From leaving high school to begin his insurance career as a “registry runner” at 16, to using his life savings to start his own agency at 22, Ely Kaplansky now runs one of the largest independent agencies in Massachusetts with ten locations serving over 15,000 clients. Agency Checklists was inspired by the story of this once exclusive representative producer’s rise in the Massachusetts insurance industry and thought you might be too.
You started Kaplansky Insurance in 1974, when and how did you get your start?
The day that I received my driver’s license at age 16, I had a part-time job after school lined up as a “Registry Runner.” I served various insurance agencies and car dealerships by processing and delivering license plates and vehicle transfers. One of those agencies offered me a part time job a few evenings a week training me to write auto insurance. Another agency offered me a full time job. I made the questionable decision to drop out of my senior year of high school and accept that position.
When did you start your own agency and how did you choose Brookline as the place to start it?
The manager at the agency I was working at left to start his own agency in Brookline. He offered me a position at the new agency and I accepted. After being employed at that agency for several years, I resigned when I realized that some of the agency’s business practices were unethical. I left the insurance field for a brief period and took a sales position in the advertising and the fund-raising industry. At age 19, I opened a small advertising agency. That lasted barely a year. I decided to try insurance again. At age 21, I decided that Brookline would be better served with an insurance agency with high standards and professionalism. I took my entire savings of $2000 and borrowed another $4000 and opened Kaplansky Insurance in June of 1974 at age 22. I was unable, however, to secure an appointment with an insurance company, so my only option was to become what was referred to as a “Designated Broker” where I was assigned to write auto insurance for The Travelers. It took me 10 years before I could secure my first voluntary agency contract.
Is Kaplansky a family-run agency?
No. I am the founder and sole stockholder.
What about perpetuation? Have you dealt with this issue yet?
I am not retiring anytime soon but I have begun to give it some attention. I have been doing some research and I am starting to put together a perpetuation plan. Every agency should have one.
How is your agency dealing with all the changes in the Massachusetts insurance industry now?
Changes? As long as I have been in this business the industry has been in constant change. Not a day goes by that I don’t go into the office and have to deal with change.
A business is like a shark. It must keep moving forward or it will die. Managed competition, coastal restrictions, unusual weather patterns, hard markets, compensation; these issues are all forks in the road that require us to make decisions and adjustments. My concern is not just the “how”, but the “when.” Too many agencies just sit on the sidelines and wait to address change. Change occurs faster than ever these days and our response to them must be immediate. I attempt to contend with change as a leader, not a follower.
How are you planning for the future of your agency?
I see tremendous growth potential for Kaplansky Insurance. We have made 16 acquisitions in the past 15 years and have plans to accelerate our acquisition model. We are targeting larger agencies, although we are still buyers of exceptional smaller agencies. We are seeking acquisitions anywhere in Massachusetts, Southern New Hampshire and Rhode Island. Our goal is to double in size within the next three years. We are deeply committed to organic growth as well. We are maximizing our internet presence. Our agency is marketing our products using traditional methods such as direct mail, local advertising, referral and account rounding programs. We are working on a new radio advertising campaign. Kaplansky Insurance is also very proud to support numerous charitable and civic organizations in the communities that we serve.
What are the greatest changes that you have seen in the agency business over the last 10 years?
Without a doubt; it’s technology and how it has affected the delivery of our product, communication with our clients, sales and marketing, financial analysis and claims services.
What kind of role does technology play in your agency? How does your agency use social media to interact with your clients?
Several years ago it would have been unheard of in our industry, but we now employ a full time Marketing and Public Relations Coordinator to manage our online presence, marketing and public relations. Technology is the fastest moving issue that we deal with in our agency. We have made a major investment to our website, a product called “Agency Revolution” which is also a “Digital marketing system.” We are investing heavily in Search Engine Optimization, Google Adwords, and internet lead services. We are very active in marketing the agency through the most popular forms of social media such as Facebook and Twitter. We also blog a lot. Blogging is extremely important for increasing an agency’s ranking in the generic search terms that consumers often use when looking for insurance.
Several months ago we launched a “Firehouse Photo Contest” on Facebook where communities vote for their local fire station. The winning fire station will receive a $5,000 grant from our agency to use to buy firefighting equipment such as life saving thermal cameras. All entries will receive blankets and sweatshirts to make available to fire victims. When we launched the contest we had less than 200 Facebook Fans. We are now approaching 4000 followers.
