National Underwriter - October 3, 2011

tions Help Parker, Smith & Feek Shine
compensation structure

advisor not just in risk management—but in other strategic organizational and management issues as well.”

CORE VALUES & CONTINGENT COMMISSIONS

One major reason for the firm’s success, says Collins, is that “our business operations are always in alignment with our core values”—and these values empower every employee to do what they need to do for the firm’s clients in solving their issues.

One example of how this philosophy has benefited the firm is how it escaped unscathed from the contingency-fee scandal that rocked the industry in 2004.

Then-New York Attorney General Eliot Spitzer accused three major brokerage firms— Aon, Marsh and Willis—of a bid-rigging and kick-back scheme with a number of insurance carriers. Brokers were accused of steering insurance contracts to individual carriers in exchange for lucrative contingent commissions.

Attorneys general in other states launched their own investigations at the time to determine if there were similar violations occurring at other brokerages.

But because PS&F producers receive salary instead of commissions, they had zero incentive to steer clients to any carrier except those with the best coverage for their clients.

Indeed, the firm had to educate account teams about its contingent arrangements so they would be able to explain to clients how the firm managed its carrier profit-sharing agreements and illustrate how it had no influence on producer’s recommendations.

This team-driven approach is an important part of how the firm handles clients and helps set PS&F apart. The teams are organized around specific industries (construction, marine, forest products, life sciences, etc.) and are cross-disciplinary in that they bring together producers with technical specialists in commercial insurance, employee benefits and surety.

“Our clients become accounts of our firm—not of an individual producer,” says Collins. The advantage to that is when the producer who secured the business moves on, either from promotion or retirement, the client remains. As proof that this approach works, PS&F maintains an average retention rate of 96 percent.

Private Ownership, Assurex
Provide Notable Advantages

AS A PRIVATELY HELD brokerage with 185 employees, Parker Smith & Feek (PS&F) does not have the quarterly profit pressures faced by its publicly traded competitors—giving it, says Gregory Collins, president and CEO of the firm, flexibility and the ability to think in the long-term interests of its clients.

For example, even though the economy
“has given us a real challenge,” Collins says,
PS&F has been “unwilling to reduce our staff
of talented, experienced professionals who
generate the very advice and counsel we see
as our number-one client-valued advantage.”
PS&F also benefits from membership in
Assurex Global, the Columbus, Ohio-based
brokerage network of international brokers
that he says gave the firm avenues to con-
tacts and advisors that have been instru-
mental to its continued growth.

SEEKS CLIENTS THAT CAN’T AFFORD
CHEAP INSURANCE

Not every prospect is a good business partner for PS&F, Collins says. Clients seeking the lowest price for their insurance placement do not fit with the culture the firm promotes.

“We are not a good commodity broker,”
he says. “We work to lower the overall cost
of risk. What our clients say they have dis-
covered is that they are not in a position to
afford cheap insurance. Our culture simply
doesn’t support policy peddlers.”
The current soft market, Collins says,
has meant reduced insurance premiums
for everyone, giving clients “immediate,
potentially short-term solutions to reduc-
ing their costs.”
But Collins believes PS&F’s value propo-
sition comes from helping clients reduce
the cost of risk in any market and at a
strategic level. And it does this by establish-
ing long-term relationships with clients
and “continually exploring ways to reduce
their cost of risk.”
For example, “when the insurance mar-
ket is hard and rates are high, we help make
the tough decisions on limits or deductibles
in their coverage lines,” says Collins. The
aim is to give clients “the tools and guid-