Ed Weeren Insurance Agency: Tweaking the Model for a Perfect Fit

In this new Insurance Journal series we will spotlight agencies that have made a name for themselves in the industry in special or unique ways.

Edward L. Weeren and his daughter Kelli Stanford have fashioned their Austin-based firm, the Ed Weeren Insurance Agency, into a finely-tuned sales operation that uses no outside producers. Their customized business model revolves around a staff incentive plan based on sales of new business. It suits the needs of the company and keeps their employees very, very happy. So much so that the Ed Weeren Agency grew by over $1 million last year and exceeds $7 million in size.

Ed began his career in the insurance business in 1959 with an insurance company. Relationships with banks and savings and loans over the years led eventually to the establishment of the retail agency. Kelli came on board in 1991 and now serves as president of the company.

Currently personal lines represent around 56 percent of the total volume, and the firm receives about 85 percent of its commissions from direct bill.

IJ: Ed, when did you begin the agency in its current form?

Ed: In April of ’71 I opened the agency, called Ed Weeren Insurance Agency. It was a sole proprietorship, and later when the state allowed us to incorporate, it was incorporated. The agency was operated in a traditional manner. I was managing, producing, we were growing. We at times would have producers and we progressed to the point where … Kelli got out of A&M and came in with me. She grew in the business and took on greater responsibility.

Along the way, our business plan changed from the heavy emphasis on commercial … to an emphasis on small commercial, which would easily fit on direct bill and required less of, shall we say, the top agent’s involvement in the account … and heavy emphasis on personal lines…

Through this whole process, we began in August of ’86 by going to the CSRs—and this I think is a very important part of what has helped us evolve to where we are today—I went to the CSRs and asked the ladies if they had sold any new business during the week. I wanted to keep a record of it. Some had and some had not. But I was pretty persistent.

As the Fridays rolled by and the weeks rolled by and the months rolled by, here he comes again with that old blue book that he writes his stuff down in. And I found that our staff was probably no different than any other staff—that there was lots and lots of business available to be written by the staff if they would take the time to do it, if they had the incentive to do it. Well, one of the incentives in the beginning was—’hey, the boss is going to come by with this book.’ It was a very low-pressure thing, I was just asking. Then out of that evolved the idea of some monetary rewards for the new business.

As I say, this started in August of ’86, so we tweaked it and tweaked it and tweaked it over the years to the point that it is today and I’m just in love with it. … I think it’s just a wonderful business plan for us because it fits what we want to do. … We grew by $1,100,000 last year and our agency is over $7 million in size.

Kelli: And that’s with no outside producer.

Ed: The staff are very heavily compensated by the unique incentive program that we have, that has evolved. It’s not something we just sat down and thought up one day. The incentive program is built around things that are good for the agency. Well, obviously selling new policies is good, yes, but that’s not all of it, not by a long shot.

If we take on a new company, for example, and it’s in the agency’s interest to push business to this new company in the office. … It’s always tough because the CSRs are dealing with a company they’re not familiar with. And it’s just harder to get the company to know the agency, and so on. So we may, as part of our incentive … pay so much per thousand of volume that goes to these companies. … And that money each month will go into the pot along with the money for the new policy sales.

We are very heavy into account rounding. Because it’s been demonstrated that two-policy or three-policy accounts have a longer retention than the one-policy account. So our incentive is extra payment when they sell additional policies to existing customers. And there are other things that are in the incentive (program). And then all of this is added up at the end of the month. … All of the staff (is involved) and I think that is critical.

I want to point out that the non-licensed people are not being paid to sell, they’re not talking to customers, they’re not in sales. This process helps the agency to determine how much bonus we declare that month. But we do include the bookkeeper, the receptionist and even the part-time college girls. And as a result of everybody benefiting from this incentive, there’s no resentment. … And it’s been a great help to our agency retention … we have a lot of 10-, 12- and 14-year employees. And the group is pretty harmonious. I just think the program is working good and I wish I’d thought of it many years ago.

IJ: So not any particular person gets more of an incentive, in terms of monetary gain, than another person?

