Speed, discipline, and culture in a consolidating MGA market

So having good people is a really core pillar in terms of being able to build a successful business. Those people give you that launching pad. We're really just getting started. Hello everyone and welcome to Insurance Business TV as we catch up with one of this year's Fast Brokerages. That is a firm that is making its market with rapid growth. That company is River Valley Underwriters and today we welcome its president, Andrew Adams. Andrew, welcome to Thank you guys for having me. Really happy to be here. So Andrew, River Valley Underwriters has built a strong regional footprint across a wide range of states and product lines. So what do you see as the key factors behind your success in such a competitive MGA environment right now? And how have broker expectations evolved over the past few years? You know, I think when it comes to the growth that we've had and the footprint that we've been able to build inside of eight years, really, we've been in business as River Valley. A lot of it goes back to the history that we have. My dad and my grandfather have been in the business before within J. Kelly Company. So we had a lot of relationships that came from that, both on the carrier side, employee side, agency side, that gave us a really good launching pad. And then obviously, we've been able to find and identify some really good underwriters and really good people that work for us. And at the end of the day, the business for us is really about the people that you're working with, both carriers, agencies, and underwriters, and the other people in the back office that help issue the policies and do the accounting and everything else. So having good people is a really core pillar in terms of being able to build a successful business. Those people give you that launching pad. And then from there, once you start being able to find those one or two, three people that can help really spearhead an office in a different state force, for example, then you can build around them. So you always have to have that leader that really is the driving force for whatever state that you're looking to grow into. And then from there, it becomes easy to build out around them. So it always comes down to finding that right person, giving them the tools to work with, helping them as much as you can, whatever help they need, whether that's market access, whether that's training, whether that's being there to answer questions and help solve the problems. That's the basics of it for us. And from that standpoint, that's what's really allowed us to build out the strong presence that we have and have the people that want to work with us and have the people that want to work for us and the carriers that want to do business with us. Brokerage expectations, you know, the market has obviously been shifting in the past couple months alone with softness in the market. So that always, it causes a lot of conversations to be had when you're changing from market cycles, from a hard market cycle to a soft heart market cycle. Carriers really want to be in touch. They want to know what's going on. We are really serving as their frontline eyes and ears in a lot of cases. So they rely on us to have open communication with them. They rely on us to make sure that we're giving them good feedback and that we're telling them honestly and truthfully what we're seeing in the marketplace. And, you know, when market conditions are changing or whether we think that the carriers are being either over-reactionary or not reacting fast enough. Same thing with our retail agents. Sometimes we have to help them by telling them, hey, the sky is not falling when they think that it is, or sometimes we have to be willing to listen to what they're saying as well. So a lot of the communication channels is incredibly important and making sure that, you know, we communicate that not only internally to ourselves, but to our partners and just continue to have those conversations and stay in constant contact. At the end of the day, I still believe, and I will always believe that this business is a business. Technology has certainly made an impact and has certainly changed some elements of how this goes. But at the end of the day, people still want to do business with people. And so those relationships are what really would have gotten us here. And they're certainly what helps us to continue to be able to grow and build the platform out. And I think as long as we continue to have a relationship focused company, we're really just getting started. Obviously people are a key differentiator for you, but speed and responsiveness are also increasingly differentiators in the wholesale and MGA market. So how is River Valley balancing that push for faster submissions and binding with the need for underwriting discipline in today's market? Yeah, I think it's a really fine balance that we walk every single day. We are very open and honest with our carriers and talking through that and talking through the different APIs and the processes that are there to help speed that up. But also for us, I think it really starts with the training and the work we do with the underwriters to make sure that we build up their technical expertise to make sure that we understand and that they understand the guidelines and what to do with the carriers and how to work through the processes with the carriers. And that pricing isn't the end all be all. Pricing is certainly a huge element when it comes to the insurance marketplace right now. And pricing is always going to be an element in the marketplace. But when it comes to forms, when it comes to coverages, those are equally as important. So it's developing that knowledge, understanding what each market brings and comes to the table with, understanding