Jeff Roberts, of Chula Vista California has been around the insurance industry for over 30 years. While growing up, as well as in his career path, Jeff Roberts has experienced all that the insurance industry has to offer. This has led him to a successful career in the independent insurance agency field. Being that Chula Vista is in San Diego County a few things may be different from the Central Valley. Home values as well as the cost of living are much greater in San Diego County as we have all discovered. The Roberts are family by marriage and were kind enough to share a couple hours answering questions for me, which can be seen below. Enough with the small talk, I wanted to get down to the good stuff, which began as my family and I got situated at the Roberts’ home. During Thanksgiving break of 2010 I got the chance pick Mr. Roberts’ brain as our families gathered for a traditional Thanksgiving dinner.
Q: How did you get started in this insurance business? How would I get started in the insurance business?
A: “My father has had an established independent agency for 30 years or more. So, I guess you could say that I more or less inherited it. Having a connection to, or knowing, someone who either owns or works with an established agency or company is obviously a big plus for getting started. Even if you don't, though, you'll still need to seek a position with a company or agency that can offer an initial base salary since it will take time to build a book of business from which to earn commissions. I would recommend looking for openings even before you have taken the required classes or licensing exam. Companies will often hire you and help with the expenses of getting your license. Plus, gaining working experience along with the schooling, before you become a full-fledged agent is enormously helpful.”
Q: What qualities do you look for in a potential employee? Education level, experience, etc?
A: “Well, I've found that there are two important aspects to the insurance business; sales and service. On the whole, I would say that a person's education level is not of primary concern. You'll be spending a minimum number of hours getting the education credits necessary to qualify for the license, so you do have to have the ability to fulfill this requirement. But, honestly, someone with either sales or servicing experience will likely be considered equally with someone with a college degree. Overall, personality can carry you a long way since salesmanship and the ability to deal courteously and effectively with clients is a really good key.”
Q: What is the average turnover in the insurance industry?
A: “We're a small agency and so I haven't had much experience working around a large number of other agents. However, my guess based on experience would be that overall it's probably pretty high. Speaking as an independent agent, It takes time, sometimes years, and a concerted effort to build a book of business that will allow you to be self-sustaining. If you're lucky you might inherit or be bequeathed a book of clients by a company from which to expand. Building a clientele from scratch, though, is going to require more than a nine-to-five work effort. If you're not prepared for that, it can be initially pretty discouraging.”
Q: How do you and your employees gain clients?
A: “Like any sales and service business, marketing is going to be important. Getting your name out there is arguably more than half the battle. After that, I have to say that by far the best quality of clients will come through referrals. A big reason why servicing as well as salesmanship skills are vital. You may be the best deal closer around, but you retain business and get good referrals from clients that are happy with your service. Not to say that you shouldn't try to attract the walk-ins and shoppers. But, I've found that usually you don't retain these clients at as high a percentage level that you will the referrals. Those eager to shop around will usually go to where ever the lower premium is offered which means the work put into servicing won't pay off as well.”
Q: How has the economy changed the company in regards to homeowners insurance?
A: “It hasn't appeared to me that we've seen a significant decline in the overall volume of homeowner policies. Although, we did take a significant drop in the number of new Mobile Home policies we had been writing. Really, the biggest problem the market shift has brought is in adjusting the rebuild cost estimate, which the dwelling coverage limit is based on. It's difficult trying to explain to someone why the insurance coverage estimate is coming back higher than the current market value of the home.”
Q: How does the company determine if an expansion is needed?
A: “Expanding is primarily a financial decision. In other words, do you have the capital to do it either through a loan or savings? It's going to be a risk, though, because if you make the leap and business doesn't increase that could put you in jeopardy. But, if you reach a point where the service you offer is beginning to suffer due to lack of staff or space, then the decision could be made for you.”
Q: With the increase in foreclosure rates, what percentage of your competition has closed shop from 2007 to 2010?
A: “I don't think that the foreclosure rate has really caused any insurers to leave the state.”
Q: When valuing a home for an insurance policy how do you and your employees determine the value of the property?
A: “There's a-standard software from a company called Marshall, Swift & Boeckh (www.marshallswift.com) that is commonly used to determine the rebuild cost of a property. Also, some companies supply their own rating system. It's important to remember that the dwelling coverage is based on the estimated cost to rebuild the home and not on its retail value.”
Q: Do you or your employees consult with any Real Estate Appraisers?
A: “Not really. Banks will often invoke the appraised value or the amount of their loan when requiring a specific amount of coverage. However, I like to make sure that the insured knows that by law they do not have to carry insurance more than the reasonable estimate of the rebuild cost in order to secure a loan.”
Q: When do you expect property values to increase?
A: “I'm not expecting much increase over the next few years.”
Q: With the above being said, how would you describe the strength of the insurance industry today?
A: “The insurance industry is strong, and is really tailor made to withstand economic ups and downs. It's a basic necessity in the world of business and for anyone wanting to own homes and cars and the like. The concept of pooling risk in this manner is actually kind of brilliant. I personally find people’s rejections against a mandated health care insurance odd considering we basically accept the same government mandate when it comes to something like auto insurance. Some might say we choose to own cars, but it's pretty unrealistic to suggest that for basic working people of California that a car is a luxury. Maybe for some, but not for most. The point being that insurance works best with the greatest number of participants and regulation to that effect benefits the insured and the industry.”
Before picking Jeff Roberts’ head I asked him a few questions about the insurance industry when our families got together for his mother in law, my aunt’s birthday, but none like the eleven I recently asked. I learned a lot more than I thought I would in regards to how a successful agency is run and what goes into hiring, valuing, and how they maybe hurting from the economy. It was really interesting that they use pretty much the same programs appraisers use to value property. Although there is no right or wrong way in valuing property, there are many different programs that are out there to help value property. By asking many questions I discovered experience could evolve your valuing process into such an easy process that you know before you value. This is established by many years of experience, which we have seen in class by Dr. Hansz in his valuation examples. I felt like Jeff Roberts had taken many courses in appraisal, as the terminology he used was very similar to Dr. Hansz Finance 181 course. My parents have suggested to me to open an independent insurance agency after graduation after working with Jeff Roberts for a few years and after the interview it seems to be a bright option as their agency is still doing very well. I would like to thank Jeff Roberts and his father Jim Roberts for their time and knowledge of the insurance industry.
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