How do private equity firms affect competition among independent agencies?

How do private equity firms affect competition among independent agencies? | Insurance Business

How do private equity firms affect competition among independent agencies?

Laurie Branch fondly remembers how her dad used to talk about insurance and his business almost every night when she and her family were having dinner. Her father, who was third generation in the agency business, established Iroquois in 1977, which is now known as one of the oldest and largest networks of independent insurance agencies across the United States.

While she felt that she always belonged in the world of insurance, Branch came to a point in her life when she wanted to break out of the industry and explore different fields. She graduated with a degree in History at Dartmouth College and took an MBA at the Tuck School of Business at Dartmouth.

After successfully finishing her MBA degree, Branch joined Procter & Gamble’s marketing department where she stayed for over four years. Her father, who always thought insurance was where she belongs, asked her to come home to the family business. Packing her bags, she decided to leave the new life she was trying to paint on her own.

Fast forward to today, Branch admits that she has no regrets. Now sitting as the president and CEO of Iroquois, she has helped the network grow from 50 member agencies in two states to around 2,200 in 41 states. Aside from the insurance industry, Branch managed to branch out to other fields of study, earning a master’s degree in English Language and Literature as well as History. She also finished her Doctor of Philosophy degree in management in 2014.

In this interview with Insurance Business, Branch shares more about the biggest struggles an independent insurance agency network faces.

Tell us briefly about your company and its role in the insurance industry. What makes it different from other companies in the same space? 

Iroquois is one of the oldest and largest networks of independent insurance agencies in the country.  The concept for The Iroquois Group was developed by my father and his partner in the retail agency in 1977. They were looking to bring profitable rural and suburban agencies together to improve carrier access, compensation, and competitive positions for all of them. Fiercely independent, my dad had envisioned an organization of many member agencies that could leverage their combined size while increasing and strengthening their individual independence. They named this new organization after the Iroquois Confederacy of five Native American nations and began to attract other agencies, first in western New York, and then throughout the Northeast. From there we have expanded across the country and are now in 41 states. Our 2,200 Member Agencies wrote $1.2 billion in premium through Iroquois-provided carrier-partners in 2017. Iroquois members are given direct access to our carrier-partners, allowing them to develop close relationships with underwriters and marketing reps at each of the carriers we provide. Our business model is extremely flexible, so that each member can tailor a suite of markets, benefits, and services to meet their agency’s needs, without sacrificing their independence.

What has been the biggest obstacle you have had to overcome so far as an insurance professional? What did you do to conquer it? 

The biggest obstacle has been managing the growth of this organization. When I joined in 1984, we had just signed the 50th agency and we had manual systems for everything including accounting. We set out to build an organization that could scale several times over and yet would be agile enough to quickly adapt to the evolving needs of independent agencies. At Iroquois we focus on helping our members optimize their markets and increase their revenue, profits and agency value. To accomplish this, we have put together a tremendous team of regional managers and managing partners who function as trusted advisors to our member-agencies. By working closely with the field reps from our carrier-partners, our regional managers are able to foster the growth of profitable books of business in areas where the carrier has an appetite.   

Have you seen any significant changes in the industry during your career? 

The insurance industry has changed significantly in the more than 30 years I have worked in it. When I first entered the industry, we were in the midst of a very hard market in which carriers and independent agencies were stuck in adversarial roles. Since then, major carrier players have come and gone, the industry has gone through cycles of expansion and consolidation, soft and hard markets, etc., and we have experienced endlessly changing appetites as different lines of business became more or less profitable. It sure keeps you on your toes!  Lately, the influx of private equity has been a major factor in the ongoing consolidation of many independent agencies, making Iroquois even more valuable to those agencies who wish to remain independent because we help them remain competitive with larger, consolidated competitors.

Do you believe that a glass ceiling exists and hinders women from getting opportunities in the insurance space?

I believe the glass ceiling in the insurance industry has been deeply penetrated, if not shattered, and I have never felt personally constrained by it. Women now play critical roles in all levels of the insurance companies with whom we work. Many of our member agencies are led by women. Women have always played an important role in the service side of agencies. A 2017 article by MarshBerry called Higher Organic Growth and Gender Diversity, presented data showing men and women producers, on average, have books of business about the same size and that women actually wrote more new business than men, on average. 

What should women do to break through? 

The best response to any form of discrimination or “ism”, (be it sexism, racism, etc.), is to focus on bringing value to the organization and to be ready to move if they fail to recognize that value. To paraphrase Bill Gates’ comments to a group in Saudi Arabia, no country and no organization can be successful if it fails to fully utilize half of the talent available to it. Women in insurance represent a tremendous resource and smart companies and smart agencies are tapping into this pool.

As a professional with a variety of experience in brand management and in the academe, how do these help you in your insurance career? 

My brand management experience taught me that it takes a marriage of effort by home office and the salesforce to make a brand, or a company, successful. I also learned that the customer experience should be the prime focus of everyone’s efforts. In the case of Iroquois, both our carrier-partners and our member-agencies are ‘customers’ to us, so, as you can imagine, we are pretty busy! My Ph. D in management from Case Western added to the practical skills I gained at P&G by exposing me to the theories and research in management that, unfortunately for many organizations, remains an unknown and untapped resource. Evidence-based management, similar to its application in medicine, has tremendous potential to transform the effectiveness of individuals and organizations. We try to utilize this approach at Iroquois as much as possible.

Given your diverse educational background (history, language, and management) how do they help you in running your firm? 

I think the curiosity that led me to get three graduate degrees and a Ph.D. is just as prevalent in my work at Iroquois. I always want to investigate whether there is a better way to do something. I am sure that constantly challenging the status quo makes my colleagues crazy on some days but they understand that we need to do this to make the company as good as it can be.

What advice can you share for those wanting to join the insurance industry? 

There are huge opportunities in the insurance industry today. Don’t let the staid reputation of insurance fool you. It is an exciting and dynamic business with plenty of opportunities for you to make your mark. Baby Boomer retirements are creating employment opportunities in all areas of the industry. An insurance career can be extremely rewarding intellectually, financially, and emotionally.

If you were not working in the insurance space, what would you be doing now?

I would say teaching, but I already teach three or four classes a semester at St. Bonaventure University. I love the interaction with the students and it helps keep me current on business practices across a number of disciplines. I guess I would get another degree – possibly in positive psychology which is a fascinating field or a Masters in Literature if my room-mate from business school, Katie, were picking my courses for me.

What do you think a stranger would most remember about you? 

One of my favorite comments from a company person was from a fellow whom I had worked with for years over the phone but had never met. When he finally laid eyes on me, he blurted out, rather loudly, “You don’t sound that short on the phone!” I STILL laugh when I think of that moment. Most people remember me because I am under 5ft tall and have looked 15 years old for 40+ years. My dad always told me this was a huge advantage because then people might underestimate me and that would give me an edge. I like to think my dad was right but I think it just made me unusual enough that folks remember me.