the type of business that you're writing, understanding what the key factors that every risk has. Those, as you build your knowledge base, as you become more and more of an expert or you're working with, you know, if you're an assistant underwriter working with a senior underwriter who's helping teach you those different items, those really help you speed up the process by bridging the technical knowledge gap. And then obviously we start trying to employ different methods behind the scenes in terms of the technical side of things, whether that is some limited comparative raters or, you know, different things to help triage emails and help underwriters be staying productive and building out that back office support. So it is a, it's a, it's a fight in both senses because you really want to make sure that we're not sacrificing technical acumen for speed. But we also understand, especially in the MGA space that we're in, which is more of the transactional space, speed is paramount. Being able to get them a quick answer, whether that's just an indication and saying, Hey, here's what we have based on the information you provided us. We need these, these extra items to be able to firm this up. Whether that's being able to have an agent or a retailer call us and we pick up the phone still, and they can talk to us through what they're, they're seeing and what they're doing. And we can give them, you know, a high level, here's what we're looking at. Here's what we would need to know. And that gives them enough to be able to go back and say, okay, I need to firm up my, my knowledge as the retailer with the insured on X, Y, and Z items. But that at least gives them a general ballpark. And so we can then say, Hey, here's the pricing. Cause we understand our markets. We know where they're going to be at. We have a general feel for what the rates are with the markets and the classes and the things that we work with on a day in and day out basis. But it also allows us to say, Hey, here's a firm number, but it's subject to whatever the different items are going to be that we need to know to firm up the pricing. And so if this comes back and everything that we've, we've based this on is true, then we're going to be golden. Here's the documents. Let's get them signed up and let's go. But obviously if there's things that change them, that's going to change the story. It's going to change the pricing. So it's that balancing act. We want to give our underwriters the tools to be able to be quick and fast and effective. We also want to make sure that the agents understand that they can pick up the phone and call us and talk to us. And we're happy to talk to them and help them as much as we can there. But we also spend a lot of time working with the different underwriters that are here to build that technical knowledge so that they feel confident in their markets and they feel confident when they get a question about, you know, what type of class of business it may be, where to go with that and who's going to be a good player for that so that they're not having to go through however many different markets just to figure out if they'll do it. They already know who will do it. And now it's, Hey, what do you actually need on this? What is the terms that we are needed on this? What is the pricing that's needed on this? Let's have a quick conversation about that and we can get you something turned really quickly. So it's that expertise factor that comes from the training, the people having the good relationships with the retailers. And then we use technology as a supplement. Technology for us is never probably going to be the first piece that helps drive speed, but it will always be an item that is there to, you know, improve the natural processes. And we'll see how that evolves with the marketplaces as everything is. You always have to be open to the evolutions of the marketplace and technology and the reshaping of what work looks like. But I think it really comes down to having people that know what they're doing and can really understand the markets and really understand the marketplace as a whole, and then giving them the tools to fight with. Great stuff. And then just want to talk a little bit more about balancing DAX with you, if I can, because of course, many brokers are facing continued challenges right now around capacity, catastrophe, exposure, pricing, volatility as well, particularly in states such as Florida and Texas. So how are you navigating those market pressures while still maintaining strong carrier and broker relationships? You know, I think the second part of that question is kind of the answer in a lot of ways, which is having the strong relationships helps you navigate the pressures, right? Nobody wants to have the conversation of the market has changed dramatically out of nowhere. If you're in conversation with your markets, whether that's quarterly or that's monthly, or that's, you know, I still do some underwriting myself and that when I'm talking to underwriters on the accounts, giving them feedback on what we're seeing in the rates on an in risk by risk basis. And, you know, obviously some of that's very anecdotal and, you know, each different account has different rating factors and they're all going to look different across the spectrum of a portfolio. But eventually there are patterns that start to emerge and keeping the underwriters and the agents aware of what those different things are helps them be prepared. You know, in the past five, six years, we obviously had two major swings in the marketplace right now. We went to from a, you know, softer market back in, you know, 2018, 2019 to a pretty firm market in terms of obviously on the property side of things where rates were rising and capacity was shrinking to tail into 25, start at 