Ed: Some do … it depends on the amount of time. Like a college girl participates on a much lower basis.

Kelli: It’s based on the number of hours she works, she may be only working 15 hours per week.

Ed: And also we discount it … because she is a college girl. And we have a lady working three out of the five days, so she gets three-fifths. But the others who work, regardless of their position in the agency, if they’re a full time person, they get the full bonus. … February was one of the low ones, it ran about 181 or two dollars.

Kelli: That was a short month.

Ed: And we had a lot of people out sick. In January it was $612 per person for that month.

Kelli: And not only that we also have a policy of a half day off.

Ed: If we have a certain number of policies sold everybody gets a half day off. And if we do another, higher level they get a whole day off.

Kelli: And these incentives have just evolved. It’s always a learning process. Sometimes its not just money that motivates the CSRs. We found out that a half day off really motivates, so that’s something new this year that we’ve incorporated in.

Ed: Another thing we learned, and as Kelli said, this is a constant learning process, one year I got the bright idea of having the incentive accumulate until the end of the year. Because we pay bonuses at the end of the year, it’s just part of our part of our program. Well, it didn’t work very well.

Kelli: It was a huge flop.

Ed: It didn’t work, because there was not the immediate reward. We thought it would be great if they would get a big check at the end of the year, just before Christmas. It didn’t work.

Kelli: And for our staff, it doesn’t work to pay quarterly either. It’s that monthly goal.

Ed: I just think the reward has to be at least monthly, that’s what we’ve found. We pay very well, compared to the industry, but when one can take home four, five, six hundred a month over and above … that makes a difference. And of course, it’s easily justified on our side, from a business person’s standpoint, because we look at the volume that those number of policies sold bring in and what the commission is generated and what we pay … it doesn’t even begin to use up all the commission that we get that first year.

IJ: Kelli, how did you initially become involved with the agency?

Kelli: During college I worked some summers here at the agency. And when I graduated from Texas A&M, in December of 1990, I was engaged to be married and I was lucky enough that my husband found a great job here in Austin. So it just seemed the right move … that I come into the agency. And I basically started in the back office filing dead files and answering phones. I moved up and I handled, and still do handle, personal lines accounts. I’m in charge of the overall agency operation, automation, management of staff. And I’ve worked up to that, it’s not something that was handed to me. But over the past, what is it now—twelve years—I’ve come to this place where I am.

IJ: You mentioned you emphasize the use of direct bill.

Ed: Eighty-five percent of our commissions come from direct bill … the important thing about that is we’ve greatly eliminated collection problems, account receivable problems, we’ve greatly eliminated the work of our bookkeeper for account current issues. Just doing the account currents and all that is so much easier.

And the bad debt losses are just nil because we have a very strict collection policy on those who are not on direct bill. And then we also use service centers. A lot of agents use service centers but there’s still controversy in the minds of some agents about service centers. But the thing about centers is that it greatly helps us service a big book of business, primarily personal lines, with fewer people. So we have more time for sales and after all, that’s what we should be, a sales operation.

For so many years I ran a service operation. I would do the selling and all of the staff would do the servicing. And through this process, we’ve changed to where the office constantly thinks of sales. In fact on each desk the ladies have a log sheet where they log in where the business came from—Yellow Page or just referrals or whatever source.

Kelli: We use that to know where our dollars are best spent.

Ed: Every morning the receptionist, an administrative person, checks everybody’s book. We have a blackboard back in the back … and the first thing she does is update the board on the number of policies sold so far this month. Toward the end of the month they can start calculating what the bonus is going to be.

IJ: What services are provided by the service center?

Kelli: The service center, it’s like an extension of the CSR. When our customers call the company’s service center … when the service center picks up the phone they have where the call is coming from, what agency. And most of our customers think they’re just talking to one of the CSRs in our office. They call there for billing questions, to report claims, for policy changes, increase their coverage, if they need an ID card, if they need evidence of insurance, if they’re refinancing their home. Basically, for any reason they would be calling the agency … the service center takes care of all of that.

