--:-- Ryan Hanley: Hello everyone and welcome back to another episode of the Ryan Hanley Show. Today we have a very dynamic episode, a very dynamic guest, someone who sits in a very unique and interesting position in our industry. He is Matt Masiello, the CEO of SIAA, a market access provider, an organization representing more than $8 billion with a B in premium.
--:-- Ryan Hanley: I wanted to have Matt on the show because I think that where he sits, the agencies he interacts with, the number of agencies he interacts with and represents, and how he represents them to carriers and vendors, and the way that SIAA positions themselves in the market... it's all intriguing. Matt's a great guy. From every interaction I've ever had with him, I know him to be a true advocate for the independent insurance agent and agency. It's an absolute pleasure to have him on the show and ask him about his feelings on the future of our industry.
--:-- Ryan Hanley: Before we get to Matt, I want to remind you to head on over to ryanhanley.com/insider to join a community of agents, a community of insurance professionals who are working towards growth, who are talking about topics, who are driving change in their organizations, who are looking for that competitive advantage. They're doing that through the construct of the launch of my agency, Rogue Risk. I'm taking what I'm learning every single day, every interaction, and applying that to the more than 14 years of experience that I have in the industry, mashing it all up and delivering videos twice a week, explaining what's going on in my head, what strategies I'm using, what decisions I'm making, why I'm making them. And then also injecting different pieces of insight and conversation and rumors and ideas that I'm hearing as I mix and mingle throughout this industry, trying to grow my own business and just in general being the connector that I like to be in the space.
--:-- Ryan Hanley: You only get access to that stuff if you're part of the Inside. Become part of the Inside. There's absolutely no reason not to give the Inside the 14-day free trial that you get. Go to ryanhanley.com/insider. Check it out. Sign up. Do your 14 days. You don't like it? No problem. You're not going to hurt my feelings. But if you love it, stick around and let's do something special.
--:-- Ryan Hanley: All right. Let's get on to Matt Masiello, the CEO of SIAA, the Sand Group, and the Masiello Insurance Group. My pleasure to have him on the show. Let's do this.
--:-- Ryan Hanley: Cool. So let's get right into it, man. I really appreciate you being on. We'll just kind of roll right into the show. Where I'd really like to begin with you is I'd love to hear a little bit about SIAA, the Sand Group, Masiello Insurance Group. This has been your life for a long time. I'd love to just get a little bit of that backstory. I'm sure people who know you today are very familiar with the version of you today, but what has been your experience kind of experiencing this thing and having it be such a large part of your life for so long?
--:-- Matt Masiello: Yeah, sure. Thanks for having me. I've been with the organization for going into my 27th year this year. So it's sort of all I've known and all I've done. Sand Group, as you sort of just indicated, is our operation here in the Northeast. It was started by Jim Masiello out of his own retail agency that he started. That agency actually is now 55 years old. It's still in business. Sand Group operated here across the Northeast, started in 1983. I came on board in 1993. I think we had probably 28 or 29 member agencies located here just in New Hampshire, a little bit in Massachusetts, Maine, and Vermont.
--:-- Matt Masiello: Around that same time, we were approached by some industry executives to talk about what we were doing with the business model here in the Northeast. They were sharing with us that it's a model that they thought would be great to have in other parts of the country to help independent agencies. That was sort of our goal back then, like it is today: how do we help agencies? That's where SIAA was born from. A group of us got together, led by Jim Masiello and Nick Papajohn, who are both still with us, and came up with the idea of going out and building the SIAA model around the country.
--:-- Matt Masiello: So we sit here today with about 13% of independent agencies having joined the organization. We have 48 master agencies around the country. We're just trying to help independent agencies grow and thrive. Our philosophy is if we help them and do the right things for them, then obviously we're going to get treated the right way as well.
--:-- Ryan Hanley: One of those master agencies I'm going to be speaking at in March down in South Carolina, Assure Alliance. I'm very excited to go down there. It's going to be a lot of fun. Ben Taylor and his team, one of our top organizations.
