Extreme service

Rough Notes, Aug 1999 by Pillsbury, Dennis

"In fact," Tony continues, "four years ago, we moved to a captive brokered by Addis. (Addis serves as a consultant for an exclusive heterogeneous captive that is completely owned by the insureds.) Our efforts to improve safety have gone right to the bottom line since that change. I really have trust in The Addis Group and understand where our insurance premiums are going and what we receive for those payments. I view the firm as a professional partner. We're in the process of expanding our operations, and The Addis Group is working with us on that to make certain we make the right risk management decisions."

The numbers speak volumes

One of the most interesting aspects of The Addis Group's success is the financial strength it has shown despite the high acquisition costs. We talked to John Wepler of Marsh, Berry & Co., Inc., Concord, Ohio about the agency. Marsh/Berry is a management consulting firm that focuses on insurance agents and brokers. Among its services is its PHP (Perspectives for High Performance) evaluation of agencies. The PHP report looks at 15 key ratios in three areas-equity, operational and profit. "Addis is better than average in every single ratio," Wepler reports. The agency has an overall PIN (Performance Indicator Number) of 9.24 which places it in "the top 2% of the industry financially." For comparative purposes, Wepler notes, "the average PIN number for the top 25% of agencies is 7.69."

He continues that "what I like best about The Addis Group is that being an idealist has paid off. Addis is the type of agency that destroys the stereotypes. With each of their clients, the people at Addis establish a professional relationship that takes price out of the equation. The clients want and need their professional expertise."

Among the highlights of the PHP evaluation for Addis are the fact that "the owners have been financially responsible, recognizing the importance of funding growth; the revenue per employee is extremely high; and their hit ratio is incredibly strong."

Raising the bar

Scott's ultimate goal is to improve and enlighten the industry, to make The Addis Group approach a norm for the industry rather than an anomaly. As often has been said, timing is everything and there's probably not a better time for this than right now. In fact, the idea of a consulting service as the lead-in to selling already has increased numbers of adherents. One of the largest brokers in the United States learned of Scott's approach and asked him to personally come out and teach its account managers, producers and loss control consultants. Interestingly, this organization has now adopted key components of The Addis Group's approach and successfully incorporated it into their business development process.

Currently, The Addis Group has partnered with Real Growth Strategies (RGS) to develop a quantifiable assessment tool that will "institutionalize their methodology for risk management," says Hal Real of RGS. He admits it is not an easy task. "The tool has to recognize that every business is different. Maybe half the questions can be generic, but other questions also have been asked. The most important part of this," Real adds, "is that it is not part of the renewal process. It is a separate process that involves assessing risk, addressing risk, and going back to remeasure on the statistical side. The other part of the process involves interviewing a cross section of people at the client's business to get a complete picture of their risk management needs."