Bigger is not better

Contrary to popular belief — and relentless ad campaigns — you don’t necessarily want your insurance to be a one-stop shopping experience. There are many boutique agencies in the market, specializing in niches that larger competitors don’t service as efficiently or thoroughly.

“Bigger is not necessarily better,” says Bill Roversi, senior vice president at Royal Marine Insurance Group (RMIG). “When you work with a specialty agency, you deal with an expert and can get custom-fit alternatives to meet your specific needs.”

The key to survival for these smaller organizations is finding that niche and using it to reach customers who need the service they provide. As is the case for all smaller organizations, not just insurance agencies.

Smart Business spoke with Roversi about what smaller businesses can do to compete with the “big boys” and how working with niche insurance firms can help you avoid unforeseen coverage lapses.

What challenges do smaller organizations have?

Probably the most difficult and important challenge is to build an identity. You have to be known for something. If you’re one of the big guys, you’re known because you are the 800 lb.gorilla. But for medium and small-sized organizations, it’s important to have an identity.

In the case of niche insurance agencies, they have built reputations on being able to solve unique coverage problems their clients have presented to them. In a number of cases, they are represented by the large agencies that, when asked to solve a particularly unique or cumbersome coverage, often come up blank. They are used to providing cookie-cutter solutions and not developing solutions from a conceptual point.

Again, you must create an identity. Boutique insurance agencies solve different and interesting coverage situations that clients find themselves in. That’s their identity. You have to figure out what your identity is. Once you have your identity, selective marketing is the key to trading on that identity — market to the type of people you can help. Don’t try to be everything to everybody.

How can a business find a niche in order to compete with the 800 lb. gorillas?

The best way I’ve found in my career is to be a good listener. If you ask a question and then listen, it’s amazing what clients will tell you. Conversations might start with your client describing a problem and then you immediately start jabbering away about how you would solve it.

However, if you simply ask about the difficulty they are having and hear what they are saying, they often help you answer it in that same conversation. If you are a good listener, people will tell you far more than they would if you are monopolizing the conversation.

How can smaller companies thrive in today’s marketplace?

The biggest key is offering superior service. At the larger insurance agencies, the brokers bring in new business, but after they bring in a client, the account is passed to an account manager or a customer service representative. That’s the last time most people ever see the broker who initially made the contact.

The brokers are expected to bring in new business, but not service old business or renewals. That is the weakest link in large insurance companies that smaller companies can take advantage of. A smaller insurance company will meet with its clients on a regular basis, whether that is monthly or quarterly. A broker should not want to only see clients at renewal. Clients should be seen at least once in the midterm and once prior to renewal to get whatever information is changed going forward. Maybe the client has bought some new equipment or some additional buildings that need covered or they’re discussing a merger. Regardless of your industry, staying front and center with your clients and offering superior customer service is the easiest way for smaller firms to outshine the 800 lb. gorillas.

What insurance pitfalls should companies strive to avoid?

You need to make sure you explore what insurance you have right now and what other coverages you may need that have not been previously considered. For instance, people working either on, in, or near the water have very unique coverage considerations for their employees. The typical workers’ compensation policy that employers have only covers land-based exposures. If you are on or near the water, or going on and off ships, you need U.S. Longshoremen and Harbor workers coverage. If you’re working on the ship, you need Jones Act insurance; Federal law takes precedent over any local workers’ compensation.

How can companies avoid making insurance mistakes?

In any situation, you want to make sure the agent you’re dealing with has specific knowledge about your industry. For instance, I wouldn’t assume to sell a property and casualty policy to a local hotel or office building because I don’t do it often enough to know what unique exposures are specific to a hotelier. But if I am dealing with a boat yard, a ship owner or an aircraft owner, I know exactly what they need. A larger company may be fine for insuring your house and your car, but they wouldn’t have a clue how to insure a cargo ship. The key is to always deal with a specialist in your area, whatever business area that may be.