This is the second part in a two-part series on the Arbella Service Center
The NRT Insurance Agency of Waltham
Ken Fries has been the President of the NRT Insurance Agency for the past five years. The agency is entirely personal lines and employs approximately 32 people. While based in Waltham, NRT has an additional seven satellite offices around the country.
Owned by NRT LLC, the agency’s parent company, Realogy, is a publicly traded Fortune 500 company. As part of some real estate acquisitions years ago, Realogy acquired the insurance operations of the organization which is now NRT. The NRT Insurance Agency was actually the first agency to sign on to Arbella’s Service Center.
As of October 31, NRT officially changed its name to Castle Edge Insurance Agency.
The Phil Richard Insurance Agency of Danvers
Mr. Richard, who started his namesake agency 26 years ago this year, has grown his business from scratch and now boasts 15 employees and approximately $11,000,000 in premium. An Arbella agent for almost 14 years, Mr. Richard’s agency also represents approximately 11 other carriers in both its personal and commercial lines business. In September 2014, his agency began using the Arbella Service Center.
The decision to use the Arbella Service Center was aimed at alleviating the stress that his agency and his employees were under, and solving the dilemma of how to lessen his employees’ workloads while growing the business.
Enter the Arbella Service Center.
What is your relationship with Arbella?
Ken Fries: I have held the presidency of NRT Insurance for just over five years, but the agency had been doing business with Arbella for many years before that.
Phil Richard: I have had a relationship with Arbella since 2001.
Before you entered into this agreement with Arbella for a service center, had your agency been involved with other carriers that had service centers already up and running?
Ken Fries: Yes, we have been using various service centers over a number of years. We are a firm believer in the service center strategy and actually have 11 service center implementations within our agency. Eleven different service center implementations with 11 different carriers, even though we have a lot more carriers than that. Those that do have a service center capability, those are the ones that we have signed up for.
Phil Richards: Unfortunately, I can’t answer that… I just signed the agreement with [a second] service center … [so] it is all new to us. It’s actually Plymouth Rock, I can tell you that.
Why did you decide to use a service center for your agency?
Ken Fries: We’re firm believers in [the] service center strategy. Actually, even prior to Arbella having their own service center, I entered into conversations with their senior management team emphasizing the fact that we felt a service center would not only be a great thing for them to have, but a great thing for their agents to participate in.
Phil Richard: I think like most agencies that are experiencing some growth, the onslaught of requotes that rear their heads due to competition and penetration of the direct writers into the marketplace… our staff was overloaded with work to the point of being overwhelmed.
We were getting new business opportunities that, quite frankly, we were losing out on and even damaging probably some referral relationships because we were so inundated with work.
If you had to rank the service centers your agency uses, where would you put the Arbella Service Center? How does Arbella differentiate itself from other service centers?
Ken Fries: I’ll tell you, I would put them right up at the top, just based on our experience. I think they’ve put together just a phenomenal offering in terms of the services they provide our clients, and us, the agent. I would rank them right up there at the top.
I think the services … It may not necessarily be a differentiation of the services. They’re going to handle services such as billing inquiries, claims, endorsements, renewals, things like that, and many service centers perform those things.
The thing that differentiates Arbella is the way in which they do them. The way they do them is just in such a stellar fashion. When they do perform these tasks for us, it’s flawless. It just makes for a good customer experience, and a great experience for our agency having placed our business in their service center.
How does using the service center help differentiate your agency from other agencies?
Phil Richard: My vision of service today is that service centers are the only way you can set yourself apart and compete moving forward unless you’re just ready to throw in the towel and sell out, which explains a lot of the M&A activity today.
The only way you can do that is by giving the people who work for you the ability to spend more time on the phone with your clients doing productive things. To have people in the office that can follow up on a claim two days later and say – “Hey, how’s it going? Have you heard from somebody?” To be able to contact clients whose rates have gone up substantially every year to say, “Hey, we noticed your rates are going up? We offer all these other options. Can you give us a couple of weeks just to check on it for you and see if we come up with a better solution?”
I’m finding that — using service centers — we are now just starting to have the ability to do that. I can tell you that last month, we went from an average of 80 submissions per month in a good month to 150. This month, we’re on track for 160. Curiously enough, 70 percent of those are personal lines.
We now have put people in positions where our growth model looking forward is – I am not going to hire more account managers. I’m going to hire more business development, “Inside sales people.” As opposed to hiring maybe sales people out there trying to drum up business, watching them come and go, we are creating a better feeder system that provides more of a receptacle for new business.
It’s working. I’ve taken two people who weren’t necessarily great multi-taskers and who were overwhelmed with service work and put them in that position. They’re killing it. They’re doing a great job. The have closing ratios of 70 to 80%.