--:-- Matt Masiello: Yeah, that's going to be tremendous. I've been talking to them in the pre-calls. I'm excited to go down there. Plus it's South Carolina in March. It's not Albany.
--:-- Ryan Hanley: When I told some of the people that I know that I was speaking to you, it was awesome. Your name, you can't spend much time in our industry without SIAA coming up. Are you going to join? Are you not going to join? What's it all about? How does it work? I think a lot of people have a lot of questions. I want to spend the second half of this conversation talking about SIAA and networks, alliances, clusters — there's all these different names for different versions of things. But I want to talk about that.
--:-- Ryan Hanley: You wrote this series of articles that I found to be really interesting. A lot of it aligned very much with my own views, but I want to get your perspective on these things. I think you sit in such a unique place. Almost $8 billion in premium written. You've had over 6,000 plus agencies be part of the network. You have extensive and intensive experience. So to get your perspective on some of these topics that I think agents up and down the spectrum, carrier people up and down the spectrum are all talking about — I'd like to start there and then we'll work into SIAA.
--:-- Matt Masiello: Sounds great.
--:-- Ryan Hanley: For everyone listening, if you go to ryanhanley.com and I'll just use the title — "SIAA" will be the title of this episode just to make it easy — I'm going to have links to this article series, which I highly recommend you check out. It's both informative on what we're going to talk about and on what SIAA is all about.
--:-- Ryan Hanley: The very first point that you have in here is "Independent agents are not going away." Obviously I couldn't agree more. I'm starting in it — at least I hope that's true. But the thing that I think is interesting is five years ago when the InsurTech movement first hit the scene, it was "Oh my gosh, it's over." What do you think has maybe spurred that initial InsurTech idea of "We're going to come in and tear this whole thing down, it's broken"? And why do you think it feels like every one of those companies has now come back to the independent agent?
--:-- Matt Masiello: Great point. Thanks for referencing that series. I think that was "The sky is falling. The sky is falling." Yes. I wrote that back in 2018. One of the reasons why I wrote it is if you were looking at the trade journals and hearing some people speak in the industry, it really sounded like the end was near for independent agencies and independent agent distribution. As we started to dig deeper into some of the trends and what I would call some of the tea leaves that we were reading of what was going on in the industry, we actually saw a pretty positive story.
--:-- Matt Masiello: One of the big things that had everybody's hair on fire was InsurTech. The billions of dollars coming into the industry, starting with whatever it was, a billion and a half dollars in 2011. I think it's going to end up being $6 billion for last year. Everybody thought, "Wow, technology and innovation has discovered our industry and they're going to disrupt us." These organizations would write articles saying that we're going to replace the agencies. I even read an article at one point that talked about replacing the insurance companies.
--:-- Matt Masiello: What I believe happened with these technology organizations is they ran into three basic barriers of entry. One is in our industry, we don't have one regulator. We have 50 regulators in each state. For these folks to get into the insurance industry, they don't just have to invest in their technology product, they have to have surplus in capital. The final thing I think they ran into is the fact that we do have three pretty successful forms of distribution in insurance. Obviously, we're all bullish on the independent agency channel, but the exclusive channel and direct channel have their own market share. I think when they ran into these things, they discovered that they would be better off to come in and work with us than work against us.
--:-- Matt Masiello: I think that has created a huge opportunity. I'm actually speaking with a company in a couple of weeks at a company sales meeting where it's creating a huge opportunity. I think these investments are ultimately going to benefit us, but we have to engage these investments and we have to figure out where they can help us. I'll preface that whole thing about InsurTech going back to 2018 when I wrote that series: this is without a doubt the greatest time to be an independent agency. It's just a matter of what people do with it. Their success is going to be determined by that.
--:-- Ryan Hanley: One of the things that I've realized, and I feel like I've known this forever and I've kind of fought it, but now building my own agency, I've really realized it firsthand: every independent agency really is its own unique snowflake. That's not a negative. You essentially get to build exactly — obviously there's some standard pieces that everyone has to have, but so much of this you get to craft to be exactly what you want it to be. As much as I think sometimes from a technology standpoint that can be frustrating, it really does create a competitive advantage across the board.
