Navigating middle markets can be as confusing as defining the term “middle market” which can vary by agency, carrier, and region. Lucky for you, Charlie Venus joins us on this week’s episode of the Trusted Advisor podcast to discuss keys to achieving success in this area. Listen in to hear how specificity can make a world of difference in capturing those middle market sales!
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Edwin K. Morris (4s):
Welcome to the trusted advisor podcast brought to you by Iroquois group. Iroquois is your trusted advisor in all things insurance. I am Edwin K. Morris. Today, we’re speaking with Charlie Venus. He joined the Iroquois group in January 2019 as its vice-president of middle-market and specialty. The former commercial lines leader for Brown and Brown of Virginia is a seasoned insurance professional who will help Iroquois members further develop their middle market and specialty insurance business. Welcome to the call. I have a pointy little question and it seems to be about these middle markets. Can you kind of frame us first and define what that is?
Edwin K. Morris (47s):
What is a middle market to you?
Charlie Venus (48s):
Yeah, that’s an interesting question because you know, the definition that from a middle market in terms of what is a middle market account. It varies often by the agency and by the carrier, some carriers defined it by premium size. Some carriers define it by exposure units, such as payroll, number of vehicles, revenue, and agencies typically define it by, by size of account. For our internal purposes, you know, we’re using roughly a hundred thousand dollars in written premium to define the account, to define the middle market account.
Edwin K. Morris (1m 30s):
So it’s not industry specific, it’s not customer client specific, it’s volume.
Charlie Venus (1m 36s):
Yeah. And like I said, there’s a, there’s just a number of different definitions out there, whether you’re on the carrier side or the agency side in terms of how you define it.
Edwin K. Morris (1m 46s):
And is there any regional definition to this too? Is there any regionality to that?
Charlie Venus (1m 51s):
There can be a little bit, and I’ll give you an example. I sit in Virginia and in Virginia, the, the rates are extremely low. If I take an account here, that’s a, a $25,000 account. And I plopped that account in Florida, in Florida it’s a a hundred thousand dollar account. In Pennsylvania, New York, New Jersey, it’s probably 75,000. If I go to California then maybe 150,000. So just because of a rate variation across the country, because you know, all the rates are done on a state level, the size of the account varies.
Edwin K. Morris (2m 28s):
So the consistency in this realm is that it’s very inconsistent. I mean, there’s a lot of variables and it’s daunting, right?
Charlie Venus (2m 35s):
Right, and that’s why so many carriers now on, at the national level define it based on exposure units, because the rates vary so much from state to state.
Edwin K. Morris (2m 46s):
You can’t compare apples to apples at that point.
Charlie Venus (2m 48s):
Edwin K. Morris (2m 49s):
So how does one break into this?
Charlie Venus (2m 51s):
You know, I’ll give you just my observations based on my years on the carrier side and on the agency side, I think, you know, there’s a couple of givens from, from an agency perspective that, you know, the agency needs to be, you know, number one, they need to be sales focused. You know, they need to be a sales organization. Meaning the bulk of their producers’ time is spent on sales related activities. And not that they don’t provide good or, you know, or even exceptional customer service, but that customer service is put onto the account managers and the account executives in the agencies, not on the producers. The producers need to be, you know, really focused on sales related activity.
Charlie Venus (3m 33s):
The other key thing is that the agencies that I’ve seen over the years that are, are truly successful are very niche oriented either at the agency level, the producer level, or both meaning they don’t try to be a generalist because they know that in order to serve their clients, well, they need to bring a deep level of expertise and knowledge to their clients. So they tend to focus on just three or four industries
Edwin K. Morris (3m 58s):
Well that makes sense, because then it becomes a very repeatable and predictable sell. Right? You’re not trying to learn things you’re not familiar with.
Charlie Venus (4m 7s):
Yeah. And then you, you go in there, you know those products, you know the coverages, you know the exclusions, and you know the carriers that you do business with on those particular, in those particular industries. So you know their products well, and you know what you’re offering to your client base,
Edwin K. Morris (4m 22s):
You have that continuum or connectivity to that carrier to have that expertise exchange quickly.
Charlie Venus (4m 29s):
And the other thing that can’t be underestimated is when you’re focusing on those niches is the relationship that you can build with your carrier partner and in particular, the underwriters or underwriter that you work with, because if a producer and an underwriter can develop a strong working relationship, you know, they can do very well together.
Edwin K. Morris (4m 51s):
Do you got any crazy stories out there of folks trying to get into this market that kind of hit a big wall rather quickly?
Charlie Venus (4m 58s):
Well, there are a lot. Yeah. There are a lot of people out there that, that hit that wall. And I think there are a couple of things that, that they don’t do that causes that problem. You know, number one is, you know, that niche specialization, because they go into it thinking they can be all things to all people and they can’t, you know, so that becomes a, a very big problem. And one of the next challenges really defining their market territory, what they want to go after, within those, with those industries. So you can define the industry group that these are the four industries I want to go after, but then you have to define it by size.
Charlie Venus (5m 40s):
And, you know, again, that can be how many employees do they have or what revenue size do they have, because you want to pair that up with the, you know, the overall expertise of the agencies and the producers that you have. And if you can get, you know, find out in your particular marketing territory, you know, what’s available out there in the marketplace where, you know, there’s say, there’s a lot of, and I’ll use Northern Virginia for example, we have a lot of technology business. So we have a number of agents in Northern Virginia that focus on, on technology and associated with that technology is government contracting business. Virtually any market that you go into, There’s a lot of construction, but within construction, you can have a variety of expertise.
