Latest / The Insurance Growth Lab / How Andy Harbut Scaled a Niche Insurance Brokerage in One Year
Transcript
- Andy [0:00:00]: For me, the satisfaction of being an independent broker and knowing that I know our clients personally, and probably seventy five percent of the clients are researchers who are entrepreneurs who've bought their own businesses. Andy [0:00:10]: This is far more satisfying for me to help those folks. Andy [0:00:13]: Succeed. Andy [0:00:14]: The way I look at is it's really for better for worse commercial insurance for me it's been a vocation in a lifestyle and everything else, you know, it's intrinsic to who I am. Andy [0:00:23]: And if I'm gonna show up and try to do my best every day. Andy [0:00:26]: I'd rather do it for people that something that I don't respect or appreciate Callan [0:00:30]: your value other people all the Andy [0:00:31]: rest of it, but it's just the intimacy of actually knowing who your clients are and knowing that what you're doing has a direct impact on your life. Callan [0:00:39]: Welcome to The Insurance Growth Lab. Callan [0:00:41]: Where we go deep on the growth campaigns and strategies driving real results in the insurance industry. Callan [0:00:47]: I’m Callan Harrington founder Flashgrowth and in each episode, I sit down with marketing and growth leaders from carriers and shirt tech and top brokers to break down one specific initiative. Callan [0:00:59]: Whether it's how they marketed a product, scale to channel or solve a specific growth challenge. Callan [0:01:04]: It's no fluff, just tactical insights you can apply in your own company. Callan [0:01:14]: I'm excited to have you on the show and, you know, leading up to this. Callan [0:01:17]: I heard a lot of really good things about you. Callan [0:01:20]: Where I wanna start this though is Tell me about Brian Casey. Andy [0:01:25]: Brian is probably the person who had the biggest impact on on my career. Andy [0:01:29]: And so I I I think it's only appropriate to sort of honor him every chance to get. Andy [0:01:35]: But Brian was the head of Ao global M and a practice from roughly two thousand five to twenty fourteen when he retired. Andy [0:01:44]: And I think he was really the the most significant mentor in my my early career because at that point, I it started Aa on in the service center, which is sort of tan amount to work in the mail ring. Andy [0:01:54]: Yes. Andy [0:01:55]: I luck out. Andy [0:01:56]: It it realized realizes and that's a whole other I could go on a tangent about how lucky I am because of nine eleven Even wound up there to be honest. Callan [0:02:03]: Yeah. Callan [0:02:03]: Absolutely. Andy [0:02:04]: But I was fortunate enough to one up working for Brian's long term partner, and she was my boss as a junior broker, and then I got to meet Brian over beers in New York City where we all worked. Andy [0:02:15]: And So Brian ran the m and A practice for Darn your ten years. Andy [0:02:19]: He wrote my my grad school. Andy [0:02:21]: In o eight, I had this great idea that I go to business school and I would leave the insurance industry. Callan [0:02:25]: Yeah. Andy [0:02:26]: So I I left an eight. Andy [0:02:27]: I left Ama meg, the Anne mergers and acquisitions group in Eight, and Brian, somewhere, it's funny. Andy [0:02:31]: I still have a the reference letter he wrote for Wash, Washington University in Saint. Andy [0:02:35]: Louis. Andy [0:02:36]: And I, I ultimately didn't apply to because I thought it would be too expensive. Andy [0:02:39]: But that letter was probably the nicest things anybody's ever said about me. Andy [0:02:43]: So I keep it in the the drawer in case I'm feeling bad on myself. Andy [0:02:46]: I can pull that guy out and you say, Brian setting andy did all this stuff. Andy [0:02:49]: But Brian was just such a huge proponent early in my career that I don't think I would had. Andy [0:02:55]: And then and I've been reflecting on slot lately for a bunch of different reasons, but I think the most important thing was that he really believed in me. Andy [0:03:01]: And as young person having a mentor who believes in you is the difference between recognize recognized your potential and actually acting upon it. Andy [0:03:10]: Yeah. Andy [0:03:10]: And so the thing about Brian, is anybody who ever met the guy He was just one of the funniest people you could ever mean your life and had a a levi. Andy [0:03:17]: He was intensely serious about work. Andy [0:03:20]: Like we really were. Andy [0:03:21]: Like he was running around the office yelling, and he didn't think he was gonna explode right there on the spot. Andy [0:03:26]: But he also had a a Levi about them. Andy [0:03:29]: Brian was such a funny guy and sometimes had a really dead dance sense a humor that I would ask him as a young wi snap who really wanted to do. Andy [0:03:36]: I was ambitious, I guess, I'd ask questions. Andy [0:03:39]: Like... Andy [0:03:40]: Hey, Brian. Andy [0:03:40]: How could I be doing better, what should I do here to contribute more and get a better team member and develop all that kind of stuff. Andy [0:03:47]: Brian will look at me just totally dead pan and say, Hygiene, June. Andy [0:03:51]: Hey I'm still work on it. Andy [0:03:56]: Spent twenty five years, but I I wanted to tell that story because he passed away recently. Callan [0:04:02]: Yeah. Andy [0:04:02]: And at some point, my plug for the scholarship fund, which hopefully they'll will think the folks are studying a scholarship fun at the... Andy [0:04:09]: His all mater, the University of Wisconsin Addison in the risk management department, and I plan to help contribute to that. Andy [0:04:16]: So it's a wonderful man. Callan [0:04:18]: No. Callan [0:04:18]: I I mean, it sounds like it. Callan [0:04:20]: Just from what you've shared on camera off camera. Callan [0:04:23]: It sounds like he's pretty incredible. Callan [0:04:24]: And so, yeah, interesting. Callan [0:04:26]: Yeah. Callan [0:04:26]: So you started your career, as you mentioned Ao on in M and A. Callan [0:04:30]: And I've seen this been a throughput of working whether that's private equity search funds, things like that. Callan [0:04:37]: And and that's one of the things I really wanna focus on here. Callan [0:04:40]: Now one of the things I'm curious about is you could have a really really good career. Callan [0:04:45]: Once you build those networks once you build those relationships, within whether it's Pe or investment banking or whatever that might be? Callan [0:04:53]: You could have a heck of a career at one of the big shops doing that? Callan [0:04:58]: Why start your own? Andy [0:05:00]: Over the years, I went from working on. Andy [0:05:02]: Large private equity deals to lower middle market private equity deals, and the dynamic with clients is very, very different as you go downstream. Andy [0:05:12]: And if you're part of a big institution and part of a bulge alphabet house broker, most often you're cog in the wheel. Andy [0:05:18]: I honestly see your disposable, but that's not what it is. Andy [0:05:22]: For me, the satisfaction of being an independent broker and knowing that I know our clients personally and probably seventy five percent of the clients our researchers who are entrepreneurs who have bought their own businesses. Andy [0:05:32]: This far more satisfying for me to help those folks succeed. Andy [0:05:36]: The way I look at is it's really... Andy [0:05:38]: For better or for worse commercial insurance for me has been a vocation. Andy [0:05:41]: Our in a lifestyle on everything else, You know, It's intrinsic to who I am. Andy [0:05:46]: And if I'm gonna show up and try to do my best every day. Andy [0:05:49]: I'd rather do it for people that something that I don't respect or appreciate value Callan [0:05:53]: to the people all the Andy [0:05:54]: rest of it. Andy [0:05:54]: But it's just the intimacy of actually knowing who your clients are and knowing that what you're doing has a direct in impacting on your life. Andy [0:06:00]: That... Andy [0:06:00]: That's what I chose. Andy [0:06:01]: And I think that money will eventually come, but I I sort of made this, you know, decision to say, I'd rather build professional relationships that way than being in part of a big institution. Andy [0:06:14]: That's a big part of it. Andy [0:06:16]: The other part of is just frankly the consolidation in the industry. Andy [0:06:18]: I think you're seeing a lot of people. Andy [0:06:20]: And I I have a handful of friends who found the same bucket of people who've... Andy [0:06:24]: I don't know if you know lion specialty. Andy [0:06:26]: I I think of them frequently, but I worked with Mark and Natasha n, and they they were inspirational and there were a couple months ahead of us, but launched lion a little bit before we did and kinda come into the conclusion like, hey, we're really good at what we do. Andy [0:06:40]: We don't necessarily need this large broker structure around us to be able to provide really good service for our clients for a ton of different reasons. Andy [0:06:49]: And if you wanna do that for the next ten or twenty or thirty years, thirty might be pushing it. Andy [0:06:55]: But I, know, we don't wanna sell. Andy [0:06:57]: We don't wanna get bought out. Andy [0:06:58]: We don't wanna work somewhere where we build a practice only have been acquired by another big broker. Andy [0:07:02]: And that that desire remain independent. Andy [0:07:04]: Was a big motivator for for Josh. Callan [0:07:07]: And is that because you have more control. Callan [0:07:09]: So it's like, you you get to build relationships. Callan [0:07:11]: Your lower middle market. Callan [0:07:12]: Those are... Callan [0:07:13]: You probably oftentimes working with family owned or not that necessarily private equity fund, but those private equity funds. Callan [0:07:19]: They're buying lower middle market what's that? Callan [0:07:21]: Couple million in revenues typically or... Andy [0:07:24]: Yeah. Andy [0:07:24]: It's it's stuff I used to joke about, Like, why are we working on this five million dollar deal. Andy [0:07:28]: And in a lot of cases, our clients are our entrepreneurs. Andy [0:07:31]: They're usually buying a family owned business that hasn't been sold. Callan [0:07:35]: That's right. Callan [0:07:35]: You said seventy five percent comes from search fund. Andy [0:07:37]: Yeah. Andy [0:07:37]: And so those are... Andy [0:07:38]: Usually our our search fund clients. Andy [0:07:40]: Without turning this into a whole discourse on search. Andy [0:07:43]: And... Callan [0:07:44]: I mean, anybody that follows this market at all probably knows a couple of things. Callan [0:07:46]: One, you know, you've had some extreme growth, right, within your agency. Callan [0:07:51]: Like, some of the highest numbers that I've heard in a long time from know, you doubled the size of the book that you took with you from the previous company. Callan [0:07:58]: And I'm curious. Callan [0:08:01]: When I look at this from the outside, I see... Callan [0:08:03]: You've got a good niche, you can run that niche and then once you become embedded in that niche, Well, now you got all the other players. Callan [0:08:10]: I'm assuming this is the case. Callan [0:08:12]: If you focus on search fund, well, you probably know all the supporting cast. Callan [0:08:15]: You can make introductions to them. Callan [0:08:17]: You can connect dots, other people can. Callan [0:08:19]: And then on top of that, these deals are good deals, but they're just under the radar of whomever it might be. Callan [0:08:26]: You name the top one hundred and probably top twenty, where if you start going after even middle market. Callan [0:08:32]: If you go over your middle market and above pe, Well, then they've got pretty tight relationships with the largest of large. Callan [0:08:39]: Is that fair? Andy [0:08:41]: Do you don't even name me on the show. Andy [0:08:42]: I feel like you just put up a mirror and you're, like, answer the questions. Andy [0:08:45]: Honestly, you nailed it within the search fund space, my partner, Josh had been at it for. Andy [0:08:50]: At least ten years at this point. Andy [0:08:52]: And he introduced me to search, And I looked at search like it was Pe light. Andy [0:08:56]: And it's... Andy [0:08:57]: Hey, we have to help people with transactional advisory services through a deal. Andy [0:09:00]: But it's not the way you approach it ten million dollar business very different than a a hundred million dollar business or billion odd business. Andy [0:09:07]: And so that... Andy [0:09:08]: It's funny. Andy [0:09:08]: There was a learning curve for me of how to scale insurance diligence to fit these types of transactions. Andy [0:09:13]: And then you have a whole different set of issues that come with small commercial work. Andy [0:09:18]: You know, when I look at my time at Ao, for example, or even house or in a lot of cases outside of a little middle market, you're talking about pe firms selling companies to each other. Andy [0:09:28]: So three hundred million dollar company getting bought by another three hundred million dollar company. Andy [0:09:31]: The insurance diligence really. Andy [0:09:33]: Maybe we can point fingers and say, I, this D policy from Marsh has got seventeen points that we would do better. Callan [0:09:39]: What's an interesting point because that's pretty buttoned up. Callan [0:09:41]: Meaning, like, they're already working with a very well... Callan [0:09:43]: Like you said, March. Callan [0:09:44]: Right? Callan [0:09:44]: So... Andy [0:09:45]: Here's the thing that I learned from all that, and which is why I'm... Andy [0:09:48]: And I think every independent broker is probably aware of this and especially when you look at the roll ups, but just because a brokerage firm has a certain name on the door, doesn't mean that you can expect. Andy [0:09:59]: Uniform quality from the work they do. Andy [0:10:03]: On one hand, when when we look at probably a hundred companies a year plus or minus us, and I've I've kept that up for a couple of years now. Andy [0:10:09]: And if something comes across your desk and it's, you know, a top ten broker. Andy [0:10:12]: You're gonna assume it's not a complete mess, usually. Andy [0:10:15]: But, you know, and that... Andy [0:10:17]: I don't wanna... Andy [0:10:18]: No. Andy [0:10:18]: I'm not going to pick on particular brokerage firms. Andy [0:10:20]: But if you just think about it logically, what I thought... Andy [0:10:22]: And I I will pick on this example. Andy [0:10:24]: I was at Fee for a year, and it was a weird year because it was it was twenty twenty and it was Covid, And I I was brought on to build out the diligence capabilities on the M and A team. Andy [0:10:33]: And the M and A team at that point is pretty nascent. Andy [0:10:35]: It was a for transaction liability brokers that came over from Jl, but they didn't have brokerage and and diligence all that. Callan [0:10:43]: And just for for the audience, what do you say diligence are you referring to This is the team that's partnering with the Pe, and we're gonna be reviewing the insurance and risk related items for a company that they're going to acquire? Andy [0:10:54]: Yes. Andy [0:10:54]: Okay. Callan [0:10:55]: Yeah. Callan [0:10:55]: As part of their greater diligence review process? Callan [0:10:58]: Correct. Andy [0:10:59]: Yeah. Callan [0:10:59]: Okay. Andy [0:10:59]: And that's the whole model. Andy [0:11:00]: That didn't... Andy [0:11:01]: It really developed, I think about thirty years ago, in the