--:-- Matt Masiello: It does. It's great that you point out that every agency is its own snowflake. There's a lot of discussions of "What is a digital insurance agency?" It's going to be fascinating following your journey because that's how you're starting. For the rest of us, we've had to sort of look at the retail insurance agency model and say, "How do we digitize that?" We did a study here, and it was a fascinating study. As we started talking about it, I sat in a room, and when I think of a digital agency, I was thinking marketing. But the person next to me was thinking more about service. The other person that was more of an inside person was thinking more about operations.
--:-- Matt Masiello: What we realized is it's all of those things. That's a big — you can only eat the elephant one bite at a time. That's a lot for an independent agency to think about. We developed a program where we identified four key areas: marketing, advisory, sales, service, and operations. We think those are the areas where agencies need to have a digital approach. We developed a worksheet where the agencies could go in and score themselves, maybe even use their staff to score them so they have a more accurate view. But it's got to be all of those things. It's got to be taken in small bites.
--:-- Matt Masiello: The biggest thing is we are not looking to replace the phenomenal attributes of an independent agency. The independent agency distribution channel is successful because of the agents and the people and how we do things. We are going to enhance those things with digital capabilities so they're more modern when the consumers are looking to do business with us.
--:-- Ryan Hanley: You brought up the captive market. We've seen a lot of captive carriers starting to release their captive force. I don't want to say throw them out to the wolves, but certainly force them to make decisions they've never had to make before. This is an area of expertise that obviously you guys fall into. There's a lot of captives that have started listening to shows like mine, like Jason Cass's, like some of these other insurance podcasts because they're just trying to find out where to get information. What are some things that you could toss to them just in these early days of moving from the captive world where a lot of decisions are made for them to making their own? What should they be thinking about as they move into the independent space?
--:-- Matt Masiello: For those of us on the independent side, we think this is a huge opportunity for these folks. We use the word "empathy" a lot in how we do things. I made my own mistake a couple of years ago talking to a former captive or a captive that was being sent down the path to becoming independent. It wasn't his goal to become independent. He liked being a captive. I said to him at one point, "You just don't understand how exciting this is." He looked at me and said, "Son, I feel like my mother just put me up for adoption. I've been with this company for my whole career."
--:-- Matt Masiello: As independent agencies and as SIAA, we have to understand that there's some known unknowns. These insurance companies, in some instances, have given them a path to independence, but they've really only given them a path to the door. What we want to do is sort of embrace them and help them to come over. This is a great opportunity for the independent agency channel. We should be embracing these folks coming over. They're well-trained. They have great staff. It's more market share from the exclusive channel over to the independent agency channel.
--:-- Matt Masiello: These folks really have to take some time and align themselves with an organization that knows and operates within the independent agency channel. That's not just us. There are other organizations out there. The biggest thing for these folks when they're starting an independent agency is there is no reason to learn from their mistakes or make their own mistakes when most of us have already made them. I'm a firm believer that experience doesn't only come from your own experiences. It comes from those around you that you can learn from.
--:-- Matt Masiello: I hope these folks are picking affiliations carefully. There's a lot of agencies that are part of organizations. Market access providers are sort of here to stay in the industry right now. But these folks need to realize that the needs they have in the immediate transition of becoming an independent agency and the needs they're going to have for the life cycle of their independent agency are different. I'm hoping they're asking the right questions relative to "What can you do for me today?" but also "Are you going to be there for me tomorrow?" The Big I actually put a great questionnaire out for folks to use when exploring market access providers. It's a document that we've embraced and provided the answers to. We make it part of our materials. But they've got to ask the questions and they've got to make sure they're entering into the right long-term relationship.
--:-- Ryan Hanley: I was just talking to a member of the Inside, my community, who was a former Allstate agent who became independent three years ago. We were discussing what that transition looked like for him. What's interesting about most captives is because they only had one product to sell, they had to be real salespeople. They had to sell. They couldn't just rip off the cheapest price and move on. Oftentimes they weren't the cheapest and they had to sell in a different way. Transferring that to an independent model, now you can sell that same way but with multiple carriers.
