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Independents find going it alone anything but easy

Surviving in the competitive insurance industry is difficult for small independent agencies. Some are banding into networks to increase their chances.

When Tim McGuire left giant Allstate to form a small independent insurance agency in Largo 10 years ago, the country was in the middle of a recession.

Then the bottom fell out of Florida's property insurance market. "We opened our doors and Hurricane Andrew came in," recalled Dawn McGuire, Tim's wife. Insurers refused to write homeowners policies in the state after Andrew devastated South Florida.

Unable to get a bank loan, the McGuires cashed out a pension plan and ran up $25,000 in credit card debt. It took six years to pay off their debt and build their company, Patrons Insurance, into a profitable enterprise.

Still, Tim McGuire thinks it could have been worse: They could be starting out today.

"The commissions are not as high," he said, "and the competition is rough."

Even as a surge of new recruits comes into the independent agency business, agents are facing more challenges than ever. Many small independents are banding into networks or selling out to growing regional players such as Tampa's Brown & Brown.

Independent agents have to get "appointments," which are contracts to sell policies for insurers. The bigger the insurer, the tougher it is to get appointments.

"There are all types of windows and doors to get into the business," said Rick Pullen, editor in chief of Independent Agent magazine. "If you just go hang up a shingle and think you can get all these big companies to let you write them, you're wrong."

Getting appointments became harder after the growth of large regional independent insurers such as Brown & Brown. Cobbled together through the acquisition of about 100 small agencies, Brown has the clout to negotiate exclusive contracts to sell certain policies for companies such as Travelers, Fireman's Fund and Hartford.

Roy Bridges, Brown's regional executive vice president, said the big insurers are making sound business decisions. "Obviously, it's more cost-effective for them to do business with agencies that can give them more volume."

Until recently, independent start-ups had few choices except going through a middleman, either a broker authorized to write policies for an insurer or a managing general agency, which distributes a smorgasbord of policies to small independents. In either case, the independents could expect to give up about a third of their commissions.

Sensing an opportunity, a couple of Florida insurance agents two years ago created the Accord Insurance Network to give some small agencies more clout.

Accord takes no commission cut. Agencies pay a fixed monthly fee based on the size of their business and, in turn, get access to Chubb, MetLife, Travelers and dozens of other insurers. "Why would you want to place a million dollars through me and let me keep $30,000 to $40,000 of your commission?" asked Norman Sapp, an agent in St. Augustine who co-founded Accord.

So far, 21 agencies around Florida have joined and up to a dozen more are considering it.

Among the converts are the McGuires, whose Largo insurance agency became part of the Accord network a year ago.

Tim McGuire thinks the investment, which runs about $100 to $300 a month depending on the size of an agency, has more than paid off.

"You've got to have something like Accord to survive," he said. "I don't think you can do it on your own. Not anymore."

_ Jeff Harrington can be reached at or (813) 226-3407.