What are the benefits to both of your agencies? I guess it would be for all service centers serving your agency, but the Arbella Service Center in particular.
Ken Fries: The benefits … First of all, I think the benefit that strikes us as one of the most valuable is that it allows us the opportunity to free up resources to focus on new business revenue generation, which is what we feel we are very good at.
On the service side, our intent is to make sure that the clients we do get on board with us, they get what we call world class service. When we place a client with Arbella, our opinion is that Arbella knows their products and services better than anybody out there. They get the best experience from the company directly.
Phil Richard: I would argue that Arbella, [or any] service center that is as tightly managed, overseen, incentivized and trained as they are is far superior to even what your office can provide in terms of a level of services. If we can take staff’s time handling everyday things from 98% down to 70%, we can fill that 30% of their time gained every single homeowner client proactively, for example, and saying, ‘Hey, we just want to make sure we still have the same contact information. Has anything changed in your life? We now have this term in insurance quoting engine, getting an update.’ To me, that is the value added that allow us to market up to capacity.”
That’s the big payoff and that’s what helps us grow organically. I think we’re starting to see that right now.
What services is Arbella doing for your agency?
Ken Fries: I think what in particular they’re doing … The implementation that we did with them as I mentioned was flawless, okay. The staff that they have brought on board to man the service center has just received what I consider to be outstanding training. They’re just incredibly qualified. The ability for them to be able to communicate not to just our clients, okay, but to us, as we need to stay in the service center. It’s just been phenomenal.
The metrics that they deliver to us on a monthly basis are very detailed. It helps us manage our business proactively. We obviously hold them accountable for continuing to improve the quality of our business and retain it. I think the way they’ve developed their service center, they’ve also built it where it’s scalable. You don’t necessarily have to be concerned about is it appropriately staffed. They always seem to be ahead of the curve when it comes to staffing.
Phil Richard: It’s pretty much a fixed package but they’ll do what you want to do. Arbella is an extremely good company. They’re a great agency partner. I certainly had lots of offers from different carriers, but I have never seen a company with a level of support in as many areas as them. It’s a fact.
One thing that they did on their website was to add service center notes. Virtually every step they take with a client is identifiable in those notes, on that client’s file, on their website. We force our staff to always go there instead of being complacent and going by our agency management system data which isn’t always 100% up to date.
The service center notes is a great addition. People were concerned that they didn’t know what they had done on an account without having to call so they put that in place within a month, I would say. Then, the other thing that they do is they call each and every pending cancellation and they’re willing to accept the exposure of that because they do provide E&O exposure coverage for any of their activities with us as additional insured.
There’s great value in that because that leads to much less requoting and from an E&O perspective. [As agents], we are always advised not to do that for obvious reasons, but the fact that they can do it 100% of the time is just another testimony of the fact that that this is a great resource.
Were there any special preparations when you implemented the Arbella Service Center that were different than your other roll-outs?
Ken Fries: I’ll tell you communication was great…what I mean by that is, the preparation and actually working with the Arbella Service Center team and the management there. Everything was laid out very specifically in terms of what was going to occur, when it was going to occur [and] how it was going to occur, as well as what the anticipated results of that were. It played out exactly as it was planned. Again, we couldn’t have asked for a better project plan and implementation of the service center.
Phil Richard: Yes. There were three folks that came in from Arbella. They shared suggestions on how we should handle [the roll-out]. We adopted probably 90% of those suggestions. We’re starting to think twice about the requoting, for example, if somebody is looking for a requote… Arbella is providing the statistics to me that says, of the requotes that they do before they pass them back to us or when they pass them, how many of those are we actually turning into 2A’s.
They’re drilling down on that statistic as we speak. If, for example, they do 100 requotes and they are able to retain 80% of them, that would be sufficient, but if we’re only retaining 30% of them, then we’ll probably change it so the requotes come back to us 100% of the time and we’ll let our staff and their relationships with that client handle any pricing issue.
Were there any teething problems or implementation problems with the roll-out of the Arbella Service Center to your clients?
Ken Fries: I have to be very honest with you, no. There were none. That’s why I used the word flawless earlier. Actually, I’ve probably used it a couple times already. No, there were no bumps in the road, no glitches. We had no issues from clients that were placed in the service center. I think again, the client’s concern is making sure that they get service when they want it, how they want it, and they’re satisfied when they’re done with that particular interaction. That’s what we’ve been experiencing, so no clients complaining to us at all. In terms of the fact that they’ve been placed in the service center, I think to the contrary, they feel they’re getting the service that they deserve.
Phil Richard: No. There’s always going to be a concern. One of the things that it brought to light is that we have to update our client database information. We’re in the process of doing that, both by phone and by direct mail as well as getting their permission for texting.