--:-- Ryan Hanley: I think a lot of times captive agents come over, they tend to be set up for success. Where they fall apart is in making these kinds of decisions. I have to absolutely echo your advice to them: join an association, become part of a group, surround yourself with other agents — whatever that looks like for you, that's the best fit. The thing that I've learned across the board starting Rogue is you do not have to do this alone. There are so many people in so many different ways, shapes, and forms that are willing to help. Do not try to do it alone. That's really the only way to fail — if you try to go out and make these decisions on an island.
--:-- Matt Masiello: Absolutely. The big part of it too is making sure you're asking the right people to help you. Not the people that don't know how to navigate in the space and not the people that have never made the mistakes that we've all made. There is absolutely positively in this business something to experience. I guess that's everything, but I think it goes doubly here. The way trends operate in our space have longer cycles. You want people who've survived, who've lived through, who've experienced some of these longer cycles to help get you there. If someone just pops up and jumps in, it doesn't mean they're wrong. You're just taking a much bigger swing in that regard. Sometimes it's nice to have a nice mix. Mix with some people that have been around for a long time. Mix with some people that have some new crazy ideas. Find out what works.
--:-- Ryan Hanley: The next thing I want to touch on from your perspective: you guys write as a collective an incredible amount of premium carriers. I'm positive that you've had the opportunity to sit in some spaces and have conversations with carriers about their future, about where they're going, what their vision is. I'm sure they lean on you for advice and feedback on the temperature of the independent channel. Where do you see — there's so much about carriers kind of jumping the agent. There's some fear there as technology becomes more a part of how carriers operate. Do you see them having a longer arm into the marketplace as a bad thing? I'm just interested in your take on that.
--:-- Matt Masiello: The question is, are we really worried about carriers going direct to the consumer? As I say to my kids every once in a while, "No" is a complete sentence. The answer is no. Let me explain why, because people look at me and say, "But you're doing business with the devil. Aren't they competing with you?" This is all about worrying about the insurance distribution channel and the perceived conflict of the different channels.
--:-- Matt Masiello: The traditional three main channels — direct, exclusive, and independent agency — we think the exclusive channel is on a downward slide. We believe the direct channel is picking up some of that premium volume. But the independent agency channel is picking up a lot of it in homeowners and small commercial. I'll come back to auto in just a second. We look at it a little bit differently. When carriers have multiple forms of distribution, they are now investing into platforms. They're investing in the products. You did a session on data last week. They're investing into using their own data.
--:-- Matt Masiello: Think about it. If we represent an independent agency company that all of a sudden has data of a huge multibillion dollar direct channel and we can have that data for a product and for dealing with our customers, that benefits us. We sort of feel like as these carriers go direct and go independent and level the playing field with product and with systems, we now have a level playing field where I personally think for the business that we as independent agencies target and want to write, we're going to win every time.
--:-- Matt Masiello: I mentioned auto because I want to come back to it. There's a place for all insurance and not all independent agencies want to write every person that comes through the door. We see the direct channel taking automobile premiums from the exclusive channel at a rate of about five to one. Five from exclusive agencies and about one from us as independent agencies. I'll talk to agencies sometimes about maybe we should consider letting the direct channel take some of that business. What I mean by that is there are some risk characteristics or classes of automobile insurance that are low limit, high service. The carriers pay reduced commissions on these products. They have bad retention. They have poor loss ratio. Maybe we should give that business to the direct channel and we should focus on clients that are worth more to our agency.
--:-- Matt Masiello: If we've got access to carriers and systems and platforms with a level playing field, and we as independent agencies know what our target market is — you and I were talking the other day about Rogue and what you're going to go after — if we know what that market is and we have the right carriers, that's a win. The direct channel isn't doing that. They're sort of throwing it all against the wall and bringing in certain risk characteristics. As independent agencies, I think we can benefit from carriers. There are great examples of carriers now that have multiple forms of distribution. While it may be really far behind the scenes, we're getting benefits from that as an independent agency.
