IIC Profile - Tom Chase, CEO

A native of Waco, Texas, Tom Chase graduated from Waco High School and went on to complete
a BA in History at Vanderbilt University. Tom then went on to enroll in law school at the University of Texas graduating with JD with Honors and going to work as an attorney for Naman, Howell, Smith & Lee in Waco prior to joining Insurors.

Below are some excerpts from my interview with Tom:

Tell me a little bit about how you got started?

I had decided I wasn’t interested in being an attorney and wanted to try my hand at business. My uncle was running an insurance agency and he asked if I would join him. At the time the agency was called Stribling, Woodward & Greig (SWG) and had been in business since the early 1900s. After several years working as a producer I offered to buy the agency from my uncle and his partner and it became Insurors of Texas. Running the agency, I saw a lot of inefficiencies in the carriers we used and with the encouragement of Clifton Robinson who had founded National Lloyds I started Insurors Indemnity Company (IIC) in 1984.

What I found out was that efficiency wasn’t as important as size and financial strength. This made getting started very challenging. However, with a conservative approach to growth focused on building financial strength, IIC was able to get Gen Re reinsurance as well as its current A- (Excellent) A.M. Best rating. This approach facilitated going into bonds in 1992 and later the commercial property & casualty business in 2001.

Who had the most influence on you in terms of building IIC?

Without a doubt Clifton Robinson who focused on being sure you built a strong company. National Lloyds was a carrier for the agency and this was how I got to know Clifton who ran it. When I first approached him with the idea of starting an insurance company he not only encouraged me to go for it but said he would help me. When I applied for the license, Clifton testified on my behalf at the Department of Insurance telling them, “If they (IIC) get in any trouble we’ll help them out.” His backing was crucial and he has remained a good friend for many years.

Are there any particular events or incidents you remember from when you were first getting started?

One that stands out in my mind is early on when a client got mad and called me up to tell I was the worst agent he knew and he was switching his business. About a week later he called me back and said, “I was wrong, you are the second worst agent because I met one that was worse than you and I want you to take all my business back.” He ended up becoming a good client and friend.

Another key event I remember is when IIC started its relationship with Gen Re. The fact that a sound company like that would back us affirmed the approach we had taken to grow the company as we focused on conservative growth and financial strength in our operations. This opened up a new world for us as their backing meant we were a good company to write business for from the agent’s perspective.

What do you think it takes for an agent to be successful?

It is the ability to go to a client and shoot straight with them and convince that client or prospect that you will take care of them. Not beating around the bush but rather being upfront with a customer – letting them know the good and the bad so they know you’re looking out for their best interests not just selling them something.

Finally, where do think the greatest opportunity for growth will be for agents?

It really depends on what the agent wants to do. For example if an agent wants to work more like a lawyer then there are huge opportunities in advising companies and individuals on their coverages and what to buy. At the same time there are huge opportunities in becoming a real marketing organization getting into several specialized niches and exploring multiple sales opportunities. Those are two totally different ways to go but both great opportunities. The main thing is being trusted your community and having a great reputation.

The other thing that will become important in the future is for an agent to include retirement planning as part of how they advise clients on their coverages because so many people who are in their 40s, 50s and 60s haven’t saved enough for retirement.

Outside of IIC what personal interests do you have?

Barnett's Building in late 1800s

Downtown urban redevelopment of Waco has been a major interest of mine. As part of that we moved our headquarters to the former Waco Drug Building, built in 1911, which we restored. I also bought another building downtown and opened an Irish Pub in it named after the original building, ‘Barnett’s’ which was built around 1883. As a side note the Barnett building at one time housed John Fall Undertaking Company and some people think it’s haunted.

Barnett's Building Today

My weekend interest is restoring the native prairie which I have been working on at my ranch for several years. This involves getting rid of cedar, cactus and other invasive vegetation that came after European settlement in the early 1800s and replanting native grasses and forbs. I was inspired by seeing the effects of overgrazing and the overgrowth of cedar and wanted to restore prairie back to how it was 200 years ago in the time of the buffalo and native Americans who inhabited central Texas. 

How to Prime Yourself to Succeed When Failure Isn't an Option

Maybe you’ve finally scored a sales call with a contractor you’ve pursued for months. Or maybe an important client has called to let you know they are switching their business. Or perhaps you’ve been invited to speak at an industry conference.

Usually, when the stakes are high people simply lock up and let anxiety take over. However, exceptional circumstances require an exceptional response. The well worn adage that, “failure to prepare is preparing to fail,” rings particularly true in these circumstances. What’s required is a response that is product of deliberative preparation that goes beyond how you typically prepare.