We had to to modify our workflows so that the staff looks in the service center notes in Arbella’s website to see if Arbella had already done anything so we’re not duplicating their efforts. Little things like that.
You mentioned about the reports you get from Arbella. What type of information do you get?
Ken Fries: Oh, boy, all kinds of information. It outlines everything from the number of calls that they’ve taken from our clients to the number of endorsements that they’ve done. We also get the number of inquiries that they’ve handled. Obviously, it provides us with numbers on retention of our book of business to make sure that it’s improving versus deteriorating. It’s just a very, very detailed dashboard, so to speak, in terms of the report that they provide us.
Phil Richard: They’re always updating [the reporting]. It gives a very detailed report on what they did, how many accounts we had in file or at this time last year. It’s by quarter so for example, I can see first quarter call volume in 2015 was 677 calls. In quarter two, there were 595 calls. It shows the activity always increasing. I see for example enhancements to coverage. They enhance someone’s coverage which could be increasing liability limits, add rental, what have you. The totals continue to increase in all ways. One of the nicer things is even in billing, the number of calls that they’re dealing with went down by 30%. That’s testimony to the fact that there are more people on EFT.
It’s a really drilled down report that you can get [where] you are seeing some results. It also will give us our new business results. For example, our renewal ratio with Arbella went up five points in the second quarter. It gives you a lot of information that’s also very helpful in managing the business overall.
How does the Arbella report compare with those you receive from other service centers?
Ken Fries: I think in the beginning I would say that they were comparable, because we outlined for them what we were looking for and what was important to us from a data perspective. So they obviously started to build their reports based on that, and based on our experience. Then they also enhanced them as we went along. They’re a little bit more of a deeper dive than some of the other companies in terms of the analytics involved.
Phil Richard: When we compare this to what we’re experiencing here at the office with the non-service center companies, quite frankly, I’m getting to a place where the companies that we’re doing business with will probably all need to engage in the service center approach.
How do they charge you for their services?
Ken Fries: I can’t go over specific numbers, but the charge is a percentage of our commission.
Phil Richards: I will tell you that it’s the same price, same cost as the other company we signed on with. I’m quite sure that company is mirroring Arbella because it’s seeing the advantages of it.
Is there any restrictions you have contractually about Arbella, like raising the prices as you become more deeply involved with them?
Ken Fries: No. We’ve built into the contracts language that we feel addresses any concerns we may have on a basis in terms of the future. The language that we’ve got built in there addresses everything from if we decide to part ways, the timing of that, et cetera. That’s just typical stuff you want to build into any contract. We were very comfortable with how the contract read. Obviously, our legal folks went through it and were comfortable with it.
Phil Richard: I was afraid you’d ask that because you and I talked about this. I will confess that I have not circled back and taken a look at that. Honestly, I was sold by the very concept of the service center. Unlike some who are more learned in this area, I did not really look at that that closely.
Has the use of the Arbella Service Center had an effect on your top line. Can you see a market increase in your acquisition of new business? Or any other benefits?
Ken Fries: Yes, we have… I can tell you we have seen improvements in our new business top line revenue numbers. We’ve also seen improvement in not just our retention with Arbella, by having the book in their service center, but for some of the companies that we do not have service center implementations. We were able to free up staff to then focus more on those companies, and provide our clients service. We actually see an uptake in retention with those companies as well.
Phil Richard: Our retention has improved two points since we joined with the service center. This might be partially because Arbella lowered their rates, but I would like to believe that [there is] certainly a combination of factors there. They also claim and I believe it’s going to be true that, this year, nobody’s loss ratio is good, at least from the North Shore. I have to believe that our loss ratios are going to improve as well because there’s two sets of eyes looking at an account to see how it’s performing.
How about cross-selling, is the Arbella Service Center doing that, or are you folks doing it?
Ken Fries: It’s kind of a mixed bag. Obviously, for the clients that we have in their service center, when they feel there’s an opportunity that they have a client on the line, and we only have one line of business; will they look at that as an opportunity as we would want them to, to cross-sell? The answer is, “yes.” They do that for us.
Phil Richard: They don’t. If the client happens to have an auto with us and a home with Bunker Hill for some strange reason, they do not attempt to pull that into Arbella. They maintain the agency. If there’s any question that they think is an agency question or if there’s any concern by a client that needs to be addressed by the agency, then they do a warm transfer back to the agency and that’s done quite well.
Do you get any input on it, or do they do it independently?
Ken Fries: They will take the initiative to do it. We also make sure that we don’t have those other lines of business with another company. We have agency standards in place that they have to adhere to in terms of how they go after that. Also, the coverages that they would use, they have to be based on our guideline.