--:-- Ryan Hanley: I agree with you. I've been on this platform for about two years now, maybe even longer. I feel like these super regional mutuals and the companies that really form the bedrock of an agency's book of business — I would love it if they reached out into the marketplace more, even if it was just from a branding perspective. Just to feel what advertising is like, what conversion optimization is like, what feedback you get. Just to have those conversations.
--:-- Ryan Hanley: Going back to my friend who was the former Allstate agent, he was talking about marketing reps coming into the office. He said, "It's hard because I'm not an expert. I can't even speak the same language. They don't even understand the basics of what I'm talking about when it comes to driving business in." I think it's because for so long the carrier has stood behind the agent. Not that that's a bad thing. I just feel like today we all need to be speaking the same language. It's okay for some of the carrier stuff to leak around the agent into the marketplace and help build that brand.
--:-- Matt Masiello: I'll make one more comment on that because that's a really good point. None of us are strong enough in this industry, and the industry itself isn't strong enough, to direct the consumer for how they're going to buy something. We can't tell somebody how they're going to buy a product online or whether they're going to go to the store. Insurance is approaching that area now where the consumer is picking the direction. At a certain level in the insurance companies, we need them to be financially stable and capturing those customers, whether it's through us or through the direct channel. As independent agencies, we need to sort of carve our own best in class out when consumers are looking for how they're going to buy insurance and show them that for their type of needs, we're the best outlet for that.
--:-- Ryan Hanley: The last question I have for this particular segment around the industry in general: everyone is talking about — there is a lot of talk around small commercial being the next blue ocean. Auto people have kind of figured out auto to a certain extent. Home is right behind it. Small commercial, not micro commercial like $500 BOPs, but that $2,500 to $10,000, $15,000 premium range — that true small commercial market feels very blue ocean. It's not automated. A lot of people don't go after it yet. It's just as clunky to service as a $100,000 account, so people don't spend a lot of time on it. Do you agree with that trend? How do you see people attacking that area?
--:-- Matt Masiello: I completely do. Small commercial is an underserved market. We all know that the larger agencies and the brokers don't even pay their producers to go after it. We heard of an agency recently that won't pay for anything that doesn't generate $10,000 of revenue. Our average premium on our small business is under $5,000 across SIAA. So we write a lot of small business. Small business is a huge opportunity. It's an underserved market for the carriers. It's a very profitable line of business, which certainly helps us as agencies relative to contingencies and additional incentives. Commissions haven't been touched in small commercial. There's a lot of great opportunity.
--:-- Matt Masiello: You do have to do it efficiently. The challenge that the larger agencies and the brokers have is they don't necessarily always have local offices. As independent agencies, we're local. We're in the community. We can write that stuff at the same cadence at which we can write personal lines business, more efficiently. We have to be careful with the touches. We have to consider service centers and self-service capabilities and things like that. But it's a huge opportunity.
--:-- Matt Masiello: We started off talking about the future of the industry and how exciting it is. We believe that the independent agency of the future is going to be a community-based organization. There's this flight to do business locally. Local businesses want you to do business with them, which means they should do business with you. Those local business owners have personal lines needs that all of a sudden become a big account when you take a look at the personal lines and the business needs. Agencies building a community brand with both traditional and digital relationships and marketing, targeting the small business in and around their community, and even targeting classes and becoming the professional in those classes, the expert in those classes, is a great way to go.
--:-- Matt Masiello: We're very bullish on small commercial. We have our own small commercial training program where we can either help agencies get more efficient at writing small commercial or we can help them transition from personal lines into small commercial. It's been a big investment on our behalf because we are so bullish on where we think it fits in.