Charlie Venus (6m 26s):
You can be focused on commercial artisan contractors or residential artisan contractors or general contractors in the commercial space or general contractors in the residential space. So again, it’s really just, you know, refining those, you know, those niches that you’re, you know, you’re going to get into
Edwin K. Morris (6m 47s):
So that’s the existing stuff, right? So how do you stay ahead of the curve of what’s emerging for instance, cybersecurity, cyber threats, or is that not the same bucket?
Charlie Venus (6m 56s):
No, it’s all the same bucket. When you speak about cyber security and cyber liability insurance, virtually every customer out there has a cyber exposure because they have a computer network. And the, you know, the thing that really varies is how much customer data do they have. You know, when you look at again, contractors, contractors don’t necessarily do a lot of business to business work over the, over the computer where they, or business to customer work, where they have a lot of customer data, but they still have their network. And when you look at some of the cyber trends, contractors are one of the most attacked segments from a cyber hacking standpoint, simply because they don’t have a lot of controls over their network.
Charlie Venus (7m 40s):
So they’re easy to get into.
Edwin K. Morris (7m 42s):
Charlie Venus (7m 43s):
Easy targets, and, and most small businesses fall into that, into that same category that they don’t have the, you know, the security measures to protect their network. So they’re easy targets for hackers. One of the things that the agents that do well in middle market are really good at, and that is in assessing the overall exposures of the account, not only on what we would typically deem the main lines of insurance coverage, which would be workers’ compensation, general liability, property insurance, auto liability, umbrella liability, but they look at everything. They look at all of those things we just mentioned, but they also look at cyber liability.
Charlie Venus (8m 27s):
They look at employment practices liability. They look at directors and officers liability. So they look at, they’re looking at all of the exposures that that company might have, and they’re not trying to sell them insurance for every one of those things. But certainly if they’ve got a meaningful exposure, you know, they’re going to bring that to their attention and make sure that that they’re protected if they need to be.
Edwin K. Morris (8m 51s):
It’s all making sense. You’ve got to have, understand your customer, understand the need, understand what you bring and understand how that facilitates to the customer need and coverage. Do you have a prime example of what “right” looks like in implementation?
Charlie Venus (9m 4s):
I’ll give you an example. And this was a, this is a company that’s a, it’s a government contractor and all they do is accounting and auditing. So you would think that would be, it sounds pretty simple, pretty straightforward in terms of what they do, but when you assess all of their exposures, they’re pretty significant. And just to give you a couple examples, so they are, they do nothing but accounting and auditing with the federal government, but they do a lot of this on an international basis. So they have people traveling all over the world. And so because of that, they have to have international coverage. They have to have international work comp, international general liability, some basic international property to cover those laptops and personal effects that people have when they’re traveling, they have to have a professional liability, even though they’re doing the work for the government, they still have to have that professional liability to cover their exposures.
Charlie Venus (10m 5s):
They have a significant cyber liability exposure because they’re going in and doing audits of government data, and government payroll. And often they may have 75, a hundred thousand government employee payroll records that they’re looking at during an audit. And if that data gets lost or stolen or misplaced, that’s a significant exposure. So, you know, just when you, even when you look at something that sounds relatively simple in an Oculus like a, you know, an auditing company, accounting and auditing, just based on what they do and the contracts they get involved with, there can be a lot of exposures that you wouldn’t necessarily think about that they will have.
Edwin K. Morris (10m 49s):
And I, that’s a continual chase. That review cycle and understanding where the market is and, and what the industry is doing, and all the threats that go associated with it is just a constant, constant reeducation.
Charlie Venus (11m 2s):
Well, and one of the unique things about this particular account was that, you know, it’s a big company, they have a big 401k plan. So they have a lot of money in the 401k. Well, there’s an exposure, on a fiduciary exposure to the, to the company, the executives of the company, because they control that 401k money for all of their employees. So they have to make sure that they have appropriate limits to cover if some of that money gets, if there’s a loss to their employees from that 401k fund, don’t want to get into the details of what those losses might be. But, you know, they have to have a substantial limit to cover their fiduciary exposure when they had that much money in the 401k plan.
Charlie Venus (11m 46s):
And again, it’s not something that is going to typically jump out at, in terms of the normal insurance review, you know, if you’re not going into that kind of detail.
Edwin K. Morris (11m 58s):
And that’s where the expertise comes in, that the expertise that’s inside of your, your cranium at this point of what, I mean really, that’s what we’re talking about. That’s critical information. That’s awesome. Thank you for sharing. And thank you for being here to talk about this exciting topic.
Charlie Venus (12m 16s):
Thank you for having me.
Edwin K. Morris (12m 18s):
Thanks for listening to this edition of the trusted advisor podcast brought to you by Iroquois group. Iroquois, your trusted advisor for all things insurance, and remember get out of the office and sell. This program was recorded live at the Cohen multimedia studio on the grounds of Chautauqua institution. I’m Edwin K. Morris, and I invite you to join me for the next edition of the trusted advisor podcast.