IJ: What are your plans for the future?

Ed: We want to grow and we don’t want to be static. And we grew, like I said, over a million dollars in premium last year.

Kelli: And we hope to do that again this year.

Ed: But we’re not going to change our model to try and double our size in one year, and we’re not going to lessen the quality of our service, and we’re not going to lessen the quality of our lives by getting an ulcer.

Kelli: If we stay on track and stay with our plan, and as it’s worked for us the last few years and we’ve tweaked it again this year, we definitely look to grow the book, like we did last year. Hopefully to increase by another million or a million and one volume.

IJ: Any advice you’d give agents or someone setting up an agency today?

Ed: I have a problem with going to these seminars and hearing these seminar experts who come in and tell you what you have to do in terms of running your agency. It’s their opinion and in many cases, I don’t think they have ever done it or I don’t think they are doing it. I think they’re seminar speakers getting paid to go on the circuit. A lot of them take polls, send out polls and take surveys of agents, consolidate the data and say ‘well, if you’re not doing this, you’re not doing it right and so and so forth.’

My advice to agents is, sure, go to seminars, go to all you can, read all you can, talk to all the people you can. And then go onto the porch and sit down and think for yourself of what your personality is, what your life demands and needs are, what your ego is and all of these things. And determine your own business plan. Don’t let your business plan be given to you by some seminar speaker or some other (person) in the business. Set up your own course, and follow it, continue to follow it, continue to tweak it, and then be happy with it and don’t change every year or two when you hear somebody say ‘you need to be doing this, you need to be doing that.’ I think agents will be happier. They’ll have less stress and less burnout when they feel comfortable doing that which works for them.

Kelli: I think we have a good model and it works for us now. And we keep our staff happy. It’s evidenced by the fact that when we hire people, they’re here to stay and they see it as a lifelong career. The only time we’ve lost CSRs is due to death or illness. People don’t leave our shop, they’re happy here. And we have people wanting to come work here. I think we have a great shop and a great business plan. It’s very, very unique and it’s evolved over quite a few years. And I think, looking into the future I don’t know how but I know it will keep changing. The marketplace changes and our business changes.

Ed: There is something I’d like to add. I’ve always believed in education, and I received my CPCU designation in 1966, been involved with the chapter and all the offices and so on. Our chapter helped set up the insurance courses at the community college many years ago. And I’ve since received the CIC and the ARM … I’ve encouraged it here. Kelli has her ACSR and her CIC and she’s passed several parts of her CPCU. We have several ladies in the office who either have or are working on their CIC designation.

Kelli: We have two that are CISRs. We’re an honor roll agency with the Big I because we have so many that are ACSRs. Just about everyone has their ACSR. And now they’re going for their CISRs and after that going into the CIC. So, we’re very very committed to continuing education.

Ed: I think that is something that I would recommend to agents—if you’re going to be in the business, and a lot of them go get their CIC designation, which is fine. But frankly, I think more independent agents should take the time, particularly the younger ones, to work on the CPCU study courses.

There’s one other thing that I neglected to say and it’s really important. I’ve always said that … ideas are things, ideas are tangible things. But they only become tangible things with energy and effort and work. Without energy, effort and work, they’re only daydreams.

So a few of us … in Austin, San Marcos, San Antonio, that were friends and friendly competitors, established a rapport… began in early 1997 … to see if we could somehow pool our efforts and work together since we were not day-to-day competitors. And that resulted in an MGA-type operation that came into existence in 1998. The name of it is the Combined Agents of America (CAA). …

(It) is a marvelous, marvelous tool for helping the local independent agents. It’s helping strengthen, during these hard times, each of our member agencies.

Probably 75 percent of the agencies that are members have youngsters in the business. And the important thing about that is, the time and effort that I and others put into building this company, if something happens to me, or would’ve happened to me a couple of years ago before Kelli was as far along in her progress as she is now—and some of the other agencies whose young men and women are in the business with them—the CAA group would close ranks and help that individual until they could really stand on their own feet. And that support system, you just can’t measure in dollars.