--:-- Ryan Hanley: One more question on this, and it's very self-serving for Rogue because it's a big part of our business model: your feeling on customer care centers. I've shared with you a couple of the carriers that I'm looking at for direct appointments. A big part of my process in those appointments is, "Do they have a customer care center?" Being a one-man shop, knowing that my first hire is most likely going to be a VA for just making sure things get connected to the proper place, I'm going to leverage — whether it's during office hours or not — I'm definitely going to be leveraging the customer care centers.
--:-- Ryan Hanley: I know a lot of agents struggle with it. I talked to a very good agent in upstate New York, Mike Crowley, who said, "Look, we're 30 years in. We've never used one. Our model is to not use one. That's what we are." He wasn't anti, but he just said, "I will never go that way." I've talked to other agents who are slowly making the transition. Where do you see them falling from your vantage point? How are they important? Is it something we should leverage more? Where do you fall?
--:-- Matt Masiello: This is something I could go on for quite a while about because we've seen those tea leaves that are going on in the industry. What I'll say is, we as the agency or the industry don't have the strength or the power to tell the consumer how to buy insurance. We're rapidly approaching the time where we probably don't have the power to tell the consumer how they're going to service their insurance. It's no longer our decision.
--:-- Matt Masiello: We'll have agencies say to us, "I'm never going to use a service center because my value proposition is my service." We sort of chuckle and say, "Well, everybody thinks the value proposition is their service." They'll say, "My phone rings off the hook, so clearly my customer wants me to service them." What we'll say to them is, "Well, what about the calls you're not getting?"
--:-- Matt Masiello: And 25 to 30% of all the calls that go into customer service centers at the carriers are in off hours from when the agencies are open. Can an agency be more efficient and more effective if they're reallocating their time to business development and service, and proactive calls to business development and upselling and cross-selling, versus service with their customers? Can they be more revenue positive with that?
--:-- Matt Masiello: I think the final piece to it with us is we've actually done some pretty in-depth studies, meaningful studies. One of our insurance companies took a sampling of our member agencies with about 15,000 small commercial policies. Of those 15,000 small commercial policies, our members had made the conscious decision to put about 18% of those policies in the service center. With this carrier specifically, about 48% of those policyholders had actually registered themselves to perform some limited service online.
--:-- Matt Masiello: Bigger sampling on the personal lines side: we have a company where our members collectively around the country write about 550,000 policies. The numbers are almost the same. Agents put about 20% of those policyholders in the service center. Consumers registered for "service my policy" or "manage my policy" with that carrier over 50% of the time.
--:-- Matt Masiello: I think as agencies, we need to make sure that we're giving our clients what they want, which may be self-service at home at night, or calling the service center, or calling the agency. I think agencies moving forward need to be prepared to be an advocate when self-service or service centers or claims falls through the cracks and agency advocacy is needed. But I believe personally, we have to provide these service capabilities to our clientele because they want it. None of us want to go to the bank during the day. Do we really want to call our insurance agent at 9:30 on a Tuesday? So I think we have to be prepared for those things.
--:-- Matt Masiello: Like what you're doing, we have to figure out where they fit into our model. We had our own retail agency that didn't use service centers, even though I'm pro service center. So it's got to fit your business model.
--:-- Ryan Hanley: How do you feel? I've always believed, and my thought process and how I'm building Rogue, is I want my value proposition to be frontline underwriter and advocate. I would love to take back being the frontline underwriter for the carriers. I'm going out, I'm looking at what the risk is. I'm making determinations on what carrier it should be, what the coverage should be. That's where I'm adding the most value. And then advocacy, because obviously I did that frontline underwriting. If there's a claim, if there's a problem, advocacy.
--:-- Ryan Hanley: Processing transactional policy issues to me just does not feel like a true value add. I get that some agencies have established that with their customer base and that would be incredibly difficult to change today. I don't discount that. But for me, starting today, I struggle with it. To me, it just feels like we should be out frontline underwriting. We should be not just plopping the information into a radar, but really thinking about that risk and building a program out. That's the value.
--:-- Ryan Hanley: If that's where our value is, then our value doesn't have to be as heavy on processing a certificate, which two button clicks can do. I don't know. Do you see flaws in that?