The excerpt below is from Daniel Coyle, author of The Talent Code and a blog about performance improvement that is well worth reading.

Here’s Coyle:

When it comes to approaching a major performance test, most of us follow advice that can be distilled into three words: Focus on success.

That is, we prepare ourselves by banishing doubt and visualizing the positive. We vividly imagine ourselves making all the right moves with fluid grace, with zero mistakes or missteps. And it feels good.

But that's not what the pros do.

What's interesting, though, is that when you look closely at world-class performers, most don't use this feel-good approach. In fact, they do the opposite--what you might call the feel-bad-first approach.

It goes like this: First, they focus on the mistakes and figure out, in detail, how they will react to them. Then they visualize the positive. A great example of this is the Green Berets, the U.S. Army Special Forces soldiers. Teams spend weeks training for a mission (most of which happen at night). On the day of the mission, they follow a two-part routine.

First, team members spend the entire morning going over every possible mistake or disaster that could happen during the mission. Every possible screwup is mercilessly examined and linked to an appropriate response: If the helicopter crash-lands, we'll do X. If we are dropped off at the wrong spot, we'll do Y. If we are outnumbered, we'll do Z.

After some hours of doing this, the team members take a break and have lunch together. They socialize, relax, and maybe take a nap. Then they spend the afternoon in Phase Two, talking about everything going exactly right. They review each move, visualizing each step, and vividly imagine it going 100 percent perfectly.

You might call this a Balanced-Positive Approach: equally split between negative and positive, and ending on the positive. Notice the complete wall of separation between the two phases. The team doesn't toggle back and forth between positive and negative. The two phases are kept as separate as night and day: First comes all negative, then all positive.

Many top performers (Steve Jobs and Peyton Manning jump to mind) embody this approach. Half the time, they are persnickety, chronically dissatisfied, negative, doubtful, obsessed with potential failures. The other half of the time, they're incredibly positive, confident performers.

This isn't surprising. The balanced-positive approach helps you avoid the pitfalls of positivity--namely, that you get surprised and demoralized by failure--by replacing it with a preparation that matches the reality of the world and also leaves you ready for performance. Good things and bad things will happen, and you can't control either. But you can prepare.

Now it's your turn.

Say you're making a sales call. Start with potential mistakes or mini disasters. What if your demo locks up? What if the meeting gets pushed back and you only get 10 minutes instead of 30? What if you're asked questions you can't answer? What if a key decision maker isn't in the room? Think of a number of likely--and even unlikely--scenarios and determine how you will handle them.

Then take a break.

And then come back and rehearse--but this time focus on everything going perfectly. Hit your marks. Roll through your demo. Nail your close.

That way, you won't go into the meeting worried or anxious. You'll go in confident, prepared--and truly prepared to succeed

 

 

 

Contract Bond Seminar

On Thursday, April 24^th and Friday April 25^th IIC is offering two bond underwriting seminars at their offices in Waco, Texas.

Both courses give you the opportunity to earn CE credits in an interactive environment with content based on actual submissions and delivered by our Chief Underwriting Officer who has more than a decade’s worth of underwriting experience.

In addition you will have the opportunity to network with other attendees as well as learning how effective underwriting can help you grow your business. Both courses are filed with the Texas Department of Insurance and the New Mexico Regulation Commission and qualify for a combined 11 hours of CE credits.

The first course, “Underwriting Small Contractors” is an introduction to contract bonding with an emphasis on small contractors. This course awards you 6 CE hours.

The second course, “Advanced Contract Bond Underwriting” provides a detailed overview of more complex cases. In order to attend this course you will need to have either attended the “Underwriting Small Contractors” course the day before or at some previous time. This course awards you 5 hours of CE credits.

Enrollment for both classes is $110 per participant which includes lunch. To enroll in a single class is $60 per participant.

All attendees must register via email prior to the seminar. Due to limited seating and high demand these courses fill up very quickly. To enroll now click the link below:

Enroll Me

Please feel welcome to contact Amy Starnes via email at astarnes@insurors.com or on her direct line at 254-759-3819 if you have any questions.

We look forward to seeing you in April!

The Economic Outlook for 2014

“In the business world, the rearview mirror is always clearer than the windshield” – Warren Buffet.

Now that we are nearly two months into 2014 what does the year ahead have in store and how will it impact you? Forecasting is more art than precision, however, having an idea what the American economy is likely to do will help you see more clearly the opportunities and challenges ahead.

