- July 16, 2009
Insurance agencies have faced turmoil in recent years, especially involving property coverage in Florida. After all, it becomes difficult to maintain a solid customer base when the carriers these agencies market cannot fully commit to maintaining policies in Florida with ever-changing rules.
Longevity remains a key for many agencies observing milestone anniversaries this year, facing the challenge of staying in business and keeping a legacy going against continuing turmoil.
They are looking to the Scott Administration for help.
Here are three examples of stalwart insurance agencies that have been around a long time and plan to be around for future generations.
If you've ever received a notice from an insurer canceling your homeowners' coverage, Ron Hockman feels your pain. It has happened to him four times — and he owns an insurance agency.
Hockman Insurance Agency, based in Tampa and primarily serving Hillsborough County, has had numerous property and casualty carriers come and go in recent years. As each came in and out of Florida, the agency has had to look for another to take up customer policies.
More often than not, those policies have been turned over to Citizens Property Insurance Corp., the state's insurer of last resort. While Citizens charges much-lower premiums than traditional insurers and is subsidized by other homeowners policyholders, it has gotten overburdened in recent years as too many carriers pull out of Florida.
A big source of pain comes from carriers tying homeowners' policies to other types of coverage, such as automobile and personal lines, offering multi-line discounts as an incentive. But when one line goes, they all go.
“We have to look at you as a new customer,” says Hockman, who has owned the agency since May 1981. He bought the agency established in Clearwater 50 years ago after working there for four years.
It helps that Hockman Insurance isn't too heavily weighted on the homeowners policy side of business. Primarily a commercial agency, it has diversified into other lines such as auto, professional and workers' compensation coverage. It also offers risk management and employee benefits services.
Having so many lines available has allowed the agency to maintain balance over the years as premium prices rise or fall and economic conditions change.
“Every line of business that we have had has been under siege at one time or another,” says Tim Salzsieder, the agency's senior vice president.
Its customer base has had ups and downs as well, he adds. Construction firms were the agency's strong suit prior to the recession, but now technology and health-care sectors appear strongest.
Hockman, a U.S. Navy veteran who went to work for Harmon Insurance Agency in 1977, says his 15-employee agency had to make various adjustments through the latest downturn but there's no magic to keeping the company going.
“You just get up and go to work,” he says.
Although the agency has just one office at 3438 Colwell Ave., agents customarily visit clients at their own offices and shops. Hockman, who grew up in St. Petersburg, says he would eventually like to expand into Pinellas County, either through acquisition opportunities or organic growth.
Salzsieder emphasizes the importance of maintaining solid relationships with clients, adding value to the premiums they already pay and helping them minimize claims.
M.E. Wilson Co. Inc.
The grandfather of Guy King III started the family's insurance agency in 1920, but it never saw an evolution like the one faced by its current generation. There is much more to the business today than simply writing policies.
The company also tries to set itself apart from other agencies by working in a more consulting role with clients, rather than as an agent who mostly signs new policies and renewals. It places a strong emphasis on risk management, identifying where customers are exposed and developing strategies to prevent or minimize possible claims.
“We are not hard-nosed sales people,” says King, the company's president and co-owner of the firm for the last 25 years. “We want to give our clients a risk solution where they don't have to worry.”
M.E. “Gene” Wilson established the agency shortly after moving to Tampa from Philadelphia, bringing an accounting background that immediately established his one-man office as a consultative insurance agent. He encountered his first customer, Frank Gannon of Tampa Electric Co., on a streetcar and that relationship with TECO Energy Inc. has continued ever since.
In the 1950s, Wilson turned the company over to his son-in-law, Guy King Jr., a former Army Air Corps pilot who had trained at MacDill during World War II. Guy King III came to work for the family business in 1974, followed by brother Doug King, now CEO. The brothers bought the agency from their father in 1985.
Along with commercial property and casualty lines, M.E. Wilson also offers corporate benefits and coverage as well as private client services to cover expensive homes and items.
King says clients have greater responsibility now to keep their premiums as low as possible. M.E. Wilson's agents use timelines to follow up with customers on various points.
“If they don't cooperate, they probably aren't going to be a long-term client,” King says, adding that the company does not charge extra for the additional services.
