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West Coverage News & Markets
Start-Up Stories: How New Agencies Are Competing Crop of New Agencies Is Defying the Hard Economy and Soft Market
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he independent insurance agency small; few if any have the resources of a giant and emerging growth companies, which system is enjoying a resurgence. like Marsh, which is behind one new agency Butcher considers to be firms with revenues For years, the number of agencies in 2008. But new agency entrepreneurs are from about $75 million to $50 million and nationwide declined, but that not small in ambition. Insurance Journal intersome below that. He said Marsh does not trend has halted. There were 37,500 agencies views reveal they have big plans and, in some have a large customer base in this range, in 2008 — the same as instances, are showing although it does have some customers that in 2006, according to promising results. size, and some with the brokerage division New Agencies Fact: could become customers of the new agency. the “2008 Future One 20% in West South Central states New York: Marsh & “When we do operationalize, when we do Agency Universe Study,” Source: 2008 Future One Agency Universe Study McLennan Agency go live, this will be a national agency, meansponsored by the New York-based global insurance broker ing, I do expect to have a footprint that will Independent Insurance Agents and Brokers of Marsh, accustomed to handling large be attractive to carriers who are looking for America, Trusted Choice and several carriers. accounts, announced in October 2008 that it an effective distribution model,” Butcher said. The study attributes the stabilization to is setting up a separate retail agency to go He said Marsh will “almost certainly” be fewer mergers among larger agencies and after a share of the $80 billion in premium looking to hire producers to staff those locamore start-up agencies. Eleven percent of paid by smaller and emerging growth compations, in addition to using current employees. the agencies studied were founded after nies. The new entity, Marsh & McLennan The company also will be looking to acquire 2004, and about 4 percent were founded in Agency LLC, will be hiring producers as it agencies. 2007 and 2008. opens in select cities starting The new agencies appear to be concentratin the first quarter of 2009. California: ed in Florida, Louisiana, Texas and states New Agencies Fact: According to Jack Butcher, Timothy Gaspar where coastal concerns have prompted some 10% in West North central states president and CEO of the new Source: 2008 Future One Agency Universe Study Insurance long-established insurers to reduce writings, venture, the agency will conServices creating opportunities for other carriers to duct its business separately from Marsh’s Family — you can’t leave them, so you wade in and appoint agencies. Also, some insurance brokerage operations, although the might as well love them. Timothy Gaspar agents acquired years ago may be re-entering launch is part of the overall growth strategy. embraced this when he formed his properthe fray as their non-competes expire. The target market will be small business ty/casualty insurance agency — Timothy Not surprisingly, most new ventures are Gaspar Insurance Services — within the confines of his stepbrother’s and stepfather’s Los Angeles area financial planning firm. Gaspar built a book of P/C clients with another agency for five years before deciding service for a select number that need placen the current digital age, businesses are he wanted more control over his destiny and ment for difficult to place risks. relying less on offices filled with cubicles flexibility in dealing with clients. His step“We’re looking for a few dozen producers and more on technology to perform traditionbrother and stepfather owned Financial with whom we can work and give them peral tasks. Harn & Lechler Insurance Services Management Services, which has handled life sonalized service for their particular cases. LLC aims to prove this works for insurance and medical insurance, and financial planning When they call us, they will talk to a princitoo, with its “virtual” wholesale brokerage. issues for business owners for 34 years. Often, pal, not someone down the line that needs Former alumni of Los Angeles-based the family members would have clients who to check with upstairs. They can get immeAnderson & Murison — Lechler previously would need each other’s services, but Gaspar diate answers for their questions and placeserved as president of that agency and Sarn was unable to make referrals. So, he used his ment problems,” Lechler said. has 25 years of experience in production and own financing to buy his book of business Harn & Lechler brokers builder’s risk, underwriting — the two pooled their and joined his relatives in April 2008. course of construction (COC), commercial finances and started their wholesale insur“Because we’re family, we’re in the same general liability, contractors, difference in ance brokerage in August 2008. The owners social circles and network, and now I have conditions, earthquake and flood, employwork out of their home offices in Castro flexibility with who I can work with,” Gaspar ment practices liability, and property all Valley, Calif., and Sierra Madre, Calif., where said. “Previously, when I worked for another risks/special perils. The company focuses on they connect to producers and support staff firm, I was not able to refer business their product liability for imported products — through an online wide area network. way. This way, I can include them on a lot of anything including children’s toys, light Despite their reliance on technology, the accounts and referrals.” pharmaceuticals and cigarette lighters. IJ two maintain that their forte is personalized
California: Harn & Lechler Insurance Services
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40 | INSURANCE JOURNAL-WEST REGION February 9, 2009
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