Parker, Smith & Feek is Agency of the Year

Daring to be different helps this winner build loyalty, retention, and profit

By Elisabeth Boone, CPCU

If someone told you about an independent agency that was achieving stellar results by every accepted measure—and was doing so without employing producers or paying commissions—chances are you’d wonder what your source of information had been smoking.

You wouldn’t be alone. When we at Rough Notes write cover stories about top-performing agencies, we’re eager to learn how they recruit and reward the kind of self-motivated, goal-oriented producers who thrive on the challenges of earning big commissions.

That’s why we were astonished to discover that our November 2008 Marketing Agency of the Month, Parker, Smith & Feek, Inc., has become one of the top independent agencies in the country despite the fact that, it employs no producers and has never paid out a dollar in commission.

Instead, each of the agency’s 165 employees is paid a salary based on how well he or she meets client expectations, and everyone is eligible for a bonus based on year-end profit. “Teamwork” isn’t just a buzzword at Parker, Smith & Feek—it’s the core principle that drives every decision and action.

This unusual business model, and how it works in day-to-day operations, made a big impact on previous Rough Notes cover agents who cast their votes for the 2008 Rough Notes Marketing Agency of the Year. By an impressive margin they chose Parker, Smith & Feek.

Based in Seattle, the agency has a full-service office in Anchorage, Alaska, with 20 employees. In 2008 the firm had property/casualty, surety, and health insurance premiums of more than $300 million, making it one of the top 100 insurance brokers in the United States. The agency represents more than 300 insurance and bonding companies and insures risks throughout the northwestern United States.

“Everyone understands that we win and lose together as a team,” says Greg Collins, president and chief executive officer, on learning that Parker, Smith & Feek was the top choice of its peers.

Echoing that sentiment was Steve Wolf, vice president-communications. “To us, the most important part of the award is the effect on our staff,” he said. “With the soft market, the bad economy, and the AIG debacle, we’re really working hard. The enthusiasm generated by the award is infectious.”

Also representing the agency at the award ceremony were Jim Hamlin, senior vice president and commercial department manager; Kevin Norris, vice president and benefits manager; and David Eckroth, senior vice president and manager of the Anchorage office.

Held in Indianapolis in March, the event also recognized the winner of The Rough Notes Company Community Service Award. Also attending were representatives of previous Agency of the Year winners, as well as members of the Rough Notes staff. Rough Notes magazine’s Editor-in-Chief, Tom McCoy, presented the Agency of the Year award.

Go team!

Parker, Smith & Feek’s team-based model, with its sharp focus on meeting client expectations, has been at the heart of the agency’s philosophy since it was established in downtown Seattle in 1937. In creating this model, Collins explains, the founders believed that sales success was not the goal but the result of delivering on promises to clients.

“This is what drives our entire organization, and it’s a key part of how we differentiate ourselves,” Collins says. “When we present a proposal, typically what a prospect says to us is: ‘You guys all look somewhat the same to us. You’re different people, but you have the same access to carriers, the same basic products and services. What can you tell us about your organization that differentiates it from your competitors?’

“What I firmly believe, and what I always say, is that our agency is built on providing risk management consulting, not on selling insurance policies,” Collins says. “To do that, we have to focus our entire organization on meeting client expectations and driving client value. So our systems and metrics, the organizational structure we’ve developed, our compensation system all are designed to support those values and the culture of our organization.”

In fact, Collins points out, “If you look at our organization chart, what you’ll see at the top is ‘Client,’ and everything we do is driven toward bringing value to that client and meeting client expectations.”

Far from managing its business quarter to quarter, Parker, Smith & Feek focuses on the long term, with an eye on devising strategies to ensure sustained growth, independence, and perpetuation. As a key step in this direction, key employees are offered the opportunity to buy stock in the agency on a book value basis. Currently the agency has 24 shareholders across several generations.

Another key to Parker, Smith & Feek’s impressive success is its diversified book of business. The agency’s predominant niche is construction, at 33.7% of total volume; other key classes are health care, food, private equity, real estate, life sciences, technology, and nonprofit entities. The agency has provided insurance and risk management service to Seattle’s famous Space Needle since the attraction opened for the World’s Fair in 1962; other top clients are Nintendo of America, drugstore.com, Cutter and Buck, Symetra Financial Corporation, Milliman, Inc., and the University of Washington.

Walt Gdowski, president and CEO of The Rough Notes Company, in highlighting the achievements of Parker, Smith & Feek, noted that the agency is not content to rest on its laurels, but projects its involve­ment in business development opportunities well into the future. Among these, he pointed out, are:

• 2010—last paper transaction—all transactions electronic
• 2070—first insurance broker in space
• 2100—arranging insurance for the first mixed-use project on Mars

With its client-centered business model and strong commitment to teamwork, Parker, Smith & Feek is succeeding admirably here on Earth—and there’s every reason to believe they’ll do just as well when they expand their territory to the solar system.