Greg Ip  of the Economist, proposes that America will “enjoy a solid cyclical recovery in the year ahead”.  Although things are looking up, several speed bumps remain. Although improving US households are still scaling down their level of debt, the Federal Reserve has interest rates at zero, and fizzling European uncertainty still could impact the US’s growth path in 2014 (in particular the ongoing crisis in the Ukraine, a vote for Scotland to become an independent state and an increasingly strident Russia).

Currently, the United States’ economy has been working out of the 2007-2009 recession, and shows promise for businesses and unemployed workers. Overly indebted homeowners, who have previously shied away from any immoderation, are more willing to spend money, trusting in their stabilizing balance sheets. The United States Bureau of Labor Statistics shows unemployment is going down, to a low of 6.6%; and hourly wages are going up to an average of $24.21 an hour as of January, 2014. Current individual debt levels have gone from an average of 135% of disposable income to only 109%, and banks are showing a growing willingness to expand their balance sheets by offering loans. The current global economic growth rate is 3.6%, much higher than the predicted 2.9%.

On the employment front job cutting has come to an end in the local and state government, and there is new bipartisanship at the Federal level as demonstrated by the debt ceiling extension without fanfare.  

Where are the potential hazards as the year progresses?

Let’s start with the Fed - Janet Yellen intends to continue “quantative easing” but at a reduced pace. The markets wobbled a little bit in January but seem to have factored this in. Yellen has indicated rates will not likely be raised until the employment picture improves further. Although unemployment is improving, millions have simply given up on finding work and as such are not counted as unemployed, but rather as retired. Work force participation has gone down from 66% in 2007 to 63.2% in 2014. Though hourly earnings are going up, they have only increased at a rate of 0.3% yearly. This will pose a challenge to productivity gains moving forward.

Low interest rates and high profit margins have boosted capital reserves and economic activity is likely to pick up through the year. Businesses and homeowners are tentatively moving towards spending more after recovering from the recession and cold winter. The banking system is posting better financial results and loan volume is starting to inch up.

In summary the outlook for the year looks positive. Households are likely to see improved earnings and employment opportunities. Also for the first time in several years credit card balances have gone up. This indicates an uptick in consumer spending which will help to fuel growth across a wide cross section of the economy. With access to cheap capital and with excess cash reserves there should be increased capital investment as corporations retool and expand. This will serve to continue the boom in construction and help support a broad-based expansion.

Underwriter Profile - Somers Goodman, VP & Chief Underwriting Officer - Surety, IIC

Somers Goodman is Vice President and head of the Bond Department at IIC. Since joining the company ten years ago the bond department has grown three times the size it was when he arrived. With a focus on helping small to mid-sized contractors grow into larger businesses with a more standardized risk profile, Somers brings both flexibility and rigor to the underwriting process.

Born and raised in Connecticut Somers attended Vanderbilt University where he met his wife, Felicia. After completing his undergraduate degree he went on to pursue an MBA with a focus in finance at Thunderbird Global School of Management in Glendale, Arizona. Having concluded his MBA Somers and Felicia moved to New York and he was hired by AIG to work in their treasury department.

Several years later, Tom Chase (CEO, IIC) invited Somers to move to Waco and help run IIC’s bond department. This was a great move as he and Felicia wanted to be close to her family in Waco as they got ready to start a family and Somers had the strong financial background needed to grow IIC’s bond department.

Somers’ interests outside of work include spending time with his two girls, Helen (9) and Daisy (6), cooking a good meal with his wife, or trying to get in a round of golf when he can.

The bond department is on track to post another year of growth and Somers looks forward to continuing to build strong relationships with IIC’s agency force, offering solutions for underwriting cases that can sometimes fall outside of the standardized approach.

Discovering the Bounty of Population Patterns

Texas had eight of the 15 fastest growing large U.S. cities and towns according to the latest census data released in 2013. Texas also stood out in terms of the size of population growth with five of the ten cities that added the most people over the year.

Large population centers like Houston, San Antonio and Dallas still account for over 75% of the Texas population; however, the fastest growth is coming from municipalities from the High Plains of West Texas along the I-35 corridor with San Marcos leading with the highest growth among all U.S. cities and towns with at least 50,000 people.

The Texas Comptroller reports that Texas’ growth of 12.7% nearly doubles the national growth of 6.4%. Part of Texas’ high growth rate is due to a boom in oil and gas. Another large driver behind the growth patterns in Texas is the strong growth in the health care industry which has recently created over 300,000 jobs.

