Manna From Heaven
Small agents find savior (and lots of markets) in SIAA
By Russ Banham
Excerpted from Independent Agent Magazine - July, 1 2001:
The Strategic Independent Agents Alliance, now in its 19th year, will pretty much be the independent agentage system in the future, with almost 1000 agencies in the network at present. About 20% of which were either life agents or former captive agents. Chairman Jim Masiello predicts a lot more agencies will join his organization. "I fully expect SIAA will have over 4,600 agencies by 2006," Masiello says.
"Last year we were signing up agencies at the rate of three per week," he says. "Now we're signing up one a day - seven agencies a week."
Paul Murphy is a satellite, or as SIAA formally calls them, Independent Strategic Member (ISM). "Jim Masiello is a godsend," says Murphy, president of Paul Murphy InsuranceAgency in Malden, MA. "I'm still an independent agent. I own my own business. Everything that leaves this office has my name on it - no one else's."
Down to Earth
"Jim basically identified a need within the independent agent community and, unlike many other smart people, was able to define a compelling solution," says Roger Jean, president of Regional Agency Markets, the independent agentage unit within Boston-based Liberty Mutual Insurance Co., with annual revenues of $2 billion.
The "need" that Masiello intuited was the inability of smaller agencies to attract and retain insurance markets. Instead, they were losing them by the truckload, as carriers lifted their premium volume requirements higher and higher, pushing them out of contention. Says Jean, "The system Jim devised helps agents acquire the products and services of top insurance carriers, which on their own would have been elusive, at best."
SIAA basically glues together different sized agencies into a large aggregate book of business that generates deals with top national and regional carriers. As SIAA signs up more and more satellite agencies, their combined premium fosters substantial profit and commission overrides, which SIAA trickles down to its master agents and their satellites.
SIAA essentially goes around convincing medium-sized, high-quality agencies to sign up as Strategic Master Agencies, in charge of a specified geographic territory. These agencies then head out to the hinterlands to convince much smaller agencies to become their ISMs, and establish a separate company to aggregate the ISM's premiums. Meanwhile, the ISMs are trained by the master agents (and/or SIAA) in the nuances of underwriting for their particular insurance markets.
Jon Pappas is an SIAA Master Agent. "We set up a separate entity called the Potomac Insurance Network, of which I'm the president," says Pappas, vice president of The McLaughlin Co., a Washington D.C. - area agentage with $23 million in premiums written last year. "The reason we signed up was because we wanted to be part of something bigger without merging with another agentage or joining a cluster." Potomac has successfully enticed 36 agencies to be ISM's.
Reality Check Time
"We view carriers as our strategic partners, particularly Liberty, Hartford, Travelers, and Kemper, Masiello says. "The days of the big agents shoving what they want down the carriers' throats are over. That is not our reputation, nor will it ever be. We are very different from agents, MGAs and clusters. We have our own unique identity. And core to that is our conviction never to play relationship games with markets. We don't ever talk about this or think about this. It is not our corporate philosophy, and it never will happen. Everybody has to benefit for this to be a win-win situation for agents, carriers and customers."
"Our goal is to build a distribution system of independent agents who want to remain independent," says Masiello. "Insurance is a personal business, and the last thing we want is for it to become impersonal because of our size."
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