Over 70% of all insurance purchases begin with some level of research on the internet. It astonishes me when I see agencies that do not even have a web site; or websites that simply act as an online brochure. I have a strong suspicion that many of those agencies will struggle to survive. The new CAP [Consumer Agent Portal] program that is being rolled out by our national and state agent’s associations will allow these agencies to participate on the web for little or no cost depending on what level of participation they select.
Just when agencies thought they had a handle on digital marketing, and the value of local search from Google, along comes the smart phone revolution. Marketing has changed and agencies need to know that smart phone searches are the fast growing segment of technology. We have just launched our new smart phone friendly product.
Finally, independent agents must provide 24/7 service. Our agency offers our clients round the clock access to their policy information, the ability to request certain policy changes and issue their own certificates, to name just a few. If we are to compete with direct writers, we need to offer a hybrid of services. If the client wants service at 2:00 AM we need to provide that. Equally as important is that if they want to stop by our office for a hug, we need to be there for those clients too.
So what role, if any, do you see for personal lines service centers for Massachusetts agents ?
We do not use company service centers. I am not convinced that they are in the best interest of the independent agent. I am, however a major proponent of using the facilities that our companies provide us. We encourage our clients to contact our companies directly to report claims or to address billing issues. These are services that agents traditionally perform that are redundant and are not the most efficient method of providing them to our client. Our companies have highly trained staff to assist our clients more efficiently than we can. The added value that we provide is that if they are not able to resolve a billing problem or satisfactorily settle a claim, we are available to intervene and act as their advocate. We are considering establishing an internal call center which will allow us to handle routine issues and free our “Client Satisfaction Representatives” to have more time to sell and account round.
Do you use aggregators or are you involved in any marketing clusters?
No, I do not. Aggregators do provide value for many agencies, but I fear that they are providing a temporary solution for agencies that are having trouble competing. Perpetuation is a concern for these agents. Involvement with some groups can limit or negatively affect the value and marketability of the agency. As an agency that looks at many acquisition opportunities, we have firsthand experience with this issue. Although I am not totally opposed to the concept, I feel that certain aggregators do a better job than others. I suggest that agencies considering this path do their research carefully.
What do you see as the greatest challenges for Massachusetts agents over the next 3-5 years?
In personal lines, it’s the erosion of our market share brought on by the powerhouse national competitors. We have circled our wagons here in Massachusetts and have been reasonably successful in protecting our business over the past 3 to 4 years. We have successfully banned the use of credit score rating in auto insurance which was a major victory.
Agents, however, cannot become complacent. We need to work together through our association and other non-traditional methods to protect our business.
In commercial lines, it’s “pricing”. We have just experienced the longest hard market in memory. We are beginning to see some of our companies taking small increases. Independent agents still control the commercial lines business, but pricing is critical and I hope to see the upward trend continue.
What do you see as the greatest opportunities that Massachusetts agents are not capitalizing on?
I am still searching for the answer to that one. I hope to become very wealthy when I figure it out.
What about your agency, Kaplansky Insurance? How do you see it developing over the next 5-10 years?
My business model has been to grow by acquiring good agencies and we expect to continue and accelerate our process. We are modifying our traditional methods of doing business within the agency to more of a sales and technology culture. Additionally, I believe it is important that we bring more young people into the business. We have been successfully experimenting with various educational programs such as The Hartford School of Insurance to help us train new producers.
What advice would you give to new agents who are starting out now in the Massachusetts market?
My advice to anyone in the agency business is the same, new, or otherwise. Operate your agency as a business. Many agency owners that I meet make their main focus selling. It doesn’t matter if you are marketing widgets or insurance policies. Run your business like a business. Don’t let it run you. Many people get into the insurance agency business because they are good salespeople. They succeed in spite of their lack of business knowledge. The great insurance agencies understand this simple principle and that is why they rise to the top.
My best advice to any agent is to get involved. Join your state and local associations. Participate. Network. Attend insurance company seminars and events. Attend conventions. Educate yourself. Attend MAIA seminars. Pursue a designation program such as CIC and CISR.
The agency business is challenging and becoming more so each day, but it is a rewarding and exciting industry to be a member of.