By Rough Notes
When Hurricane Katrina made landfall on August 29, 2005, the relaxed atmosphere that gave New Orleans one of its nicknames changed dramatically. Residents had ridden out major storms before and many made that choice this time. Unfortunately, it was a gamble where everybody rolled snake eyes. By the time Katrina rolled out of town, 90% of the city was flooded and many homes and businesses were gone, not just damaged…gone.
For many of the people at Gillis, Ellis & Baker, Inc., it was a triple whammy. The agency had recently moved into newly renovated digs just across the street from the Superdome. New furniture, brand new workstations, everything was great…until Katrina knocked on the door.
Suddenly, agency employees had to deal with the fact that the assets in the office they had grown to love were no longer available. Essentials such as telephones, Internet access and the office itself were just not available. At the same time, 27 of the 37 employees had to deal with the complete destruction or significant loss to their homes. And they also knew that their clients, many of whom had become their friends over the years, also were facing similar tragedies and were counting on the agency to live up to its promise.
Even if they could reopen immediately in New Orleans, the infrastructure was gone. The phone circuits were flooded. In order for the agency to help its clients, it needed to open a temporary headquarters outside of New Orleans. And it did. The entire staff was working out of a trailer in Baton Rouge by Friday, September 2, and were handling what turned out to be more than 3,000 claims and more than 10,000 phone calls. (For the complete story of those days after the storm, see “The Spirit of the Trailer” in the November 2006 issue of Rough Notes.)
The atrabilious prognosticators quickly followed with stories about the inevitable decline of New Orleans. But the people who believed in New Orleans, the people for whom New Orleans was home, had strong, unprintable words for those who predicted the demise. “As a group, we were committed to returning to our city and helping with its rebirth,” says agency Chairman R. Parke Ellis, CPCU. “When we came out of the trailer and returned home, we weren’t exactly sure what was going to happen to us and to the city of New Orleans, but we were sure that we were going to do our utmost to make a successful recovery.”
The first order of business was settling the more than 3,000 claims as quickly as possible so its clients could get back to their homes and businesses. Much of that occurred even before the agency returned to its offices on Poydras Street. And the agency personnel were pleased to learn that the coverages and risk management advice they had provided to clients proved efficacious. “After the storm, 148 of our 150 largest clients were still in business,” Vice President and Chief Operating Officer Douglass C. Mills, CPCU, reports. “That’s a pretty impressive record and it says a lot about the quality of our service and our understanding of what is needed to survive in the New Orleans marketplace. It also provided excellent fodder for an advertising campaign we ran after the storm.
“There were a lot of horror stories that came in from elsewhere,” he continues. Not every business and home owner fared as well as the clients of Gillis, Ellis & Baker. “A lot of people were looking for a new home for their insurance coverage. We got a lot of calls from people who wanted to do business with us and, at the same time, received a lot of referrals from clients that we helped make whole.”
Parke adds: “We took advantage of our position to write a lot of new business in 2006 and 2007 and the momentum has continued. Our growth rate has been on the order of 15% per year and that’s all organic growth. And it’s all been done in a terrible market.
“We’ve been working with Roger Sitkins on a Vertical Growth Strategy and that’s been instrumental in helping us reach $77 million in premium last year.” Seventy-five percent of the business is in commercial lines, with 15% in personal lines and the balance in benefits and life.
“Our focus has always been on managing risk rather than simply selling insurance,” says President W. Anderson Baker III, CPCU, ARM. “But after the storm, our clients really zeroed in on the importance of managing their risks. Most of our commercial clients saw their property risk move into the surplus lines market. Every renewal had to be remarketed and a solid risk management program was an essential ingredient in finding the best market at the best price.
“We brought on additional staff to help our clients implement strong risk management programs and now have four people in that area. It has really helped our commercial lines sales in particular. We lead with our risk management capabilities. We normally don’t even talk about price in our initial discussions with prospects. We stress risk management and how that will positively impact pricing.”
And coming back…younger
“Before the storm,” Doug notes, “we had three people on staff under the age of 35. Today we have 16. Our staff has grown to 47 people and we moved from our space that took up half of the sixth floor in our building up to the seventh floor, where we occupy the entire floor. We literally and figuratively moved up.
“Our goal for many years has been to attract younger people to our business, but we also recognized how important the seasoned experience was. Our average tenure here is over 20 years. People seem to like working here and, if that’s a problem because it raises our average age, it’s a nice problem to have. Thanks to our growth, we’ve needed to add people at all levels and, since the storm, we have found that more young people are interested in coming into the insurance business. We’ve literally had a flood of people that want to work here and we’ve been able to attract the best people into the fold.”
Parke adds: “Opportunities in insurance have been a well-guarded secret for far too long. It’s unfortunate that it took our country’s worst natural disaster for people here to recognize just what a great industry this is. After the storm, New Orleans enjoyed its own stimulus that was mostly fueled by insurance. Being part of that attracted a large number of young people into our business.
“It’s also been very important to our clients and the companies we represent,” he continues. “They can see that we are committed to remaining independent and perpetuating internally. We make sure that we let them know that we will not be sold tomorrow. We’re entering our 80th year and our fourth generation of ownership. We now have the next generation in-house and are planning to be here for at least another 80 years.”
Anderson adds that “our Sitkins association has really helped us develop our young producers. We work closely with each new producer and rehearse every proposal so that, regardless of which producer goes out to the client or prospect, our message of strong risk management support will be presented clearly.”
“That’s our most important differentiator,” Doug picks up. “And it’s definitely working. We write 8 out of 10 prospects when we go to the final meeting,” he says proudly.
“We also have a 98% retention ratio,” Parke says. “That certainly influences our ability to grow.”
Part of the new New Orleans
“There’s a great American success story occurring here,” Parke says. “And we wanted to be part of that. We’re much bigger, much better positioned and much more engaged in the city than we were six years ago. You can just feel the change and excitement as the revitalization has taken hold. Tired, old housing projects have been torn down and replaced with much nicer dwellings. Charter schools are flourishing with a concomitant improvement in education here.”
“And all of that comes from the commitment of the people,” Anderson adds. “Everybody who is still here made a decision to stay. While I’m very proud of what we’ve done, I also have to add that we were not alone. There are thousands of businesses that did the same thing we did. They all said they intended to make the recovery work and became much more involved in the community. Several of our people serve on boards of charter schools and other associations and nonprofit organizations. We’re also big supporters of United Way.”
Doug continues, “While the revitalization and improvement was evident to anyone who lived and worked in the city, it was not readily apparent to businesses in other parts of the country. So we worked hard to bring that message to the insurance companies and reinsurance companies that New Orleans was a good risk. We organized a tour of the levee system for their people so they could see all the improvements.”
“New Orleans spent $15 billion doing flood control,” Parke adds. “A lot of the improvements are not visible, but enough is that the underwriters could see some very important aspects. The defenses against storm surge have been moved out of the city. The levee systems are carefully coordinated now so one will pick up protection if a particular area becomes stressed. At the same time, nearly all of the businesses have transitioned to RMS 11 for hurricane protection. It really has been a citywide effort, involving both the public and private sectors in an almost unprecedented partnership.
“I can’t imagine the insurance community having a more difficult final exam,” Parke concludes. “I’m very proud of what our agency did and what my peers in the industry did.”
And we at Rough Notes are proud to recognize the agency for its commitment to its community and to the independent agency system. They well deserve being named our Marketing Agency of the Month.
© 2012 Rough Notes, Inc. Reprinted with permission.