By Peter Van Aartrijk JR., CIC
Leonard Forey doesn’t have to think long about the biggest challenge his agency has faced: Mother Nature.
His Texas-based agency, Talon Insurance, located about 25 miles from the Louisiana border along the Gulf Coast, has faced four hurricanes—two of them major—since 2005. And then there was the 2004 fire that wiped out the Port Arthur office. Following both of the major hurricanes, virtually all of Talon’s clients had a claim of some extent, and most of its employees had problems with their own homes. But the agency’s disaster planning—and its adherence to the plan in the aftermaths of each event—ensured remarkably quick rebounds for the firm and its clients.
“We lost only three working days following the fire, although we were out of our office for eight months,” says Forey, who owns the agency with Ted Moor III and Robert Cain. “Following the storms, we were taking calls on the first working day.”
Planning ahead
Talon’s planning occurred in the nick of time, as it turned out. In 2004, the agency’s operations manager, Linda Trevino, spearheaded the adoption of a disaster recovery system in anticipation of increasing storm activity in the Gulf and the need to protect client data through remote storage.
“We had three possible plans in place,” says Forey, allowing for different scenarios following a disaster. A month after the plans were in place, the fire struck Talon’s headquarters office. “It was completely destroyed,” he says.
As luck would have it, a friend had a building available in the area, which Talon quickly leased. “We got some rental furniture and some used computers, and we were up and running,” he recalls.
Although the fire had a significant impact on the agency’s profits and production, says Forey, it also served to demonstrate Talon’s commitment to its clients. “Our personnel have performed exceptionally well,” he says, “and helped us establish a reputation for great service.”
That reputation was enhanced when the Gulf Coast was struck with a succession of hurricanes over the next few years, and Talon lost little time in addressing customer claims. “You cannot be in this business if you are not available for your clients when they are in need of your services,” adds Forey. “Our solutions were to pre-plan for Mother Nature and the fire, and then follow the plan. There is no secret solution other than good planning and solid personnel.”
Fueling business
Talon’s location doesn’t just dictate its disaster preparedness—it’s also the driving force behind one of the agency’s core specialties, the oil and gas business.
For more than 100 years, the Golden Triangle of Texas—encompassing the Beaumont, Port Arthur and Orange areas—has been making its fortune with oil. It began with the Spindle top strike of 1901 and continues today, with a slew of refineries and drilling operations scattered throughout the region.
Talon has long covered the refineries, and it began to write more drillers when it bought a book of business in Tyler, 200 miles north, in 2004. Oil and gas risks are specialties that demand an understanding of an industry that can be devastated by the storms that clobber Texas’s Gulf Coast and the increasing threats of petro-terrorism. The firm also specializes in manufacturers and industrial contractors, and the latter especially is a thriving source of business for the firm.
“Since our area is rich in these areas, our specialties are extremely important to the success of our agency,” says Forey. But with Americans increasingly intent on freeing themselves from dependence on oil, Talon wants to diversify its niches. Like the nation as a whole, says Forey, “We’d like to be a little less dependent on oil and gas.”
The true cost
Regardless of the commercial client’s industry, Talon takes a singular approach called total cost of risk (TCOR), introduced to the firm by industry consultant Rob Ekern. “We had followed his newsletter for years and were impressed with the method,” says Forey. “It separates us from the pack.”
TCOR identifies the true cost of risk, including self-retained losses, risk management administration expenses and insurance premiums (which represent only 20%). As part of its TCOR approach, Talon has implemented a stewardship program that provides in-house risk management services and a claims manager for commercial clients. They also receive access to seminars and are notified of legislative changes affecting their business. Services are provided at no additional cost to all Talon clients.
“If we can assist the client in reducing their indirect cost,” says Forey, “we feel we can achieve a much greater impact than simply reducing premium.”
Talon’s risk management recommendations reach beyond basic exposures. “Clients don’t need a fire extinguisher. They need training for their supervisory force in accident investigation, harassment, disaster relief,” Forey says.
For the agency, providing such expertise required a bolstering of staff. “It took awhile for us to make it work,” admits Forey. “We couldn’t get there with the staff we had, so we hired a risk manager and a claims manager. We’ve seen very good results. It gives us a different image in the eyes of our insureds.”
Added value
As an added value, Talon also provides Zywave services, which include client tools for human resources, OSHA, risk management and benefits. In addition to client access through an agency-branded portal, two e-mails go out weekly dealing with these topics to approximately 170 individuals representing more than 100 clients. To make sure customers understood its value, Talon offered a two-hour presentation in its office when the agency first signed on. “It allows us to communicate with insureds at different levels, not just the decision makers.”
Providing such additional services is necessary in a competitive environment, says Forey. “Agents used to separate themselves by the markets they carried. But the industry has consolidated to such a degree that everybody has the same markets. So, it’s what you provide your clients that counts.”
What we learned
“Our biggest and most costly mistakes have been in the area of personnel,” says Talon’s Leonard Forey. The agency struggled unsuccessfully to find the right management and employees for its Houston location. “We tried to hire young and train them, and it was a huge financial undertaking,” says Forey. “But the personnel we hired didn’t want to wait for results. They wanted instant gratification.”The location became, says Forey, “an anchor on us, dragging the agency down.”Ultimately Talon disbanded the office. Says Forey today of the lesson learned: “When the numbers clearly reflect that hard decisions have to be made, do not waste an inordinate amount of time and expense trying to force the issue. Make the decision and go forward.”
About the article
Written by Peter Van Aartrijk JR., CIC. Published June 2009, Independent Agent Magazine.
© Copyright 2009 Independent Agent. Reprinted with permission.