mid nineties, you had guys like Mike Marco, my former boss, Neil Crowd. Andy [0:11:09]: The guys who started the Anne Saint Louis Office that Tim and Tom Donny are pretty well known. Andy [0:11:13]: Yeah. Andy [0:11:14]: And to your point about insurance relationships, what I learned much later was that Ao Marsh, whoever else had a pension fund, they all wrote checks to the top ten private equity firms. Andy [0:11:25]: Right? Andy [0:11:25]: What it's funny is, I found it too is even an independent broker world. Andy [0:11:29]: A lot of guys who are principles of independent agencies invest in other small businesses. Andy [0:11:34]: And whether they formally or, like, informally, but that just seems to be how this... Callan [0:11:40]: Well, or or I just say and oftentimes you, especially if it's a generalist agency. Callan [0:11:45]: Right? Callan [0:11:45]: They might send all of their mitigation business when a claim hits. Callan [0:11:50]: To somebody that contractor that they ensure as opposed to going to one of the other other companies. Andy [0:11:57]: It's really funny you say that because those are the types of issues we run into now. Andy [0:12:00]: The challenges... Andy [0:12:01]: That we have competing today. Andy [0:12:03]: This NewCo Risk exists. Andy [0:12:04]: That's the kind of thing we run into where our client is search might buy. Andy [0:12:08]: And we... Andy [0:12:09]: I think we have two or three remediation companies, and it's exact example Of thinking of is, well, they don't wanna switch insurance brokers because the current agent and some lot of business locally from, you know, and and the funny thing for what it's worth, and I'll get this out there too. Andy [0:12:22]: It's rare that I compete with other independent agents that I am almost always of the mindset. Andy [0:12:27]: Great. Andy [0:12:28]: It should keep the business. Andy [0:12:29]: It's not who I'm competing. Andy [0:12:31]: If you already sold your agency and you have a pe sponsorship, a publicly traded company. Andy [0:12:36]: That's who I'm competing against. Andy [0:12:38]: It's not the folks are still on the the independent agencies. Callan [0:12:42]: So one of the things I'd like to dive into is you got a good niche, a really strong niche. Callan [0:12:47]: And clearly, you and your partner both have the experience for this niche. Callan [0:12:52]: I mean, anybody that's just listening to what we just talked about, that is a very unique skill set where you can bring value that the standard... Callan [0:13:00]: I wanna say standard. Callan [0:13:01]: That's unfair. Callan [0:13:01]: That the rest of the independent agents probably don't have at the same level. Callan [0:13:05]: Just by the nature of, however, they grew their business whether they're a generalist or their niche. Callan [0:13:10]: But you still grew really fast. Callan [0:13:12]: What do you attribute that to? Andy [0:13:14]: Thank you. Andy [0:13:14]: Number one. Andy [0:13:15]: And and I also have a bit to say about that too. Andy [0:13:18]: Just want when I think about our competitive positioning, and why I don't mind saying this out loud. Andy [0:13:22]: I don't think there's really anybody else who could do what we're doing. Andy [0:13:26]: It would have to be... Andy [0:13:27]: Now I say that. Andy [0:13:29]: It's... Andy [0:13:29]: I'm the star of my own reality show. Andy [0:13:31]: Right? Andy [0:13:31]: I don't know who else is out there. Callan [0:13:33]: Well, I... Callan [0:13:33]: But I'll say this, search funding just got big. Callan [0:13:36]: Only a couple years ago, and you guys were early into that. Andy [0:13:39]: Thank you. Andy [0:13:39]: And that's that's very true where I feel like Where we luck out just is how stuff works. Andy [0:13:45]: Is having experience working at at Aa, and then how her for me to work at initially a very large firm and sort of have this institutional training, and then to come downstream most of the folks, And I'm still front with tons of people I work with over the years and they're not gonna quit their good jobs at ao or pick a firm. Andy [0:14:03]: Right? Callan [0:14:04]: Yeah. Callan [0:14:04]: Sure. Andy [0:14:04]: Sorry to go be independent. Andy [0:14:05]: You you have to be half nuts to do this. Callan [0:14:07]: Well, it's my original question. Callan [0:14:08]: I'm like, why why why why do it? Callan [0:14:11]: Yeah. Callan [0:14:11]: Exactly. Callan [0:14:12]: That's exactly right. Andy [0:14:13]: I you know, I wish I had I wish I had a better answer. Andy [0:14:15]: In fairness, of... Andy [0:14:16]: I I'm not comfortable with the term entrepreneur, but as it reflect on middle aged. Andy [0:14:20]: It is accurate that I've always been kind of an entrepreneur, and I've always... Andy [0:14:24]: Yeah I always started business with with my friends is when it comes a big part of it is, hey, I like this guy. Andy [0:14:30]: I like hanging out with them. Andy [0:14:31]: We work well together. Andy [0:14:32]: Do you wanna go do that thing? Callan [0:14:34]: Yeah. Andy [0:14:35]: And that is a big motivator, but to answer your question about growth. Andy [0:14:38]: Just more directly. Andy [0:14:39]: Yeah when I, Don't think anybody else could do this, I think for Josh and I, they've have had the experience institutional and then falling downstream into search. Andy [0:14:47]: Super helpful. Andy [0:14:48]: It's just where the people choose that career path. Andy [0:14:50]: And have the the set of experiences. Andy [0:14:52]: Two, I think to your point, from a revenue perspective, independent agents can live off a ten to twenty thousand dollar revenue clients all day long. Andy [0:15:00]: Those are great great accounts for us. Andy [0:15:02]: Right? Andy [0:15:02]: But you go to Ao or whoever it is, and the producer doesn't get paid if it's less than twenty five or fifty thousand dollars in revenue. Andy [0:15:11]: And the production goals, and I I was on a production plan at Ae on in twenty thirteen for six months. Andy [0:15:16]: I think you have to hit three times for salary, every year. Callan [0:15:20]: Mh. Andy [0:15:20]: In new business, which depending on what market you're in, I don't know how anyone can do that if they're not in... Andy [0:15:25]: If they're not focused on private equity construction or or rated Tv film production, Yeah. Andy [0:15:30]: Media production. Andy [0:15:30]: I don't know how you build that kind of book, it seems darn near impossible to me And not that book. Andy [0:15:35]: How do you build that kind of new... Andy [0:15:37]: How do you fit that funnel every year with your business? Andy [0:15:39]: Yeah. Andy [0:15:39]: Wild. Andy [0:15:40]: So the how did we grow? Andy [0:15:43]: I never would I thought I'd... Andy [0:15:45]: I would say this out loud, but old school selling insurance. Andy [0:15:48]: And know when I say, old school sell insurance flying around publicly being visible shaking hands and meeting people. Andy [0:15:54]: We do a lot of conference sponsorship, do a lot of happy hour sponsorship We go to a lot of university conferences. Callan [0:16:01]: What are the university conferences? Andy [0:16:03]: Yeah. Andy [0:16:03]: That's totally a good question. Andy [0:16:04]: So in the world of search, you basically have two tracks, traditional search, and then self funded search. Andy [0:16:10]: Traditional search refers to this model of entrepreneurship where... Andy [0:16:15]: Say you. Andy [0:16:16]: Right? Andy [0:16:17]: So you I'm an insurance executive, and I wanna go buy an insure tech company, and I need... Andy [0:16:22]: I need five or ten people to pledge. Andy [0:16:25]: This they used to be called pledge funds. Andy [0:16:26]: You basically have this capital commitment from investors to buy a business