By Dennis Pillsbury

The NIA Group, based in Paramus, New Jersey, traces its roots back to 1926, when Bernat Nelson started the Nelson Insurance Agency primarily to handle his own insurance needs. Bernat's principal business was construction and real estate. The agency continued on that basis until 1957, when Bernat's grandson, Paul L. Gross, took over after graduating from the Wharton School where he studied business and insurance. In the mid-1960s, Paul changed the agency's name to NIA.

"When I took over the agency, we had $23,000 in premium. That was where we started," Paul remembers. "My father helped out with money he would have spent had I gone on to graduate school, and we managed to survive with that and the $5,000 in commissions I made in that first year. I had a wife and child at the time, so it was difficult, but I also recognized the opportunity."

Today, thanks to a solid mixture of hard work and business acumen, NIA Group now has nearly $50 million in revenue, 550 employees, and 15 offices in four states. It is licensed in almost all states.

A significant part of the growth was accomplished through mergers and acquisitions of other agencies. Over the years, Paul says, "We've purchased about 75 agencies."

But the biggest change occurred in 1994 when NIA merged with Kornreich Insurance in New York City. As a result of the merger, Paul took in partners for the first time and requested general management assistance of his younger son, Roger, who had been in business for himself for the previous 10 years. The merger with UVW/Elizabeth of Elizabeth, New Jersey, about two years ago also added some more partners. Today, there are 23 partners, and the company is run by a management team that includes Steve Grossberg, president; Don Readlinger, chairman; and Roger Gross, chief operating officer. Paul is chairman emeritus.

"The most important thing today is the development of management people," Paul maintains. You have to run more efficiently no matter what size you are. Quality management is what creates survivors."

Steve Grossberg, who was with Kornreich and became a partner and officer of NIA after the merger, says, "The agency is in the process of going through a major cultural change. The days of the small independent agency are numbered. We had to grow as an organization and become more efficient. The internal change to having a team approach to management has been difficult but worth the effort. The executive committee, which includes myself and the chairman and COO, meets regularly to discuss operational issues and strategic planning."

As part of this effort, Steve adds, "NIA Group is making major efforts to grow internally. We really are spending a lot of time trying to manage our growth. Our size has helped us with this effort. We're writing larger accounts. Everyone wants a quote from a large broker other than Marsh and Aon. We're able to compete for that business."

Paul says that one of the factors that is having a dramatic effect on the future of the business is its increasingly competitive nature. "We're competing with banks; accounting firms can receive commissions; some state bar associations have allowed attorneys to receive commissions; and the Internet is a monster area of a competitive nature. All of a sudden, the whole industry is turning upside down. A lot of 'name brands' in the insurance business have disappeared through mergers and acquisitions. It pretty much necessitates being large. The mom and pops are going to have real trouble. Hard work still pays off, but you have to be more creative and willing to consider new ways of doing business."

Paul continues that NIA has taken many steps to deal with the changing environment. "We've entered into a number of joint ventures with banks and accounting firms and just signed a significant deal with a dot-com company where we'll be partnering with them to sell and service thousands of Web-sourced accounts throughout the United States."

"In addition to being large," Paul maintains, "you need to be efficient. Management skills are more important than ever. You've got to be organized. We don't have autonomous offices. We'rereally one agency with multiple locations. Roger focuses much of his time on making sure that the importantdecisions are made closest to where
the knowledge resides. He says, "Centralization of function occurs only where clout and/or consistent procedures best serve the entire organization.
We've centralized human resources, automation, accounting, agency contracts and so on. To be more efficient in dealing with customers, we're running our own service centers for personal lines andsmall commercial lines."

Department store with boutiques

"In the old days, independent agencies were department stores for insurance coverages. They offered everything," Paul says. "Today, you still need to be a department store, but you've got to have boutique departments as well." He explains that programs can be written efficiently because of the volume, and that means higher profit. "That's especially important in today's competitive environment."

Among the "boutiques" that NIA is offering are:

* A national auto wholesale program through a captive with Royal as the fronting company.

* A program for shore properties--ShorePac--that offers homeowners, fire and windstorm and is underwritten through Lloyd's.

* An equine mortality program.

* A newly created elevator maintenance program that operates almost like an HMO. Kemper is the fronting company, and NIA hired an elevator maintenance expert to oversee the program.

To make certain that it still can offer a complete "department store" of coverages, NIA opened a wet marine department and has expanded its financial services department beyond life and health coverages to include broker/dealer services. "We already do a substantial amount of variable life and 401(k) business," Steve says. "We use a soft-sell approach to write this business where our property/casualty producers will be meeting with clients and mention that we have these additional services. We plan to use the same approach for our broker/dealer services. We're also going to focus more on worksite marketing where we'll offer group auto or other coverages through payroll deduction."

Steve concludes, "We don't want to lose sight of the fact that products are the key to success. We've set up hub operations with specific professionals as product coordinators. We've broken down operations into large commercial, group business, personal lines, life, broker/dealer and programs. By doing so, we find we are better able to match customer needs and expectations and utilize our resources in the best manner possible."

"NIA is a member of Assurex, so we're able to provide coverages all over the world," Paul says. "We sell and service on a worldwide basis."

"NIA is entering the new millennium with a new management style and commitment to prosper in a soft market that looks like it will never end," Paul concludes. "I'm extremely optimistic that creative, well-managed independent agencies are well positioned to succeed in this environment. And we intend to be one of them." *