

“As one carrier put it: ‘Keystone is about tapping into the intellectual capital that exists within the network of partner agencies. An agency doesn’t have to reinvent the wheel. Rather, they can simply ask their partners for input. They’re part of something unique and special rather than being an island all by themselves.’”

Buzzard continues: “Keystone exercises the power of aggregation so that franchise agency partners might prosper in an industry that has displayed a propensity for dramatic and often drastic change. Keystone works to improve agency futures and increase agency value by enhancing carrier relationships, by generating greater opportunities, by encouraging companies to penetrate particularly attractive affinity groups and by providing resources that are unavailable to even the largest agencies.”

Steve Harper of Winfred C. Harper Agency in Burlington, North Carolina, says: “For over 50 years we operated as a family-oriented agency, fiercely independent and very conservative. Initially, we saw Keystone as a possible solution, but we worried about giving up contracts. Our concerns were unfounded. Carriers pay more attention to us and we have more opportunities at our doorstep than we can handle.”

Another resource is Keystone Agency Management (KAM), headed by Mike Azar, CFO. Azar notes that “KAM exists to instill and preserve best business practices and to assist partners with issues of perpetuation, agency acquisition, agency valuation, and simply how to be more efficient and dynamic. KAM is about creating greater value.”

And Jim Garner of the Franklin, North Carolina-based Wayah Group adds: “We liked the idea of partnering with agency principals we’ve known for years as people of integrity, but not giving up ownership or the freedom to do as we wish. We felt like an island. That’s no longer the case. We get a lot of attention from senior insurance executives and tremendous support from Keystone and other partners.”

Brett Schultheis of Schultheis Insurance in Evansville, Indiana, Keystone’s newest partner, says, “My brother, Kenan, and I had reached a good point in our agency. But then Keystone brought this to the table and we were intrigued. It provides us with an opportunity to share ideas with other agency partners.”

Cloyce Anders of Anders-Ireland-Marshall in Raleigh, North Carolina, and former IIABA president, is not new to Keystone. His agency joined three years ago. “We formed an agency group years ago,” says Anders. “We found that, in our approach, we were doing all the wrong things. We looked at Keystone and realized they were doing all the right things. Keystone helps agencies become better at what they do, better marketers and better service providers. Keystone is not a dictatorship, but a democracy. If you can’t make it with Keystone, you’re not going to make it in insurance.”

Buzzard sums it up this way: “Our mission is to assist Keystone partners in growing their agencies by getting the most from their producers. Our proprietary producer training program, Path to Professionalism, provides state-of-the-art sales instruction via videos, accessible 24/7 through the Keystone Web site. For partners who desire to take their agencies to a new level, The Sales Culture Development Program focuses on agency management and ‘mission-oriented’ selling, and guides agencies toward developing a true sales organization. In addition, Legacy Development will identify, screen, and select candidates of impeccable integrity and work ethic and work with them closely to hone their skills and develop a process to employ that wins and keeps clients.”

For more information:
Keystone Insurers Group

Web site:


“Keystone is all about creating greater agency value by increasing and maximizing sales volume, by enhancing business reputations in their communities and with insurance carriers, and by value-added services.”

—Colin Buzzard
Executive Vice President
Franchising and Marketing
Keystone Insurers Group



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