to provide the equity capital, you need to buy a business. Andy [0:16:33]: And in the traditional search fund model, typically the the search. Andy [0:16:36]: If you think about it, Search is really doing business development for private pooled capital, but that search also drawing a salary during time that is j with self funded search. Andy [0:16:48]: And self funded searches where Josh and I felt, frankly, because, I don't think it would be a secret to the folks we used to work for that before we thought, gosh we should carve out and buy our book, we thought, well, can we buy an agency? Andy [0:17:01]: So I would say we were self funded at searches for six or twelve months before we realized that there's way too much competition, multiples were way too high for us to make it make sense. Andy [0:17:10]: And then where we wanted to take the agency or broker as I prefer. Andy [0:17:14]: Where we wanted to take it, we didn't make sense To try to do, like, a transformation of an existing agency. Andy [0:17:20]: Yeah. Andy [0:17:21]: So the cell phone of guys are are literally, like, thirty to fifty years old. Andy [0:17:24]: There's a profile. Andy [0:17:25]: Right? Andy [0:17:25]: Yep. Andy [0:17:25]: And it's thirty to fifty doesn't wanna work for somebody else anymore. Andy [0:17:28]: Typically uses an Sba loan. Andy [0:17:30]: So why would we go to a university conference? Andy [0:17:32]: Most of the top twenty business schools and and and below that too, x actually, I don't wanna just say this is a Ivy league thing, but a lot of business schools now have entrepreneurship through acquisition tracks within the business school or they'll have a... Andy [0:17:47]: An entrepreneurship through acquisition is also called Eta. Callan [0:17:50]: Yep. Andy [0:17:50]: So they might have a Eta Club. Andy [0:17:52]: And most of those Eta clubs will will sponsor a a conference. Andy [0:17:56]: Gotcha. Andy [0:17:57]: And the conferences are are they're frankly, they're great. Andy [0:18:00]: They're, like, one or two days, most of of academic conferences are one day, and they're generally open to non students as well. Andy [0:18:07]: And in the fact I should probably Should feel like I should plug the By conference coming up in March because I think we're sponsoring that next. Andy [0:18:12]: I'm hoping that they give me a panel slot like, wink wink. Andy [0:18:16]: The University conferences are great because they they almost take you through within a day long event. Andy [0:18:22]: How do you source a business? Andy [0:18:24]: How do you finance a business? Andy [0:18:25]: What does it mean to conduct due diligence across insurance, finance, legal. Andy [0:18:30]: So that's why we go to the university conferences and it's... Andy [0:18:33]: You kinda said earlier too is we spent Josh put in years before I did and then mean personally since twenty one. Andy [0:18:41]: Was putting a lot of time on the road, meeting people and networking within the the space. Andy [0:18:47]: And a lot of folks within search. Andy [0:18:50]: This is what's kinda interesting. Andy [0:18:51]: I guess the blue Ocean ish, I guess, the idea of insurance diligence, well, it's it's commonplace in private equity. Andy [0:18:57]: And so for the the folks who come out of the private equity world big go, oh, sure. Andy [0:19:01]: We need insurance diligence because why wouldn't we have insurance those guys had it. Andy [0:19:05]: Anybody else goes, what... Andy [0:19:07]: What would I need insurance diligence for. Andy [0:19:09]: That seems crazy. Andy [0:19:10]: Why I don't also I have, you know, diligence on the toilet vendor and diligence... Andy [0:19:13]: You know You know what Mean? Andy [0:19:14]: Like... Callan [0:19:15]: Yeah. Callan [0:19:15]: Yeah. Andy [0:19:15]: Yeah Yeah. Andy [0:19:16]: So when we get to talk about it, suddenly it's very eye opening. Andy [0:19:19]: And invariably, if I get ten people in a room roof who bought a business, there's somebody who has bought a business who didn't do insurance diligence. Andy [0:19:26]: And they'll have a story about how their x mod went up after they bought it or they got to closing and then they found out they they didn't think they're gonna need new policies, but then they found it out. Andy [0:19:35]: They needed new policies and the sellers policies had that kind of stuff. Andy [0:19:39]: And that's where we help them avoid this to basically have uncertainty around you can buy this business and your expectations around what insurance should cost are reasonable and we can deliver upon those expectations. Callan [0:19:51]: So essentially, you built messaging that informs them about a problem that they do not know that they have yet, which is the ultimate place to be, and you can back that up with real testimonials. Andy [0:20:03]: Yes. Andy [0:20:03]: And it's funny because I I joke on I'm terrible insurance Salesman because I'm I tend and never think the worst is gonna happen. Andy [0:20:10]: Right? Andy [0:20:10]: We're, like, let's go start an. Andy [0:20:11]: It'll be fine. Andy [0:20:12]: You know, I'm like, the total knuckle head when it comes to that kind thing. Andy [0:20:16]: And so I do a really mediocre job at best of telling people about I've watched other insurance professionals do the thing that I'm bad at, which is to just scare the Be jesus out of their prospects. Andy [0:20:28]: So we don't have to do that. Andy [0:20:30]: But the testimonials, I guess to my point, ten people in a room there's usually some testimonial from somebody else about... Andy [0:20:36]: Oh, yeah. Andy [0:20:36]: That that happened to me. Andy [0:20:37]: And then you start to see the same things over and over again, there's some pattern recognition there that happens where we're talking about generally family owned businesses, and the way that family owned businesses are run or entrepreneur entrepreneurial airline businesses. Andy [0:20:49]: They tend to be risk takers to beginning with. Andy [0:20:51]: And so their approach to risk and insurance is Out me. Andy [0:20:55]: Right? Andy [0:20:56]: Like, I don't wanna say it's looser, but it's not necessarily up to the best practices of the current underwriting community. Callan [0:21:05]: Well so actually, here's a question. Callan [0:21:07]: The nice thing about being a generalist agency in a local market is carrier selection pretty straightforward. Callan [0:21:15]: You got a pretty good idea on who's competitive and if somebody stops being competitive, It's not hard to find who is gonna be competitive. Callan [0:21:22]: And the carriers are giving you communication all the time on where they're competitive. Callan [0:21:26]: When you're a niche agency that's especially in this one. Callan [0:21:30]: Right? Callan [0:21:30]: This is interesting because it's not like this student housing, and you've got carriers that are specific to just student housing. Callan [0:21:39]: You could be buying anything. Callan [0:21:40]: Like these researchers they're they're just looking... Callan [0:21:43]: I mean, don't be wrong. Callan [0:21:44]: There's things like Hvac and stuff like that that's probably more common as my guess because those are just good businesses to buy. Callan [0:21:50]: But how do you approach carrier selection and who you write with and maximizing contingencies and things like that. Andy [0:21:58]: One maximizing contingencies is not something we think about. Andy [0:22:01]: Okay. Andy [0:22:02]: Not no. Callan [0:22:03]: Just no. Callan [0:22:03]: It's good. Callan [0:22:04]: No. Andy [0:22:04]: I so hits say, we really don't, but mostly because we're not that sophisticated. Andy [0:22:08]: And also in part because I worked today ae on when Spit are investigated in o six. Andy [0:22:13]: And a commitment