Marketing Agency Of The Month - October

Exceptional service and relationships lead to success

This New Jersey agency boasts an astounding $400,000 revenue per employee

By Dennis H. Pillsbury

“In real estate, it’s location, location, location. In insurance, it’s relationships, relationships, relationships.” That’s how Ron Cooperman, president of KCI Insurance Agency, Marlton, New Jersey, explains a philosophy that has seen his agency through some trying times, including the loss of its only market in 2003, to reaching $6 million in revenue this year.

Ron is a firm believer in developing strong niche programs where the agent learns everything he or she can about the niche and its risk management needs. Then the agent takes that knowledge and uses it to provide ultra-service to the client. “Our producers meet at least once a month with their clients,” Ron says. “We provide every client with a stewardship report that delineates our responsibilities and theirs and then we follow up on our promises.

“We also eliminate the renewal rush by starting the process well in advance” Ron continues. “We like to have all our renewals completed three months in advance. I love bringing the client and the underwriter together and working on the renewal. Again, it’s all about relationships. Our goal is to have limited, but very powerful, relationships with our clients and with our underwriters. This means that we can have only ‘A’ clients. We can’t afford to provide this kind of service to ‘B’ clients, so we simply don’t have any.”

The goal for each producer at the agency is a maximum of 15 clients and a minimum of $500,000 in revenue.

Ron started the agency in 1991 in partnership with an MGA owner as a minority stockholder. The MGA had an exclusive program with one company and that fit well with Ron’s idea of focusing on one niche area, in this case, transportation. All of KCI’s business was placed through the MGA until 2003 when the insurer non-renewed the program.

Following the iteration of a one-word expletive, Ron started scrambling to find other markets. “While we were searching, we were chum in the water,” as Ron colorfully explains. Six of the top 10 accounts found homes with competitors. It was an unpleasant learning experience that made it clear that occasionally an old saying like “don’t put all your eggs in one basket” has more than a grain of wisdom.

Although all the primary insurance coverages had been in one basket, Ron had paid attention to that proverb by diversifying the income streams in the agency. By the time it lost its market, KCI was involved in managing a large workers comp self-insurance group (PETRO) and a risk retention group (Elite RRG) and in placing the reinsurance for those entities through its reinsurance intermediary, EPIC Intermediaries.

Having the right people

“It’s all about having the right people,” Ron says, explaining how he recovered from losing his only market. “We had good people in place who had strong relationships with clients and potential clients. We were certain that other markets would be attracted to our book of profitable business.”

And they were. Pretty soon, KCI had several major markets interested in writing its book of transportation business.

“We became much better business people,” adds Jerry Stechmann, chief operating officer and agency owner. “We had not been paying sufficient attention to expenses, but the loss of our market made it clear that we needed to do a better job in that area as reduced revenues brought some of our spending into sharp focus. We definitely needed to become better focused on all areas of our business.”

Jerry, who came to the agency from Marsh in 1996, took a personal interest in bringing expenses in line. “In addition to getting better control over our acquisition costs, we also were faced with buying out the MGA that had been a minority owner,” Jerry adds. “Fortunately, we were a very profitable agency, so we had the wherewithal to handle these expenses.

“Control over expenses put us on a much better footing for future growth and made us more nimble when it came to taking advantage of potential opportunities,” he says.

Helping Jerry with this effort are Debbie Ranger, controller, and Jeannie D’Orazio, accounting administrator.

Careful but generous

Expense control did not mean austerity. KCI had a solid reputation built on excellent service and needed to continue to be generous with employees and to go the extra mile for clients and underwriters.

Jerry explains, “One of the real keys to our success has been our four account managers—Rose Grello, Shirley Ravenscraft, Amy Seitz, and Lance Doka—who always are there for our producers and our clients. Each one of them has put in 24-hour days, day after day, when we needed them to work on an account renewal or a new account proposal. And that teamwork extends to every level of the agency. Everyone understands that when the agency succeeds, we all succeed.”

Ron adds, “We’ve worked hard to find the right people and work hard to keep them. In addition to compensating them well for their efforts, we treat them as part of the team and as adults. We don’t have set vacation time or sick days. We don’t need that. We tell them to take time off whenever they need it. If we couldn’t do that, then we’ve hired the wrong people. The only trouble we have is that sometimes they forget to stop working. They always overperform.