26, where you're seeing more capacity coming into the marketplace and rates generally softening. And it happened probably faster than any cycle I've ever seen. And in talking to a lot of different folks in the industry, it's happened faster than is typically expected. And so you have to have a lot of conversations with the different carriers and you have to have really already built the trust up with them. Now is not the time to be building the trust with the carriers, right? Because you really need to have shown that you were doing a good job for them underwriting, that you know what you're doing, that you could handle the hard market. And now that you're coming into a softer market, they need to have already built that trust with you to really value your opinion, to value what you're telling them from the front lines on the underwriting side of things. And it is a balancing act, especially in the CAT space right now, the coastal market, you know, we had a really good storm cycle last year in 25 in terms of the hurricane season and a lot of capacity in the marketplace. So sometimes the conversation has to be with the carriers, hey, we're going to have to hold, we can hold the line on the rates and that's probably what we need to do. But it does mean that there's going to be some freemium that goes away on that if we want to try and maintain underwriting discipline. The other side of that equation is, is that they want to know where the market's going and you can let them know. Doesn't necessarily mean that we're going to push them to go and chase that market because every carrier has a different set of goals and different set of growth goals. They have different appetites for different amounts of risk. So our job is really to be there to be the advocate for that carrier on whatever they want to do. And we want to help them do that. And so if they're saying, Hey, we're at the bottom end of where we want to go. And if it goes lower than that, we're not comfortable there. That's perfectly fine. We want to support our carriers in that, but it does mean that they need to be aware when we have the conversation of saying, Hey, we're seeing this, the market's going in a direction below this. So property may not be the, the line item that's going to grow for you guys. It may have to be casualty lines. So in having those conversations with them and about how do we manage the book and how do we manage growth in a tough market environment? And maybe it's not property growth. Maybe it's casualty growth or the different line items that come out of that. So there's a lot of different conversations that are taking place. I'm talking to my carriers more frequently than I have ever have in the past few years. And I don't think that's a bad thing. I think that's a very good thing. I think it indicates that the carriers themselves want to know where the market is going. And I think they value the opinions that guys like us have. And it's really imperative to us that we're giving them good information. And that's not necessarily just meaning that the information that we're getting from the retailers, they have good information as well, but also the information that we're seeing firsthand, the experiences that we're seeing from the market as a whole. And, you know, whether or not some of that is opinion on whether we think it's sustainable or not with pricing strategies and things like that. And having really good conversations about, you know, deployment of aggregates in certain regions, certainly in the space and when to deploy those and whether it's better to hold your powder or not, or where we need to be at. So it's a lot of conversations. It's a lot of really trying to understand the market, spending a lot of time making sure that you're in the marketplace, because you can't be the highest person in the marketplace. You can't be the cheapest person in the marketplace. You have to be in the market to be able to write business. And really, you don't want to be on either of those two extremes broadly, because then you become selected against in one way or another. So it's really incumbent upon us to make sure that we're doing the due diligence and doing the research to give them good information and present that to the carriers. And then from that standpoint, what the carriers decide, we'll make the best of whatever they give us, right? We'll go to bat for them on whatever we can with whatever tools they give us. And we continue to have those conversations. And it'll be an evolving market cycle. Certainly right now, we'll see what that looks like in six months, a year, two years, whatever it is. As the cycles seem to be compressing a little bit, how long they last, it's going to be an ongoing process. And it's going to require a lot of time, energy, and effort being devoted to managing the book, managing the relationships, and continuing to build out what we view as a good response to stay in the marketplace, but also not lose all the underwriting discipline we've gained over the past however many years of the hard market cycle. Yeah. And of course, one of the themes of the discussion so far, Andrew, has been about how important relationships are and sort of maintaining that contact as well. Of course, the MGA sector in general is attracting so much investment and consolidation activity across North America. So from your perspective, what advantages do independent relationship-driven firms still hold in a market that is perhaps becoming more technology-led, increasingly consolidated as well? I think at the end of the day, a lot of people really like having the relationship with the people that they work with. And they want to feel like they're more than a number at a certain place. For us, this is the second time we've done an MGA, right? I had mentioned previously