to transparency is still really important to me. Andy [0:22:17]: And it's, like, you wanna know how much... Andy [0:22:19]: I I see other agents agency this will take their sharpie and scratch off the commission. Andy [0:22:24]: Right? Andy [0:22:24]: Like, I don't do that. Andy [0:22:25]: We'll tell you exactly how much we make because in a lot of cases, we're losing money. Andy [0:22:28]: But to answer question about here selection, That's one of the most challenging aspects of what we do. Andy [0:22:33]: We've got clients in roughly forty states, and so we tend to work with national insurers. Callan [0:22:39]: Do you take the edge cases? Callan [0:22:40]: Do you take the S opportunities? Andy [0:22:42]: Oh, yeah. Andy [0:22:42]: I mean, we do. Andy [0:22:43]: I would say giving away probably forty fifty percent of the the book is standard markets, national carriers, thirty to forty percent is E s or program business. Andy [0:22:53]: Programs are are becoming increasingly more important for us. Callan [0:22:57]: As you say, do you guys think about that? Callan [0:22:58]: How do you... Callan [0:22:59]: I mean, do you think about building your own program for some of these ones that you're seeing all the time? Andy [0:23:03]: I've been asked about that. Andy [0:23:04]: And people say gosh, could we do a program for Smb business operators, wish I could, but it's just because we all know each other It's too general. Andy [0:23:11]: Right? Andy [0:23:11]: And if if I can't find a short answer. Andy [0:23:14]: I don't think we have the shared underwriting characteristics to come up with any kind of meaningful program. Andy [0:23:18]: I have thought about an agency captive because there's a lot of interest in group captive but people don't don't really understand how they work. Andy [0:23:24]: And just in general, for folks buying businesses I think, like I said, they're, like, the risk takers. Andy [0:23:30]: They generally... Andy [0:23:31]: Nobody likes insurance until they've had a claim paid. Andy [0:23:34]: Is what I found too. Callan [0:23:36]: They're so percent, absolutely. Andy [0:23:39]: And I don't think I'd be insurance. Andy [0:23:40]: My mom burned up the house when I was in knowledge And if it wasn't for the state farm, adjuster coming in and, you know, writing checks and making sure that we were made whole, I don't think that positive experience of insurance, had it been... Andy [0:23:52]: But for that positive experience of insurance is a young person. Andy [0:23:55]: I don't know that I would be in the industry today. Andy [0:23:57]: Right? Andy [0:23:58]: I'd probably be as skeptical as everybody else. Andy [0:23:59]: But I thought about that. Andy [0:24:01]: But where I think programs matter from us, and and I this I'll give away if anybody's interested in it. Andy [0:24:06]: I found there's a number of program managers that are... Andy [0:24:11]: It's some of them are now have been acquired by large brokers. Andy [0:24:15]: Right? Andy [0:24:15]: Like, the... Andy [0:24:16]: It's... Andy [0:24:16]: You know, it came up this morning. Andy [0:24:17]: The cosmetic program that is now owned by Epic, but it used to be Victor Frank, which was a, you know, independent regional broker in New Jersey. Andy [0:24:25]: And Franco and brown your both have these cosmetic programs that if you're a cosmetics or or personal items manufacturer or seller. Andy [0:24:33]: I think are tough to beat. Andy [0:24:34]: I've... Andy [0:24:35]: Somebody else knows a better market. Andy [0:24:36]: Please let me know. Andy [0:24:37]: But almost anything that I... Andy [0:24:39]: That I've done that's personal beauty products, Cosmetics, Shampoo. Andy [0:24:43]: It's usually one of those markets. Andy [0:24:45]: Right? Andy [0:24:45]: They don't really have a sales channel. Andy [0:24:47]: Like, they don't have salespeople. Andy [0:24:48]: They've got one guy who's the Bd lead. Andy [0:24:51]: Other than that, they're like, I don't wanna see they're orphan programs, but maybe they do a couple revenue. Andy [0:24:55]: Yeah Yeah. Andy [0:24:56]: My hypothesis is we're building based on what we know initially to your answer your question of how will we manage to grow. Andy [0:25:04]: It's been almost eighty ninety percent through the channel of clients buying businesses, whether it's search or or independent sponsored private equity. Andy [0:25:13]: And then referral start happening too, which has been great. Andy [0:25:16]: But I think the next step for us and proactively growing. Andy [0:25:20]: What I'd like to try to do. Andy [0:25:21]: And what I think we can do is is finding a couple program managers amongst the program managers already work with and then making a more concerted effort to market their programs. Andy [0:25:29]: And some program managers go direct and drives me crazy, but a lot of them don't. Andy [0:25:33]: And this is where I think we kinda have an advantage potentially. Andy [0:25:36]: Is small business focus, but a national broker not competing with other local offices. Andy [0:25:42]: If anybody has worked at an a national broker, and they don't all work this way, but I mean, I don't know my experience today and for example. Andy [0:25:49]: Right? Andy [0:25:49]: Producer and Charlotte logs a prospective client, the Salesforce, the producer and Dc can't call in that client. Andy [0:25:57]: And so that's where I feel like we have advantage. Andy [0:25:59]: Just it's not a lot of people not have a national production focus. Andy [0:26:03]: For small commercial business. Callan [0:26:05]: Well, so actually, on the national carrier side, admitted side, how do you select the carriers? Andy [0:26:10]: You don't... Andy [0:26:10]: It's the eighty twenty rule to some extent. Andy [0:26:12]: And we had the advantage of, like, looking at where our book was a year ago, year and a half ago and saying, alright. Andy [0:26:18]: And it's funny out how this worked out. Andy [0:26:19]: I don't think there wasn't any strategic path on our part. Andy [0:26:23]: But when we look at the book of this travelers is Hartford who else. Andy [0:26:27]: I can tell you who... Andy [0:26:28]: We don't really write with. Andy [0:26:29]: We don't really write with Liberty, we don't really write with Chu I call them super regional. Andy [0:26:33]: Was probably a better name for it, but the Cincinnati Selective West, West, you know, that second tier of maybe not household names. Andy [0:26:42]: Those are the markets that we wish we had better relationships with. Andy [0:26:46]: But my experience has been that they tend to be geographically focused. Andy [0:26:50]: When we've had those conversations with the carrier reps about explaining what do we do and where do we get clients from and where our clients based. Andy [0:26:57]: They've said Well, gosh. Andy [0:27:00]: Fcc agree one. Andy [0:27:01]: Fcc I'd love to have Fc fcc, but they're like, wait a minute. Andy [0:27:04]: You guys are down in Texas, but you live in Missouri and California, and you've got employees in California, Texas Smith Michigan again in Florida. Andy [0:27:11]: We don't know where to put you. Andy [0:27:12]: And I've had that conversation five or six times now where the carriers just don't know what to do with us. Andy [0:27:17]: Yeah. Andy [0:27:17]: And then I will throw this on extra layer on, what's been interesting about being a member of the Indian network is we've had some flexibility in terms of what underwriting were aligned with where it's been... Andy [0:27:31]: Oh, should like, they'd be within Ohio because it's where a lot of the Indian relationships sit. Andy [0:27:37]: But that's a not given away the broker ring insurance business twenty years ago, it was like, a well known inside tip within, for example. Andy [0:27:45]: Right? Andy [0:27:45]: About knowing which underwriting office to approach. Andy [0:27:48]: The example I was think it was Lexington at Ao in New York, We knew the the deluxe ten under reuters in New York only had five million quake capacity. Andy [0:27:55]: But if you called home office in Boston, you get done. Andy [0:27:58]: Right? Andy [0:27:59]: Stuff like that... Andy [0:28:00]: So we've always sort of leveraged that arbitrage, I guess of, well, given away all the secrets that house. Andy [0:28:06]: Right? Andy [0:28:07]: We're like, Well, we've got a guy in Atlanta. Andy [0:28:10]: We have some of Atlanta under. Andy [0:28:11]: We've got some, you know, cincinnati under writers, where do we think we're gonna have the most success with this particular risk that is not connected to where the risk actually sits Callan [0:28:20]: Well, but I say, I would still put that back into kinda what you said earlier. Callan [0:28:23]: Right? Callan [0:28:24]: Like, I think I'm personally a big believer in itching. Callan [0:28:27]: We have a marketing agency, and we specifically focus on insurance, And that's it. Callan [0:28:31]: That's all we focus on. Callan [0:28:32]: And it's for a lot of the same reasons. Callan [0:28:34]: That you had mentioned is, like, you begin to know... Callan [0:28:37]: Not no. Callan [0:28:38]: I've been insurance my entire career, but you begin to know all the nuances. Callan [0:28:41]: You can make those connections. Callan [0:28:43]: On the insure tech side, we can help line up Vcs. Callan [0:28:46]: On the carrier side, we've got deep relationships with agencies where we can get real information from them that carriers want to know, but your odds are you're probably not gonna have that that conversation with the carrier. Callan [0:28:58]: And it's connecting those dots, and you're at the conferences, you're... Callan [0:29:01]: You are where your client is as opposed to go me going to advertising week's conference and competing with every single marketing agency it's out there. Callan [0:29:10]: If it's us versus a bigger New York agency going against trying to get Geico, we're not gonna win that. Callan [0:29:16]: There's no chance. Callan [0:29:16]: But there is oftentimes that little niche within the very big company, that we we'll be able to out compete them and in every way across the board. Callan [0:29:25]: So to this point to why I'm actually saying this is what you're saying, yeah. Callan [0:29:30]: I think if you've got a niche, they had usually a good niche agency can do very similar where you just said for their specific niche. Callan [0:29:38]: And knowing where to go, knowing where it what markets to go to, who's got capacity, who doesn't, who's gonna be more competitive, Who should we go with? Callan [0:29:46]: I've seen that quite a bit. Callan [0:29:47]: Whether it's people writing ambulances, people writing student housing is another example. Callan [0:29:52]: But and it could cannabis. Callan [0:29:53]: It could be any of those. Callan [0:29:54]: So I would agree with you. Callan [0:29:56]: That's gonna be really hard to compete with you in that, but the layout and, like, how to scale a niche is dead on. Callan [0:30:01]: It's they're super interesting to me. Andy [0:30:03]: What we found... Andy [0:30:04]: And you kinda you kinda nailed it earlier too though about what is the profile of a search Still looks like? Andy [0:30:08]: The stuff that... Andy [0:30:09]: For cell funded it search for folks are are buying businesses with Sba loans. Andy [0:30:13]: Those generally have to be they trade at reasonable multiples. Andy [0:30:17]: Right? Andy [0:30:17]: So they're not Saas businesses or tech businesses. Andy [0:30:20]: They tend to be pretty meat and potatoes of Hvac plumbing and electric, other business services, which is really really helpful. Andy [0:30:27]: Right? Andy [0:30:27]: And it's... Andy [0:30:27]: You don't have to be super niche to know the intricacies of a plumbing business and pick a geography. Andy [0:30:35]: It's not that they're all the same, but like, and we have enough clients too and we've had enough experience that we can comfortably speak to, like, behavioral therapy in Texas. Andy [0:30:43]: I why do we have four or five Ab approved therapy clients in Texas? Andy [0:30:47]: Yeah. Andy [0:30:47]: I don't know what we do. Andy [0:30:48]: So you know Callan [0:30:50]: That's I seeing as you were saying this. Callan [0:30:51]: Was like, I would almost debate what you just said. Callan [0:30:54]: Right? Callan [0:30:54]: And and and like you said if I'm hearing you correctly was it's not crazy that an agency in their local market would know the ins and outs of a plumbing business, for example. Callan [0:31:03]: I would say yes, but there's only so many plumbers in that area where you could see they're odds you a much higher volume could be much higher? Callan [0:31:12]: Is that fair to say? Andy [0:31:13]: I think so. Andy [0:31:14]: Yeah. Andy [0:31:14]: I mean, it's it's the balance between you know, mile wide inch deep vice versa. Andy [0:31:18]: And and here's the honest answer your question because I I don't... Andy [0:31:21]: They're all honest answers by the way. Callan [0:31:25]: Everything previous Andy [0:31:26]: that. Andy [0:31:26]: It was all It Callan [0:31:27]: was just I Andy [0:31:27]: don't know. Callan [0:31:28]: I was just thinking about it. Andy [0:31:29]: I I... Andy [0:31:29]: Sometimes I I hear my whole self talk, and I think it really probably does, but Go, man I like my father. Andy [0:31:35]: And I, like the same like man in the same, honestly. Andy [0:31:40]: To be Frank. Andy [0:31:41]: Yeah. Andy [0:31:41]: Right. Andy [0:31:42]: Alright. Andy [0:31:42]: Thanks, Ed. Andy [0:31:42]: But we wholesale a fair amount for specialty stuff. Andy [0:31:46]: Like, all the financial lines. Andy [0:31:48]: Like, I'm a decent D o broker, been For twenty years, but I'm not gonna sit here and you you throw a D o policy and me and a Dino policy at the guy who's only been doing D for twenty years. Andy [0:31:59]: The guy's kinda... Andy [0:32:00]: Yeah. Andy [0:32:01]: Like I work with the guy at rt who ran the program at showed for the private equity portfolio. Andy [0:32:06]: Like, I'd rather bring that out of the table and make less money. Andy [0:32:09]: And so the other part about this is, yeah. Andy [0:32:11]: You know, you booked whatever eighteen million in premium, but, like, a lot of that said, ten percent, and not twenty percent. Andy [0:32:15]: And I and It's just... Andy [0:32:16]: You know, the the mindset. Andy [0:32:17]: And this... Andy [0:32:18]: I would say, like mike Marco, guy we used thor for Mike drilled it into me more than anybody. Andy [0:32:22]: And I I'm gonna j that with some other independent brokers I worked at where the were concerned about maximizing profit share and looking at it, like, alright? Andy [0:32:31]: Well, can we bring this chunk of business in house and make more money on it versus leaving it with a wholesaler who does bring a specialty expertise and I used to be super cynical about wholesaler fifteen years ago, because I I was a softer market, and I'd work with within Ao, for example, you'd had market facing people on client facing people Right? Andy [0:32:53]: And they call them, brokers and relationship managers. Andy [0:32:55]: S really kinda whatever the terminology was, but Yeah. Andy [0:32:58]: I'd meet these, like, lazy brokers, who wholesale their whole book. Andy [0:33:02]: And I'd go, what are you do in a market to set renewal? Andy [0:33:05]: Oh, I got I got it to sweat. Andy [0:33:07]: Needs used to be sweat and crawford. Andy [0:33:09]: Right? Andy [0:33:09]: And I had that was lazy. Andy [0:33:10]: But I've changed