“We recently had one of our account managers work on an account that we succeeded in landing. It was weeks of long days and nights working with both the potential client and the underwriters. Once we landed the account, the manager was in the office the next day ready to start on the next job, exhausted but ready. We sent the account manager and family on a week’s vacation in Ocean City, Maryland, at the agency’s expense.”

Jerry adds, “We also pay bonuses based on profitability to make it clear that the agency’s success adds to everyone’s success.”

Identifying opportunities

As noted above, KCI had diversified into a number of areas that allowed it to continue to succeed, despite the loss of its major market. This diversification involved identifying opportunities in its niche area of transportation and then pouncing on them. One of the first moves was to get into the self-insured workers comp arena just as the millennium approached.

“Dick Giblin, an agent based in York, Pennsylvania, controlled PETRO,” Ron says. “So we hired him. We made him an attractive offer and he came on board along with PETRO. He heads up our York office and serves as administrator of PETRO and the Elite RRG, which we formed after bringing Dick on board. Shirley and Amy work with Dick in the York office.

“When we hired Dick, PETRO had nine members. Today, it has 26 members.”

The members of the self-insured group understood the need to manage their own risks, so it was a logical transition to also ask them to self-insure their liability risks as well. The agency established Elite RRG in Arizona and today, 10 of the 26 members of PETRO are members of the risk retention group.

Naturally, both the self-insurance workers comp group and the RRG needed reinsurance protection. KCI was working with Chuck Marsar of Aon Re to place the reinsurance coverage. “It just didn’t make sense for us to be paying someone else commissions to place business,” Ron says. “That’s what we do. So we hired Chuck and established EPIC Intermediaries to place reinsurance coverages for ourselves and other agencies. Today, Chuck brings in about $500,000 in revenue from providing reinsurance for risk retention groups and captives. We’re just starting to make reinsurance capacity available to other agencies involved in captives, self-insurance, and other alternative markets. We see this area as offering almost unlimited potential.”

As the self-insurance and RRG business grew, the agency needed expertise in underwriting and claims. “We brought in Patrick Ferrell from AIG to help us with the RRG. He serves as our underwriter for the RRG and has a wealth of knowledge and contacts in this arena. We also have Kathy Watkins, who has many years of experience in the claims arena, to serve as our claims administrator.”

The agency also has a strong contingent of producers who bring in traditional business.

In 1998, KCI hired Jeff Smith, an agent based in Pittsburgh, Pennsylvania, with whom they had crossed swords on several transportation accounts. Jeff now runs the Pittsburgh office where he and Lance Doka service accounts representing more than $500,000 in revenues.

Jackie Roynan came to the agency with four accounts representing $300,000 in revenue. She is a vice president in the Marlton office and brings with her an expertise outside of transportation, which is helping the agency to diversify its product lines.

Jeff Maconaghy has emerged as the agency’s super producer. In recognition of his efforts, Ron and Jerry sold him a part of the agency. He is the agency’s executive vice president.

Ron continues, “Most of our accounts represent more than $40,000 in commissions. We’re continuously working to bring in more ‘A’ accounts. One of the questions other agents almost always ask is, ‘Aren’t you concerned about losing big accounts? Doesn’t it hurt your bottom line?’ And the answer is: ‘No one likes to lose any account and, of course it hurts. But every account we work on is a big account. So, if we lose one, and that’s very rare these days, we’ll probably be replacing it with one of equal size and maybe more than one. You can’t stop writing big accounts out of fear.’

“We have fewer than 100 accounts and that does make us more leveraged than the average agency,” Ron says. “But we also can concentrate on those accounts and provide excellent, continuous service. We know our clients inside and out. We know when one of our clients is looking for an acquisition and know when one is looking for a buyer. We’ve helped bring clients together in a merger situation. All our clients not only know us but know their insurance company underwriter as well. We also have a relationship with a life and group insurance agent. If our clients need help in that area, we’ll bring them together.

“Even when we’ve lost accounts to the competition, we continue with the relationship. We provide help wherever they need it and, more often than not, we eventually get that account back,” he explains.

“The world is nothing but relationships,” Ron concludes. “And I just love it. I have the best job in the world. I go out and meet people and open doors.”

KCI currently is developing a captive to provide health care coverage to its transportation clients and an agency captive for auto liability. It also is in the process of opening a new niche.

Anyone who has been around this business for more than two seconds has heard the cliché that “this is a people business.” KCI is proof that there is more to the cliché than mere words. It has succeeded because of its adherence to relationships and deserves to be this month’s Rough Notes Marketing Agency of the Month. *