my family had been in the business with MJ Kelly Company, and now myself and my dad are in it with River Valley. And it's a testament to how they did with MJ Kelly that we had a lot of those folks that wanted to come over and join us with River Valley. It's a testament that a lot of those folks are still here and still growing with us. For the culture that we try to build, we try to build it around the values and the belief system that we have. That being that we try, and myself and John are both Christians, we try and build it around Christian values. We try and treat people the way that we want to be treated. And we try and reflect that as much as we can in the business decision-making process. That doesn't necessarily mean that we're going to be 100% on that. We still make mistakes. It's still a business. There's But from my experience and from the people that have come over and worked with us and from the folks I know that are also in the businesses, family-owned MGAs or independent MGAs, there's a lot of people that really want to have value in an organization beyond just being a cost center or beyond just being a revenue-producing unit. And not saying that the larger MGAs don't have value to people, but I think the larger an organization gets, it becomes much more difficult to do that. At the stage that we're at now, north of 50 employees, around 54, I believe, is where we're at right now. I still talk to all the underwriters. I still talk to the branch managers. I'm still involved with the policy issuance, the accounting. I know all those people. I work with all those people. So it's not layers and layers between me and whoever the next person is as a manager or who the next person is as a decision-maker. I'm involved in working with those people. I sit in on conversations with those people, whether those are work conversations or personal conversations. And we want them to make sure that they feel appreciated. And we try and show them that through various different things throughout the years, whether that's doing a Christmas lunch for people, whether that's different benefits that you can show them as a small independent MGA to really make them feel like they matter, to make them feel like they're valued. And I think that that interpersonal relationship there is incredibly important. Not just the top line number growth, which obviously revenue is important, obviously premium growth is important, but also having people that enjoy coming to work, that want to work for you, that feel like they're being taken care of is very important. And really working hard to make sure that we're reflecting the values that we believe is incredibly important to us as the owners of the company and as the ones running it. And so we really hope at the end of the day that the people that work for us feel like they matter and they feel like that they're part of a bigger thing than just a company or an organization. They're not just a number. They're not just an underwriter that has goals to hit because it's a business. Everybody has goals, right? But at the end of the day, we truly care about the person, not just the number that they generate, not just the premium that they generate. And I think that's what the value add is for the from that standpoint. And then obviously from the carrier standpoint, my experience has been is that the smaller independent carriers truly value those contracts. They truly put a lot of effort into making sure that those run well, that the production that is given to the carriers is high quality production, because we really want to build those relationships, not for three to five years, but for 10 to 20 years. And we really want our carriers to succeed because when our carriers succeed, we succeed. And we place a lot of value in pride in terms of how we perform for those carriers and how we make them look. And we want to be a good representation of them as well. And the same thing with our agents. We want to help our agents succeed as much as possible. And we don't want to be moving retailers and having to do all that every year. We want to have retail agents and producers that are working with us for five or 10 years, and we can build good, solid relationships with them there. And I think that's the value that you get out of a small independent is you get, obviously the service standard for the retailers, for the carrier is going to be higher. The carrier is going to be higher, but also I think it's largely because the people that work here feel like they're valued more. And I think that really drives everything else. Yeah. And I think another one of your key values as well is that you really emphasize your community roots. So at a time when insurance distribution is obviously becoming, like we said, more digitized, more automated, how important is culture and personal connection in retaining broker trust and long-term growth? I think it's always going to be incredibly important. I think there's a lot of value in having people that are working with people in the same state, that they are around each other, that they are in the same communities as each other, that if it's an agent, a retail agent that's in Arkansas, that they want to work with somebody that's also in Arkansas, which is where I sit, or whether it's Texas or Louisiana or Mississippi. I also think that you get a lot of the cultural elements that are harder to understand if you're not in and around the community that you're working with, right? There's just portions of the culture you're not going to understand from state to state. It's not saying that if you're in the state of Missouri, that you can't work in Iowa or Nebraska or somewhere like that, but I do think there's something that gets lost there a little bit. I think that having people that live and work in the