my thinking about this to saying, you know what? Andy [0:33:13]: Working with wholesaler is appropriate and better for the client in a lot of cases if it's a... Andy [0:33:17]: Like I've done a lot of health. Andy [0:33:19]: Like I know health care pretty well. Andy [0:33:20]: I actually wrote a fifteen page book on how to ensure a, physician practice management. Andy [0:33:25]: Like Ms roll ups of health care services. Andy [0:33:27]: But I still use a a medical professional broker to place now. Callan [0:33:34]: So big expert. Callan [0:33:34]: They... Callan [0:33:35]: Well what I'm here you say is if I feel that I can do as much as the specialty broker that's out there, then I'll do it. Callan [0:33:42]: But if it's something that needs this advanced knowledge where somebody... Callan [0:33:45]: This is worth bringing in somebody that knows way more about me because if I'm wrong on something, it's a problem, that they're in odds are, they're gonna get it right totally. Andy [0:33:55]: And if you think about it... Andy [0:33:56]: If I I think about what is my role for the client. Andy [0:33:58]: And the way I'm personally hardware hardwired is that I wanna know everything works. Andy [0:34:02]: And I'm... Andy [0:34:03]: It's a huge burden in my life that I terrible, Terrible at things like, paying people to do stuff for me because I'm, you know, the kinda of knuckle head who goes I'll figure out to do myself and it takes five years and I spend twice as much money on tools and stuff like that. Andy [0:34:17]: Yeah. Andy [0:34:17]: Yeah, which is, you know, to get to the the tech stuff. Andy [0:34:20]: Like I went and took this, like, Python and machine learning classic a couple of years ago and spent every Saturday morning for you're doing it. Andy [0:34:26]: I'm still bad at it. Andy [0:34:27]: But if you think about what is the role of an independent broker for their client. Andy [0:34:30]: It's not to be an expert on everything. Andy [0:34:33]: It's to know who the experts are, Bring them in and sort of curate that panel of of professionals. Andy [0:34:38]: And particularly for things like where we have private equity relationships, a family office relationships. Andy [0:34:43]: Right? Andy [0:34:44]: Where you can't be in this... Andy [0:34:45]: If you as a retail broker, wanna have a niche, like, pick with the niche franchises point? Andy [0:34:52]: If you think about what we do with private equity firms, most private firms will have some sort of industry profile of, hey, we, like the following types of businesses. Andy [0:35:00]: Like... Callan [0:35:01]: Here's our thesis. Callan [0:35:02]: This fits our thesis. Callan [0:35:03]: This businesses fit our our thesis and right able will focus on. Andy [0:35:07]: Some are very narrow, but some are fairly broad. Andy [0:35:09]: Yeah. Andy [0:35:10]: And and so, like, you can't... Andy [0:35:11]: The thing I wrestled with until we got to where we are today and still wrestle with it is if I show up. Andy [0:35:16]: Yeah and this was my pitch five years ago at Symphony when they do when I was just dedicated to private equity for about four months until I realize Like to search. Andy [0:35:23]: At show up private equity firms, and I'd say, hey. Andy [0:35:26]: Here's how we fit together. Andy [0:35:27]: My team understands transactions. Andy [0:35:29]: But also within our brokerage firm, we have experts across ten different industry verticals. Andy [0:35:36]: And so we bring in those experts based on the deal that you guys were doing. Andy [0:35:39]: There's a whole host of reasons why it's hard to do at, I don't know locked in because you've got office charges if you're in one recent P and L, and you wanna work with a resource from a different region There's a charge back and get people with conflicting personal interests and people aren't incentivized in a lot of cases they're not incentivized to work on new business, which I think is asked nine, but it's besides the point. Andy [0:36:02]: That's how we position it for private equity five years ago. Andy [0:36:04]: We're transaction advisers. Andy [0:36:06]: So we have specialty resources in house. Andy [0:36:08]: And sometimes, we'd say we had specialty resources, not in house. Andy [0:36:12]: I... Andy [0:36:13]: It took me a while you're comfortable with that message, but that's what's happened in practice. Andy [0:36:16]: It's is from able to say, like, look, I'm not an expert and everything, but I got a guy who is Callan [0:36:21]: You know, it's interesting. Callan [0:36:22]: I've appeared a couple things. Callan [0:36:23]: It kinda connects a few dots here. Callan [0:36:24]: The first is why it made more sense for you to do this on your own as opposed to doing this at a big company. Callan [0:36:29]: It sounds what I'm hearing is you care more about getting the best result from the client. Callan [0:36:35]: Then you do maximizing the amount of money that you're gonna make. Callan [0:36:38]: And I'm not saying that that all the brokers are just trying to maximize the amount of money that they're trying to make. Callan [0:36:43]: But for you, this gives you more control to be able to do that. Callan [0:36:47]: And then the second thing, and this is probably a great place to bring this, episode to a closes. Callan [0:36:52]: You know, we talked about this offline and throughout this, You, you said the whole time. Callan [0:36:57]: You've used word broker. Callan [0:36:58]: And you have not used the word agent. Callan [0:37:01]: And we had this conversation beforehand, and I think is a great place to bring this up. Callan [0:37:06]: As we come to a wrap is why do you say broker, not agent? Andy [0:37:10]: When I learned twenty three years ago or whatever it was is a... Andy [0:37:13]: When I went to work at Am, which I knew as a broker? Andy [0:37:16]: And we took the broker licensing exam. Andy [0:37:20]: I had to sit in a class. Andy [0:37:21]: I don't know if people still do this. Andy [0:37:23]: They, like, Anne would have classes two nights a week. Callan [0:37:26]: I've taken class and I've taken self study. Callan [0:37:28]: When I did self study, it took, like, ten times longer. Callan [0:37:31]: Right. Callan [0:37:31]: Well, because I was doing... Callan [0:37:32]: I wasn't doing it full time. Callan [0:37:33]: I was just doing it you know, nights and weekends, while I was at... Callan [0:37:36]: In this time, I was full blown and shirt tech. Callan [0:37:38]: So didn't have a lot of time. Callan [0:37:40]: But when I went to the class, it was week long class, take your exam, you're done. Callan [0:37:44]: Well, I would take that ten times out of ten between the two. Andy [0:37:47]: I totally get that. Andy [0:37:48]: That's why I did that machine learning classic a couple years ago. Andy [0:37:50]: The thing I found is that the broker licensing exams. Andy [0:37:53]: Like I took my life exam on Monday night. Andy [0:37:54]: I do not buy life insurance for me. Andy [0:37:57]: I was resolved. Andy [0:37:58]: I have a life... Andy [0:38:00]: For it, but I have a specialist that work with Callan [0:38:02]: Yeah. Andy [0:38:02]: The guy named Michael West field. Andy [0:38:03]: I'm gonna give everybody his name at the insurance partners now called Tip, and his team's awesome. Andy [0:38:08]: And besides the fact that I wanna ex educate myself from, like, the Hipaa exposure. Andy [0:38:12]: So my point is it just happens to they have a very low bar for passing. Andy [0:38:15]: But answer question, why a broker and not an agent? Andy [0:38:18]: Because the first thing I learned was that the agency relationship and what is an agent? Andy [0:38:23]: And this... Andy [0:38:23]: I don't know if this is still in the test, but it is. Callan [0:38:25]: I I took... Callan [0:38:26]: Well, as of twenty nineteen, the difference between a broker and it like, the actual definition of a broker and an agent. Andy [0:38:32]: And an agent is a representative of the insurance company. Andy [0:38:34]: To me, that was, like, coming out of the gate. Andy [0:38:36]: What's different between broker agent, agent represents the insurance company in New York a broker represents their client. Andy [0:38:42]: And what I found is it sounds semantic some of it it's geographic. Andy [0:38:46]: Actually there... Andy [0:38:47]: There's acr. Andy [0:38:48]: Episode Bradley Flowers podcast where he talks about it too and people in a south Agent. Andy [0:38:52]: But the distinction to me is that we represent our clients, not the insurance companies. Andy [0:38:57]: And depending on who your client is that not that they ant us as brokers or agents either way. Andy [0:39:04]: But your client needs to know that you work for them. Andy [0:39:06]: And if anybody's ever had a claim for... Andy [0:39:08]: This is a great example. Andy [0:39:09]: Or had peripheral a lot of my friends are attorneys and they get involved in claims and stuff like that? Andy [0:39:13]: And they've said to me, hey, there's a big claim and I know that the guy over at x y z broker. Andy [0:39:19]: I don't think that they wanna make, like say the name of the insurer doesn't matter of a cna. Andy [0:39:23]: A specific example I'm thinking of. Andy [0:39:25]: They don't want Cna to pay this claim because they don't wanna blow their loss ratios for their profit share. Andy [0:39:29]: Well, how can you argue with the appearance of proprietary in terms of who the fiduciary duty is owed to? Callan [0:39:35]: Well, yeah. Callan [0:39:35]: And... Callan [0:39:36]: Because you don't even say Cna at fault here. Callan [0:39:37]: It's... Callan [0:39:38]: The broker doesn't wanna do that because this has probability of loss. Callan [0:39:42]: You're gonna screw up the contingency might knock you down, might knock you out. Callan [0:39:45]: So well, here's a question. Callan [0:39:47]: When you think about the fee only model? Andy [0:39:49]: I'd love it. Andy [0:39:49]: I... Andy [0:39:49]: Absolutely... Andy [0:39:50]: If there is a way to do it and make money on it, and I think about it all the time. Andy [0:39:55]: I think about it all the time because there's a lot of small clients that would pay me a lot more than they are. Andy [0:39:59]: Yeah sure. Callan [0:40:00]: No. Callan [0:40:00]: It makes sense. Andy [0:40:01]: And I think everybody kinda intrinsically knows this. Andy [0:40:03]: Your most brokers and I've done diligence on other brokers and my past life. Andy [0:40:08]: Right? Andy [0:40:08]: So I've I've looked at and Say brokers meaning independent asia. Andy [0:40:11]: Yeah. Andy [0:40:11]: But like everybody kinda has a similar distribution. Andy [0:40:14]: Unless you're very, very niche and everybody's the same profile, but most people have some large clients. Andy [0:40:18]: It's mostly small clients and a couple of big ones that is where you make all your money. Andy [0:40:23]: I'd love to go to a fee model, but you'd wind up charging most of the clients more money. Andy [0:40:27]: I just don't how to do it. Andy [0:40:28]: And I know there's a handful of people doing it. Andy [0:40:30]: Have they been on your show? Callan [0:40:32]: No. Callan [0:40:32]: But I literally, as we were talking, I was legitimately thinking is like, that's probably a good guess to come on. Andy [0:40:38]: This some guys in Ohio. Andy [0:40:39]: Right? Andy [0:40:39]: Oh, I'm sure they're one. Callan [0:40:41]: I mean, if you think about this in the Ra side of the business. Callan [0:40:44]: The adviser side, and this is the model got a pure coincidence, the guy who kind of founded that fee only model on the advisory side. Callan [0:40:51]: He started this in Columbus, Ohio years and years ago. Callan [0:40:55]: And then he grew that over the years. Callan [0:40:57]: And then, you know, it was probably when all the fee compression and stuff started to happen when that model really started to grow, and then people started leaving the wire warehouses and and starting their own Ra practices and to go fee only. Callan [0:41:09]: And I always loved that model. Callan [0:41:11]: Why I thought it was such an interesting. Callan [0:41:12]: It's hard one to explain. Callan [0:41:13]: But I think I am gonna try to get somebody on and talk about it. Andy [0:41:17]: And, like, I know some people like, in the the Twitter verse who are becoming consultants and working on a fee as a consultant and it's tied to the what value they can extract from the brokerage and I've mixed feelings about that, but Callan [0:41:30]: mh. Andy [0:41:31]: The other issue too and this is just explore. Andy [0:41:32]: This is, like, state regulations around re bait and fee agreements. Andy [0:41:36]: And and I I still... Andy [0:41:38]: Like, We've got handful a full of clients on fees. Andy [0:41:40]: Don't me wrong. Andy [0:41:40]: It's not that I'm opposed to it or don't do it at all. Andy [0:41:43]: I look at... Andy [0:41:44]: There used to be the the rim survey, I think, of, like, what a large organizations pay their insurance brokers. Andy [0:41:49]: Yeah. Andy [0:41:50]: And it's usually, like, eight to ten percent total costs or risk. Andy [0:41:53]: So if you're if your organization spends three million bucks on insurance, including retained loss costs, everything else, then you should be paying your broker about three hundred thousand, maybe two fifty to point that. Andy [0:42:02]: And that's that's usually what I I kinda peg it to for bigger clients. Andy [0:42:05]: But no one has explained to me how I'm... Andy [0:42:09]: You've run this issue of most carriers if you wanna go net rather than gross and net out commission. Andy [0:42:14]: A lot of under reuters are looking at cross written premium and so they'd rather hit the G number, I guess than net it out, so you don't get dollar dollar savings. Andy [0:42:21]: If you... Andy [0:42:22]: Legally, you can't rebate your commission. Andy [0:42:24]: So I'm I'm just not sure mechanically how you get to a female model. Callan [0:42:28]: I don't know. Callan [0:42:29]: It's worth. Callan [0:42:29]: I'm actually excited if anybody that's listening is either doing this model or know somebody that's doing this model. Callan [0:42:36]: Please send him over. Callan [0:42:37]: I would love to have that conversation. Andy [0:42:39]: Oh, yeah. Callan [0:42:39]: I'd love to hear it. Callan [0:42:40]: Well, Andy, this is great. Callan [0:42:41]: Congrats on all the success that you've had so far. Callan [0:42:44]: One year in. Callan [0:42:46]: I'm very excited to recap in a year and see where things are going. Andy [0:42:50]: Thank you. Andy [0:42:50]: Thank you for having me. Andy [0:42:51]: I I appreciate it. Andy [0:42:52]: Here's my shameless plug. Andy [0:42:54]: I wanna grow. Andy [0:42:55]: Right now, I mean, we're we're basically a ten person shop, but there's two of us who are primarily doing production. Andy [0:43:00]: I think we're gonna do a point where our infrastructure is where we could support outside producers. Andy [0:43:05]: Yeah. Andy [0:43:05]: And I'm interested in saying... Andy [0:43:07]: I think there's a whole bunch of them out there. Andy [0:43:09]: Of folks who are maybe ten years in the business, their agency was acquired and now they're part of a roll up, and they wanna try something else. Andy [0:43:18]: And if if anybody listening, hears that and thinks that I would be fun to work with. Andy [0:43:24]: Yeah. Andy [0:43:24]: Yep give a rank. Callan [0:43:27]: So I don't know, Andy. Callan [0:43:28]: Thanks for coming on. Andy [0:43:29]: Thank. Andy [0:43:29]: Thank you.