Traditionally, these population patterns are a leading indicator in large infrastructure investments. With migration to urban centers you will typically see a boom in housing starts followed by infrastructure projects like schools, roads and sanitation projects.

By looking at the 2010 census map below you can see where this growth is likely to occur. The mantra in real estate is “location, location, location”, and the same is true for being well positioned for business growth. 

Texas has been handed not only an energy windfall in the form of new fracking technology but also a population boom which will have a long-term economic impact. Being well-placed to take advantage of this will have a material impact on your business’s growth.

Agent Profile - Ken Hotchkiss, Hotchkiss Insurance Agency, LLC

Hotchkiss Insurance Agency, LLC (HIA) is a privately held Texas based corporation. Far from the typical insurance agency, HIA is a place of advanced technology, innovative business insurance products and specialized programs. With more than 5,000 business and personal insurance customers, HIA is one of the largest independent insurance agencies in Texas. Founded in 1975, HIA is a leading provider of custom designed insurance programs and services to commercial business, associations, affinity groups and individuals. With expertise in property and casualty insurance, employee benefits, surety bonding, risk management, personal insurance and professional coverages they employ over 100 people with main offices in Dallas, Houston and San Antonio.

As founder in HIA's surety practice, Ken Hotchkiss has contributed to the growth of the agency over the span of an eighteen year career. Below are some excerpts from my interview with Ken:

Tell me a little bit about how you got started?

My father Doug started the agency as personal lines insurance agency in 1975. Over time it developed into a full-line agency. Dad never pressured me to go into the business and instead encouraged me to pursue an accounting degree as this would give me a broad range of options.

In my junior year at Texas A&M I knew that my interest lay in business and in particular sales so I did an internship over the summer at HIA. I enjoyed the business and saw a natural fit with the accounting degree I was going to graduate with. Once I graduated and interviewed at several other places I felt that the best fit for me would be joining my dad in the business and helping build the bond department as part of my overall sales focus.

A few years later in 1999 my brother Mike joined the agency having practiced public accounting prior to joining HIA. Mike also studied accounting and is a CPA. Our shared background has been invaluable to our clients and underwriters as we continue to grow our bond department.

What has been your experience working in a family business?

Family businesses can be tricky but you have the benefit of a built-in relationship where there’s trust, unity and focus on the overall strategy. It takes a lot of people rowing in the same direction for it to work. That includes the many non-family colleagues I have been fortunate enough to work alongside in the business as well.

What would you identify as HIA's core values / business philosophy?

One of our highest values is to develop trust between the client and the bonding agent. That means doing business in an honest, open way and working hard to represent our client’s best interests in the bonding market.

Hard work and following through on commitments is the foundation of our strategy.

Who has had the most influence on you personally and professionally?

I would have to say my dad. He has been a strong influence from the parental aspect of providing guidance in my life.  I appreciate that he has never told me what to do but rather been there when I’ve sought out his counsel. He has taught me a lot about the character and principles of how to run your business.

Do you have a story from the early days when you first getting started?

One I remember from early on was when we made a typo on a bid bond for a contractor. They were the low bid but were not awarded the project due to our mistake. Needless to say they were not happy. We sent them a $1,000 in premium steaks to acknowledge the mistake we made and to demonstrate the value of their relationship to us. The contractor is still a client today and we have a strong business relationship.

How does your agency differentiate itself – what do you think it takes for an agent to be successful in the bonding arena?

Having a strong financial background certainly helps with our focus on contract bonds. More importantly being trustworthy, responsive and a strong communicator are critical because you are dealing with a client’s personal information. Being able to develop strong long-term relationships goes a long way in building a successful career.

How have you found great employees?

Personal referrals have been our best source of great employees. We ideally look for people who have five to ten years of business experience. We also look for people who are outgoing and likeable with strong ethics and who have the skill set to build long-term relationships with our clients. We have good support from carriers in particular IIC to teach the fundamentals of the bonding business.

Finally, where do think the industry is headed?

I think that the future is bright for bonding. The Texas economy continues to grow and bonding plays a role in that growth whether that is on the private or government side of jobs.

We have seen that trend reflected in our own agency where our new accounts have grown over 18% a year over the last three years. We are constantly investing in new hires and have chosen to be strategically located in three high growth metro areas.

I think there is also a lot of opportunity for new agents to build a career. You have an aging agent population creating room for younger bonding agents to move up.

We have always been an organic growth agency so we always set very high annual growth goals. We are not happy to just sit and are always looking for new opportunities to grow. With that in mind I feel excited about our future and feel we are in the right place, doing the right things at the right time.