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Its Own Way: A Special Report on FCCI


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  • | 5:43 p.m. April 16, 2009
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The recession has clearly been a drag on FCCI, much like it has for just about every other business in the region. Its top executive, however, likes what he sees in the company's future.


Of all the awards, accolades and accomplishments G.W. Jacobs has seen and overseen during the 11 years he has run FCCI Insurance Group, one of the standouts is the blood bank story.

It's not an award for the most donations, although the pints fill up regularly during the company's regular blood donation days. Instead, it's a conversation Jacobs had with the blood bank director one day in the summer of 2003.

The director told Jacobs, president and chief executive of Sarasota-based FCCI, that her staff was fighting over who gets to work the FCCI donation days. She told Jacobs that her crew was constantly saying how much fun it is to work with the FCCI employees, who seemed to be really enjoying their insurance jobs.

While the blood bank director was shocked that fun ran synonymously with insurance at FCCI, Jacobs wasn't surprised at all.

“The greatest thing about this company is the culture that the workers have created here,” says Jacobs. “At FCCI, you will be able to say you worked harder than you ever have in any other job, but you should also say that you have never been any place where you have had more fun or enjoyment.”

Jacobs recalls the blood bank story as the basis for what he says was the best career move he ever made in 1987. That's when he left his job at a law firm to come work as an attorney for FCCI, which was then focused exclusively on providing worker's compensation insurance. The company, which turns 50 years old this month, is now one of the largest property and casualty insurance firms for businesses in the Southeast.

Says Jacobs: “I can't believe how blessed I am to have found my way to this company.”

A Georgia native, Jacobs graduated from Florida Southern College in Lakeland and stayed in the area to work for Maas Brothers, the Tampa-based retailer. He later went to law school at the University of Florida and worked as an attorney in the Florida Deppartment of Labor, in the workers' compensation division.

He moved to Sarasota in 1986 and went to work for FCCI the next year. FCCI's board promoted Jacobs, 65, to CEO in 1998. He says he has no imminent plans to retire, only that “I would be surprised if I were still here when 2012 started.”
Jacobs' recently discussed other aspects of FCCI's future. Here's an edited transcript of the conversation:

Through some of the company's 50 years, talk of going public has cropped up from time to time but it has never happened. Will the company ever go public?

We are a mutual holding insurance company, which gives us the capability to do that should we ever desire to sell stock. We still think we are better served as a mutual insurance company.

The industry is so cyclical that our profitability is almost as predictable as summer rains in Florida. We go through underwriting cycles of profitability, which is followed by increasing competition as everyone realizes that everyone is making money. Then we actually price ourselves into unprofitability.

That is not conducive to a public marketplace. Public markets don't accept those kinds of results.

FCCI has also strictly maintained its independent agent business model, whereby non-FCCI employees handle the selling aspect of the company's insurance products. Will that continue or do you foresee a time where the company will utilize the direct-sale business model?

As far as I'm looking into the future, no. If there ever became a universal insurance product where everyone had the same coverage and it was all just pricing and service, then it might happen.

Some product lines have been successful using direct sales; you've got your Allstate, your State Farm. They have offices selling mostly personal lines. Also, the Internet has crept into the equation and that becomes another distribution channel.

A lot of companies are playing all sides of that fence. There are companies that give lip service to being independent only, but they have some direct marketing programs through AARP all the way to the companies that have the full spectrum, a mix of both independent agents, a direct sales force and the Internet, which cuts out everybody.

But since we are business insurance only, the coverage is a little bit more remarkable. In other words, there are more choices to make, and it requires a good deal more sophistication.

Our biggest competitors have made steps toward going to some direct marketing and sell straight to the consumer. Those companies have not been successful in the business insurance area.

What are some of FCCI's future growth plans and projections and how will the recession impact those goals?

In 2015 we have a target of $850 million [in premium revenues] and for 2020 we have it projected at $1.15 billion, which is double what we are today. That sounds rather aggressive, and frankly we haven't made some of our stops along the way. We didn't make what we we're supposed to this year, which was $550 million.

I still think if we are looking ahead that $850 million is within reasonable attainment. We should have a couple of years of 15% to 20% year-over-year growth, and if we do that it will be pretty dramatic.

Obviously the business conditions have been so remarkable over the last year. This business environment has been amazing and unprecedented. The great news for us is FCCI had a record year last year in terms of increasing its market share. We increased our market share in Florida to a greater extent than we ever have and yet our premium shrunk.

Our real growth is going to come from our customers' growth. We are going to grow with them. And the good news is that whenever they start back, even though the economy may only start growing at modest rates, such as 3% or 4%, our customers will grow at a much more impressive rate. That's because these are people who have survived bad business cycles. They will lead the way out of this thing. It won't be new business startups that bring us back.

The company's 2010 and 2015 growth plans call for expansion into new states, possibly in the Mid-Atlantic region and farther west. What are some of the regulatory challenges facing FCCI as it executes that plan?

One of the great barriers to entrance in new markets is licensing, since licensing for insurance companies is still controlled at the state level.

That means learning how to adhere to all the rules and regulations of each state. Of course, each state has differing interest and parochial needs.

From a federal level, for years and years the insurance industry has enjoyed a limited exemption from federal antitrust in that we can share loss information. But the insurance industry is very divided as to whether it would like to have a federal charter for insurance.

At FCCI, we would like to see that option. You would think the industry would be split based on who has licensure and who doesn't, for competitive advantages. But that's not necessarily the way it breaks down. Some people really believe that the benefits of uniform regulation at a national level outweigh any competitive advantage. We think there has to be some kind of move in that direction.

What are some other regulatory or legislative threats to the other side of the business at FCCI, that of providing worker's compensation insurance?

A. There won't be a need for workers' compensation products the day everybody gets universal health care coverage. That would be the demise of workers' comp.

Q. What is the company's succession plan for your retirement?

I just recently told our board of directors that we have candidates at each level of senior management that are prepared to assume their roles.
We're not going to name names. We don't believe in anointing successors.

AT A GLANCE


FCCI Insurance Group
Sarasota-based FCCI Insurance Group writes insurance plans for a variety of business and industries, spread across 14 states. It has more than 16,000 policyholders.

Industries: Clients include dairies; egg/broiler producers; farm centers; fruit/vegetable growers; mechanized logging operations; orchards; sod farms; hybrid seed producers; wholesale florists/nurseries; and wineries/vineyards.

Locations: Outside of its Sarasota corporate headquarters, FCCI has regional offices in Carmel, Ind., and Duluth, Ga. It has a branch office in Lake Mary. The states where it writes insurance coverage include: Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, South Carolina and Tennessee.

Employees/Agents:
• 660 full-time employees, including 400 in the Sarasota headquarters
• 398 select appointed agencies
• 3,500 appointed agents

Product lines:
• Agriculture: Specialized insurance for farmers and ranchers;
• Auto: Coverage for business-owned vehicles, plus vehicles that are rented, leased or borrowed;
• Crime: Coverage to protect a business from financial loss due to criminal acts, from robbery and burglary to computer fraud and employee theft;
• General liability: Liability coverage for bodily injury or property damage stemming from work, either on or off company grounds;
• Inland marine: Coverage to protect personal property and mobile equipment in transit.
• Property: Coverage for buildings and property within the buildings. Can include leased or rented property;
• Umbrella: Supplemental, catastrophic coverage over and above a business owner's primary commercial auto and general liability.
• Workers' Compensation: Company provides two types of coverage: Standard workers' compensation coverage for injured workers that's required by state law and employer's liability coverage. The latter is to protect employers sued for damages arising from employment-related accidents or diseases.

 

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