Florida agency uses “Ritz Carlton” approach

Florida agency uses “Ritz Carlton” approach

Pillsbury, Dennis H

Gateway transforms itself from boutique agency to large multi-state firm

The Gateway Insurance Agency in Fort Lauderdale, Florida, was established in 1952 by Fred and Hortense Stanton. It grew into a successful boutique agency with some difference from other independent agencies in that it included a strong financial services business.

But by the late 1980s it became clear that the small boutique agency no longer could count on the companies to provide markets. By that time, Gateway was run by three partners-Peter Stanton, chairman; David Stanton, president; and Mike Weinberg, executive vice president. “The companies were applying the 80/20 rule and we realized that we needed to be very large in order to survive,” Mike Weinberg explains.

The agency took an aggressive stance that included acquisitions of several agencies, as well as internal growth. A sales center was set up that included direct mail and telephone follow-up. “We mail more than 100,000 pieces every year,” Mike says. The agency buys leads for industries where “we already have competitive products. We also qualify the market to make certain the niche offers sufficient premium.” He continues, however, that “a large percentage of our new business still comes from referrals. That remains our most important source for leads.”

This approach has led Gateway into several niches — construction, manufacturing and distribution among others. “We provide coverage for some large chains of car dealers and a large chain of retail stores nationwide. We’ve also done a lot in the catalog sales area providing coverage for mail order businesses.” And, because a number of these clients have multi-state operations, Gateway has obtained licenses in every state.

Today, the agency is a multi-state provider of insurance services, with 30 employees and revenues in 1997 expected to reach around $4.1 million in commission income.

Dramatic comp savings for clients One of the valuable services that Gateway provides to all its commercial insurance clients is an evaluation of their workers compensation coverage using AcuComp. This service is made available through a partnership arrangement with National Insurance Advisory Services, Inc. (NIAS), and is provided at no charge to the client. It includes three services related to workers comp:

1. Experience modification factor verifications and corrections. NIAS verifies the validity of the client’s current experience mod and handles any corrections if the mod factors have been calculated incorrectly. This service is provided on a national, multi-state basis.

2. Mathematical modeling to determine the best deductible. Using the clients’ actual premium and loss history, AcuComp develops a mathematical model designed to reduce the frequency of claims paid by the insurance company. This results in premium savings and even improvement in experience mod factors, since claims that fall under the deductible amount don’t adversely affect the mod. The model helps clients determine the best possible deductible/premium combination.

3. Claim audits to minimize reserves. NIAS conducts an audit of each large claim (claims of $10,000 or more) on a quarterly basis to minimize reserves and to keep them at a reasonable and current level. This service has resulted in an average reduction in reserve levels of 27%.

“We emphasize AcuComp and these results in all our direct mail,” Mike points out. “But AcuComp is only part of the story. We also work with our clients to help them improve on their loss experience. We recently were called in by one of our construction clients who kept losing bids for business. He was not competitive because of his high workers comp premiums. We did a risk evaluation and helped him set up a safety program, including writing the safety manual. That resulted in lower premiums and allowed our client to compete successfully. When you can help clients stay in business, that’s the kind of service that they really remember and tell others about.”

Gateway also has worked with clients to set up drug-free workplaces. “Our agency has done more than 100 drug-free workplaces.’

“We also look very hard to find any means for third-party recovery. We recently had a six-figure check come back to one of our clients.”

Savings like these are not what people have come to expect from their insurance agencies, so naturally word of this gets around, especially among members of niche groups in which Gateway specializes.

The sales center The Sales Center at Gateway centers around a database that includes every prospect that fits the agency’s criteria. Every prospect is assigned to an agent who is expected to get in front of that prospect and tell the Gateway story. The agency also uses several telemarketers and direct mail so that each prospect is contacted at least once every quarter.

One of the interesting features of the Sales Center is the fact that xdates are not part of the information Gateway uses. “We’re not looking to compete based on price,” says agency President David Stanton, “so the xdate really doesn’t matter. We emphasize service and it usually doesn’t matter whether we’re there near the x-date or not. We’ve found that we usually have something to offer, somewhere we can help them.