state, working with people that are also in the state, there's some connection there. Those are people that are going to, they go to church together or they maybe see each other at the local football game or whatever. They're both invested in that community. They both understand the challenges that come with writing in each individual state because there's always challenges. There's also a lot of benefits that come with working in each individual state, and they all understand those concepts and they all want to push together. Obviously for us, like I'd mentioned previously, our values are very important to us. Our faith is very important to us as a Christian-based business, and we try and push that as well on the values of what we stand for in the community as well. We want our people to be involved in that community if they want to be involved in that community. We try and reflect that to our retailers and we try and make sure that we express the fact that we really care for the states that we're working in, the states that we're based in, and we want to be positive members of that community, whatever that may look like. I think that if you were to run everything out of a central hub and one state and you were underwriting for 24 like we are, you're going to lose some of the connections that you have there. You're going to lose some of those personal relationships that you have there with agents. There's going to be underwriters I have that have agents they've worked with for 10 plus years, and they know them, and they know when their kids' birthdays are, and they know the major events that happen in their life and graduations and things like that. And those relationships, they do add a tangible benefit to the business. Whether it's a measurable benefit or not, that's a different question, but that's not necessarily the end goal. Everything is about measurable benefits. Sometimes there's just the benefit of enjoying who you work with, and that will make that relationship stronger. It builds that trust. It makes it easier to do business. It's always easier to do good business with good people, right? If it's somebody that you like working with and that you trust, those are the business partners that you want. Those are the people that you want to be working with every single day. And I have a lot of my underwriters that have agents where they see an agent that calls through, and if it's XYZ agent, that's one they're always going to pick up the phone for. They're always going to be excited to talk to. They're always going to try and help them as much as they can because they have that relationship there. And I think that that's what you lose a little bit right now in the cycle that we're in where everything is becoming so technologically driven. Technology obviously has its place, but technology isn't going to be able to help solve the problem every single time. Sometimes you need to have that relationship where you can pick up the phone and call somebody and say, hey, here's what we've got going on, and I really need to help. I need a favor. Call one in. And that personal relationship that's been built up over years, that's been built up through countless of different accounts that have been worked and understanding how we work together and generally building that trust together. That is what the basis of the business is. And the technology that is coming into the space that will help speed up the workflows, I think that'll be true. It'll help speed up the workflows. But I don't think you can replace the human element. I don't think you can replace the trust. I don't think you can replace the relationships at any level in the chain. I don't think you can replace it from our side to the retailer or our side to the carrier or from the carrier to our side, right? At the end of the day, there's somebody behind the desk that's working the account. There's somebody that's looking at this and making the decision. And having trust in those people and having good relationships with those people, that's what drives the business. And then the technology is additive, but that's what it should be. It should be additive. It shouldn't be a replacement for people, and it shouldn't be replacement for the relationships. Pricing is great. Having great pricing and having strong terms is great. But valuing who you work with and valuing the carriers that you work with, and also being able to have that conversation of, hey, this price may be really good, but here's the forms. Here's the things that you need to make sure you need to talk to your insured about. Because not only is it our relationship to the retailer, but the retailer has a relationship to that insured. The insured is trusting that retailer. So we want to make sure we're giving them the right tools there so that they can continue to have those long-term relationships with their insureds and continue to add value and trust into that chain. Because it is, it's a chain. It goes all the way from the start with the policyholder all the way to the carrier and flows through us, flows through the retailer. So all of those elements together, I think will always be incredibly important. I think it will always be something that is there in the industry. And while I think it'll change in some ways with the speed up of technology and the distribution flows and everything else that comes with that, I don't think you can ever get away from the fact at the end of the day, it's going to be a relationship business and it always has to be a relationship business. Great sentiments. There are no doubt the seeds for future success. Andrew, congratulations again to you and the team on being named among this year's fast brokerages. And thanks too, to you for watching. We'll see you next time right here on Insurance Business TV.