The birth of American Advantage Insurance Group
Many agencies have responded to the changing pressures in the insurance marketplace by joining forces through merger, believing that greater size will be important to future success. The four founders of American Advantage Insurance Group, LLC – Mark Lindow, Mike Plumley, Russ Boie and Bill Petersen — understood this approach, but set out to do something different when they formed their firm, best described as a cooperative venture, in June, 1997.
The key difference they created is that, unlike a merger where a parent company has full interest in agencies that join the group, agencies under the American Advantage umbrella each share ownership of the group itself. This approach allows each member agency a level of autonomy not possible in a merger.
Today, the firm is made up of not only the initial agencies brought in by Lindow, Plumley, Boie and Petersen, but also agencies throughout Wisconsin and the Midwest.
In addition to its reciprocal structure, American Advantage has an interesting approach to management. Managing members of the LLC change titles every two years on a predetermined rotation, giving each a turn in the President’s chair.
“We started this automatic rotation of structure to prevent an uncontrolled ego situation from occurring and getting out of hand,” says Lindow, “but more importantly, it gives everyone a chance to share responsibilities and, when their turn comes, to step up to the plate.”
An Impressive Debut
The first three years saw growth of over 60 percent, with the lion’s share of this amount coming from agency acquisition and internal sales. And the key to that growth? “80-hour workweeks!” Lindow says. But when prompted further to reveal their business formula, all agency partners agree that, in addition to hard work of all producers, the advantages gained by pooling resources have been critical. In fact, what most interested the four founders and subsequent partners about the arrangement were not just the market advantages gained by larger size, but also the chance to share resources – both physical and intellectual.
“One of the biggest reasons we’ve been successful is that we share everybody’s expertise,” says Lindow, whose own background in Personal Lines pairs with Plumley and Stoecker’s similar expertise and complements the focus on Boie, Peterson and Weidenbaum on Commercial Lines.
“I’ve always been of the belief that two minds are better than one any day of the week,” says Plumley, “and with six, even more ideas are brought to light.”
In addition to shared expertise, pooled resources have been important, such as in the ability to spread the cost of the group’s agency management system among members. Actively managing customers and referrals and combining persistence with expertise. “You have to be competitive in price to get in the door on a commercial account,” says Boie, “but when you get in, you earn the confidence of that individual by your expertise,” says Boie.
Naturally, greater size also equals greater opportunity for referrals. And as the agency group has grown, so has its reputation for expert service. “You’re not just [an insured’s] agent; you’re his confidant,” Boie continues. “When he starts calling you for advice, then you know you’ve established the relationship you need.”
The group now represents over 40 carriers and more than 60 Million in premium volume. For the future, the agency has a goal of being a dominant agency group in the country. With offices throughout the Midwest, they have laid the groundwork for doing just that.
“I wish I had a crystal ball!” Boie laughs. “People may think the Internet is the answer, but I believe people will still need the independent agent. People will want to talk to a live person, dealing only through the computer and an 800 number is not the answer.”
And in Wisconsin and the Midwest, insureds wanting that personal service can continue to look to the member agencies of the American Advantage Insurance Group to prove it.