By Susan Greco and Kate O'Sullivan
As Printed From INC. Magazine - August 2002
AGENTS FOR CHANGE
The Alliance: Strategic Independent Agents Alliance (www.SIAA.net)
Founded: November 1996
Members: 1,000 Insurance Agencies Nationwide
Driver: The consolidation of insurance carriers is leading to increased demands on insurance agents
"In our state alone, there are probably half as many independent agents as there were 10 years ago, and that number will probably continue to be reduced annually," says Tim Hyland, president of Hyland, Block, & Hyland, in Louisville. Local insurance agents, long a fixture in small towns across the country, are struggling for survival, according to Hyland, as insurance carriers grow larger and raise the minimum premium volume they require of agents who do business with them. "The companies that we represent want more volume from fewer agents," he explains. Since 1997, Hyland has found refuge from the turbulent insurance market as a member of the Strategic Independent Agents Alliance, a national network of small and midsize independent agents.
SIAA can trace its roots back nearly 20 years. In 1983, SIAA chairman Jim Masiello, founder of the SAN Group, was running a small agency in Keene, N.H., and thinking about growth. "I didn't want to invest in branch offices," he says. Instead, Masiello joined forces with two other New Hampshire agents to aggregate their premium volume and gain clout with regional carriers. Over the years, with consolidation increasing, the lopsided relationship between independent agents and powerful insurance companies got only worse. In 1996, in response to that trend, Masiello took his partner concept and expanded it to start SIAA, which now has nearly 1,000 members in 48 states. Together, the members generate enough business to meet the premium volume minimums set by giant national insurance carriers as a prerequisite of representing them. "In the 1970s and '80s it was easy for somebody to start from scratch, find appointments, and write enough business to get a contract with a big insurance carrier," says Madelyn Flannagan of the Independent Insurance Agents & Agents of America Inc., a trade association in Alexandria, Va. "That's virtually impossible today."
The alliance comprises 60 regional "master agencies," midsize independents like Hyland, Block, & Hyland, which aggregate the premiums of dozens of smaller agencies in their area. (In total, SIAA wrote $2.1 billion in premiums for 2001.) The master agencies also provide technical assistance, helping their smaller partners adjust to the on-line quoting and claim-processing systems now required by most carriers. In return, they receive a percentage of the smaller agents' commissions and an initial membership fee that varies depending on the region.
In addition to providing access to insurance companies, the alliance offers members other benefits, according to Mark Berset, president of Comegys Insurance Corner, a master agency in St. Petersburg, Fla. "If you're the top dog in your organization, you really have nobody to talk to," he says. "A little guy will often call me with thoughts on automation or how to handle contracts if he's hiring somebody. My issues may be bigger ones, like how to benchmark against others in the industry, and that's when I call SIAA." But it's also a lot of work for the master agencies. Hyland says the demands of serving the small agents have overwhelmed the five staff members he assigned to the task. Still, it's worth it, he says. "With the alliance, people don't feel so isolated; they don't feel so alone. What we have created is a support mechanism for all of us."
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