M.E. Wilson is a member of Marsh Berry & Co.'s Agency Peak Performance Exchange, or APPEX, which brings together leading independent insurance agencies from around the country. Members meet twice a year to discuss finances and challenges in the interest of continuous improvement, says King, who served as the group's chairman for 2009-10.
Clearwater-based Bouchard Insurance has gone through many turns since being founded more than 60 years ago. Most have happened in the last few decades.
“Our industry has changed so much,” says Ray Bouchard, chairman and president of the 200-employee agency with additional offices in Sarasota, Fort Myers and Kissimmee. “In the old days, you just presented the low bid on a policy to win business. Those days are over.”
No longer a low-price proposition, he says insurance agents must remain involved with clients throughout the year on issues such as risk management, compliance, loss prevention and even human resources. All these services are included as part of the premium payment, at no extra charge, and can be a big help to business owners.
“An owner is wearing multiple hats and doesn't have time to do it,” Bouchard says. “Issuing the policy is the easy part.”
Service after the sale is a principle Bouchard's father, Roger Bouchard, had in mind when he began writing policies in 1948 in a rented storefront in downtown Clearwater. The agency opened its own offices and moved a few times in the '50s and '60s, then acquired four local agencies in the '70s.
It purchased its current headquarters at 101 Starcrest Drive from Foremost Insurance in 1987. The elder Bouchard retired in 1992, turning the agency over to his three sons.
In 1999, Bouchard Insurance became part of Naples-based First National Bankshares, allowing it to expand its footprint along the Gulf Coast over the next five years. The original owners bought back the agency in 2004 from FNB, which merged with Fifth Third Bank.
The agency continues to grow organically, rather than through acquisitions, but Bouchard does not rule out any offers that may come its way. He mentions, though, that he foresees more consolidation within the insurance industry, as older independent agents look to retire and put their book of business in the right hands.
As for current insurance rates, Bouchard says they have remained soft over the last several years on lines other than homeowners coverage and should stay flat this year.
But that also means they won't decrease by double-digit percentages the way clients had become accustomed to seeing. “We're seeing that pendulum swing back,” he says.
For example, insurance carriers now are being more conservative on rates for workers' compensation coverage, which fell in Florida to the lowest levels in the country, declining 65% since 2003.
Two years ago, State Farm Insurance said it would cancel all of its homeowners insurance policies throughout Florida. The state's largest insurer in that category is still here, though the number of covered homes has shrunk.
State Farm over the past year has notified 125,000 Florida homeowners, mostly living within five miles of water, that they would need to seek coverage from another carrier. It's part of a deal the company made with state Insurance Commissioner Kevin McCarty to keep 700,000 policies in place, in exchange for a 15% rate hike.
Insurance agents along the Gulf Coast have numerous anecdotes about phone calls from panicked State Farm clients, many who had homeowners policies for decades without ever filing a claim. Some were so angry they wanted to turn other coverages, such as auto or personal lines, over to other insurers to spite State Farm for the homeowners' cancellations.
One would think this would have created a business bonanza for agents, but that has not proven to be the case.
“We told those who were still with State Farm to stay with State Farm because they're the only ones who are solvent now,” says Ron Hockman, who has owned an independent insurance agency in Tampa for the last 30 years.
Agents agree with State Farm that a lack of competition, pointed back to the presence of Citizens Property Insurance Corp., the state-run insurer of last resort, as undercutting premiums. Private carriers cannot maintain balances to pay off projected claims without being able to charge actuarially sound rates. The very existence of the subsidized Citizens undermines that ability.
State Farm points out that eight of the 12 costliest hurricanes in the United States struck Florida, and even though no storms have hit the state during the last five years, claims for non-hurricane losses have gone up at least 65% in recent years.
Insurance agency groups are once again working with the Florida Legislature to help property carriers balance premiums and claims, hoping to restore a bill that passed last year before then-Gov. Charlie Crist vetoed it, even after initially supporting it. Newly elected Gov. Rick Scott of Naples told agents he would make insurance a priority during his campaign.
“This process is not going to be without pain,” observes Ray Bouchard, who owns a Clearwater agency with offices along the Gulf Coast. He says Florida homeowners can expect premiums to increase in the short term until competition returns to the state.
“If you want to pay a little more to be with a real insurance company,” he adds, “you should have that choice.”