Phil Richard: What we don’t do here is when somebody calls in and they skip that first service center choice and say, “I want to talk to Cathy at extension 102 because that’s who I’ve dealt with for 10 years.” Then, that’s who they go to and Cathy handles it. She doesn’t push them back, but she will then say to them “We’re just starting to introduce this new service now.” In case I can’t get back to you right away. If you call and press the service center option, then you’re always going to get somebody on the phone. You’re never going to get a voice mail. It’s always going to be taken care of.
What are the criteria you think another agent should consider in deciding to use a service center like the Arbella Service Center?
Ken Fries: Just things off the top of my head, I would say first of all, take a really hard look at the services the Arbella Service Center would provide the agency. Based on what their business model is, and what they may want it to be in the future, because just what one’s business model is today, doesn’t necessarily mean that’s how you want it to stay. Some business models naturally are going to evolve, so I think truly analyze the services being provided. Understand the value, and the time that that would save your agency, and potentially costs. Also, look at how is that going to free up your existing staff or new staff that you bring on to go after new business revenue.
Phil Richard: First, they should understand the depth of the organization and who’s in charge of it, how it’s managed and what kind of best practices they’ve employed in what they’re doing. I think that they should also talk to other agents who have used that service center to be sure that it’s what they hoped it would be.
I think that they should also work with a service center that is open to adaptation, based on the agency needs and within reason and open to change. They should also want a service center that is willing to help integrate and transition and train the staff of each agency independently of other agencies and also collectively with other agencies. It was very valuable to hear what other agencies were doing and how they were using the service center in different parts of the state.
Are there any particular advantages in the Arbella Service Center agreement compared to your other ones?
Ken Fries: I can only speak from our perspective. The way we structure them, they’re pretty consistent from one company to another based on our requirements. I don’t see any huge advantages or disadvantages.
Are there any other cost-savings you have seen at your agency because of the switch to Arbella’s Service Center?
Phil Richard: Sure. The bottom line cost is in personnel and HR – that is the bottom line cost. If you have to go hire somebody and spend between $40,000 and $70,000 a year with salary and benefits and that person doesn’t work out, or you don’t have the time to train them then that cost is almost immeasurable.
How about the E&O exposure for the service center’s operation?
Ken Fries: Yes, Arbella handles that. They cover the E&O for anything that’s going to occur arising out of service center business being conducted with a client of ours and their service center.
Phil Richard: I am quite sure there’s an indemnification clause. I can’t give you 100% on that but… What I do know is that we’re an additional named insured on there, which generally provides for a waiver of subrogation. I’m not sure about the indemnification clause, but I know that we are listed as an additional insured.
Is there a particular exit path or strategy in place if there is ever a parting of the ways?
Ken Fries: The way all of our contracts would be worded, it certainly provides us and obviously them, a way to address the exiting of the relationship, whether it be just the service center aspect of it. Obviously, I’m not talking about the agency appointment side, which is a totally different contract. The contracts are very fair on both sides.
Phil Richard: In my case, unless Arbella terminated me or unless Arbella changed their rate structure, or it had a financial concern, I don’t see us ever separating ways with Arbella because of the level of split they have given us.
Do you see any disadvantages to an agent using a service center?
Ken Fries: I’m going to be honest with you, I don’t. If we did see an disadvantage, we certainly would fully vet it and make sure we understand it. We’re very solid, very confident and secure in the strategy that we’ve chosen. I can’t see any disadvantages, frankly.
Phil Richard: I think everybody can benefit but … then, there might be that agency, that deals in all high-end stuff and chances are, they’re never going to buy into a service center approach.
Is there anything else you would mention to agents that might read this that are contemplating a service center, or the Arbella Service Center in particular?
Ken Fries: I would say, first of all, if you’re talking about the Arbella Service Center, the Arbella partnership is just a partnership that you can trust; whether it’s through the agency appointment process or the service center implementation process, they’re a partner that’s always going to be there for you. They’re always going to do the right thing. I think agents need to be willing to embrace change, because our industry is changing constantly.
I think when they decide to make that move, they just need to instill the service center culture within their agency staff. What I mean by that is communicate openly to the staff in terms of what the agency is doing with the service center. Why they’re doing it. When they’re doing it, and the benefits of the service center implementation for the agency, the clients, and the staff. My other comment would be just to make sure that agents proactively monitor their business that they put in service centers to make sure that it’s performing the way in which they anticipated.
Phil Richard: What I would say to any agent is that you need to stand out from the crowd and provide something that other people are not, so that your clients are organically selling your business for you, otherwise you are going to shrink or struggle to maintain.
Would you be open to queries from a Mass. agent interested in talking with you more about Arbella’s Service Center?
Ken Fries: Yes. My email is ken.fries@CastleEdge.com.
Phil Richards: Yes. My email is firstname.lastname@example.org.