“We aren’t looking to compete for one line of business. Our goal with all our accounts is to become their agent for all their insurance,” David explains, adding that this includes life, health and other financial services. “We believe that this is the right approach for our clients and for the agency. For us, it is proper from an E&O standpoint and it makes matters easier for our clients.”

Cross selling

Not surprisingly, Gateway rounds out many of its P-C accounts with life and health insurance coverages. But, it also is interesting that, because it is such a strong player in the group insurance field, cross selling also has gone in the other direction as well.

“We have several hundred groups in force and it’s not at all unusual for that to lead to our agency eventually getting the commercial property/casualty coverages,” David says, noting that one of their clients, a ship builder with operations all across the country, first came to the agency for group insurance coverage.

The agency also takes advantage of the opportunity to sell personal lines coverage to employees of commercial insureds. For example, if some of the coverages are part of a payroll deduction program, this “lets us sit down with every employee. The personal lines department will call every employee or, in some cases, selected employees.”

“We also spend a lot of time networking within the community,” David continues. “We conduct onehour seminars in our office with breakfast or lunch. We bring in outside speakers for these. We want people to see our 10,000 square foot facility and realize that we’re a strong and vibrant business, not just a storefront operation.”

The agency also recognizes the need to be innovative in its marketing approach. “We don’t just rely on standard letters and phone calls. We work to get people’s attention.” For example, one year the agency sent a bottle of champagne to each of 100 businesses it was targeting when that business hit its first anniversary congratulating the owner on being in business for a year. You can bet those business owners remember Gateway.

The Ritz

The potpourri of services and marketing approaches used by Gateway is aimed in one key direction-to emphasize value and quality of service. “We’ve even organized the agency a little differently,” David explains. “Sales and marketing are under Senior Vice President Tim Dawkins. We wanted to make certain that all contacts with clients and potential clients were coordinated.”

According to Dawkins, “Most of our clients come to us as referrals or, if not, we always urge them to call our current clients. That usually gives us a better than average entree. But we don’t want that to end once they’re a client. We try to get them to allow us to do more for them. We’ve adopted the Ritz Carlton approach and take the extra minute and make the extra step.

“Whenever the account manager has a client on the phone, they emphasize this approach by doing three things. (S)he asks the client: `While you have me on the phone, is there anything else I can do for you?’ and `Is there anyone else you need to speak with?’ As soon as the phone call is ended, we immediately send a letter to the client thanking him or her for calling and for being a client and then document what was done.”

Tim says this technique has been quite effective at helping the agency maintain a retention ratio that is significantly better than the industry average. “People expect to be brushed off when they call an insurance agency and they’re pleasantly surprised when they call our agency.”

This focus on making the Gateway experience pleasant and unique extends internally as well. “We never want any of our employees to have the attitude `It’s not my job’,” Mike says. “If they do, that will be reflected in the way they treat customers. So we’ve made every effort to create a team spirit. Every quarter salaries are adjusted depending on how well the agency has done. That certainly has removed any tendency to pass the buck to another employee. Everybody goes out of their way to make certain a job is done and done right.

“We also make a strong effort to have a positive working environment,” says Tim. “We offer flex time where employees can get every other Friday off by working an extra 45 minutes each day. Employees get three weeks vacation and get their birthday off.”

Automating for service A key part of the success of Gateway is the use of automation to improve efficiency and enhance service to clients. The agency uses the Applied System and has every contact on the system. Transactional filing is used throughout.

When a client calls in, his or her file immediately pops up on the screen. “If a contractor needs a certificate of insurance,”

Mike says, “we often can send it to him by FAX while he’s still on the phone. And we’re always working to stay ahead of the technological curve. We spend six figures a year on automation and have a tech team of non-insurance people who do all the routine work on the system. Our goal is to constantly improve the efficiency of our agency so we can better serve our customers.”

Mike sums up by noting two key elements of the agency’s success: a real top quality management team and unrelenting dedication to the customer. “As a result, we’re going to have record profits this year-and they’ve also been recognized by us very appropriately as Marketing Agency of the Month.

Copyright Rough Notes Co., Inc. Sep 1997

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