--:-- Matt Masiello: No, I think you're dead on. And by the way, that clientele that's calling the agency is getting older and is getting more technologically savvy for how they do things and when they do things. I think your model is dead on. What I like to say is that we as independent agencies, we're not going anywhere and we're not going to be removed from the insurance transaction and that whole cycle of sales and advising and risk selection and service and advocacy. We're still going to be in that cycle. It's just where we fit in that cycle is evolving. That's what you're doing, saying, "I'm going to carve out where I fit in the cycle."
--:-- Matt Masiello: There's no right or wrong way. It's what works for us. But that becomes a more valuable value proposition when you're finding out where you fit in that, versus saying, "I answer the phone on the first ring." That's a real tangible value proposition that you're creating that makes you as an incoming agency, and some of the listeners, unique at where they fit in the process.
--:-- Ryan Hanley: We could talk about the future of the industry all day. I do want to, because a big part of this is, like I said at the very beginning, SIAA is brought up over and over and over again. It has for my entire career. You're such a staple in terms of your place. I tweeted out on Twitter, I just said, "I'm interviewing Matt Masiello, what questions do you have?" We got a tremendous number of questions. People are interested in it. I think anyone who has been in a growth phase in their business has at some point said, "Is this a good option for me?"
--:-- Ryan Hanley: I'll start with the very first question I got. This is a chance for you to talk through for people who've just said, "I've heard their name, maybe I know an agent down the road who's a member, but I'm not really sure." The very first response I got when I tweeted this out was super simple: "How do you guys partner with agents? What is that frontline value proposition when someone sits down? What is one of your master agents saying?" I know it may be a little different for each master agent, but what is that value thing that they can start to think about?
--:-- Matt Masiello: I think it actually starts with the business model. We are in a transactional industry where when a policy is written, a revenue is shared. Our model is actually not transactional. While it's very important for us to help our agencies write business, our model is actually based on them growing their overall agency from the day they join, whether they're a startup agency or an existing agency looking to access our benefits.
--:-- Matt Masiello: Our focus is broad. It's on placing business, but it's on giving them the tools to grow their overall business as an entity. Simply writing business doesn't make you successful. What are all the other things in running and operating and growing an agency that will make you successful? That's the life cycle of an independent agency. Our model focuses on the overall agency, not simply placing business. I think that's allowed us to invest in a lot of services and benefits that maybe folks aren't thinking about day one when they join, but then they're thinking about them down the road.
--:-- Ryan Hanley: The next question I got was, and this is making my job really easy that everyone had these questions: "What are some of the rewards for, and how do you become a top performer inside the SIAA ecosystem?"
--:-- Matt Masiello: Rewards are — look, we're not an insurance company, so we don't do trips and things like that. But rewards for independent agencies are their own success. It's their own success for their families, for their communities, for their staff members. What we've done in our business model is make sure that we're negotiating the best incentives with the carriers. But unlike other organizations, we're passing a majority of those incentives back down to the agencies.
--:-- Matt Masiello: We recognize agencies throughout the master agencies and throughout the country for being top entrepreneurs, community service, most profitable, fastest growth, startup agency of the year. We have these rewards in all of the master agencies. But to me, the biggest reward of the independent agency is looking at what they've accomplished and then putting pen to paper on what they can accomplish down the road. Because everything they're doing is for themselves and their families and their employees. It's not for somebody else.
--:-- Ryan Hanley: What is something about SIAA, a benefit that not enough of your agents are taking advantage of? Something that you have out there that you think is really valuable that maybe people just don't know you offer? What's that hidden benefit that you'd love to see more agencies taking advantage of?
--:-- Matt Masiello: There's actually a fairly long list, but a lot of these things get plugged in at different stages of an agency's life cycle when they're ready to do things. I'm actually going to do the easiest one, which is compensation. Money is important, but we have to write the business first. There are a lot of aggregators out there, a lot of market access providers that are talking about compensation. What's unique about our business model is because of the size of the books of business and the relationships we have with the carriers, we've got a unique compensation model that really gives our agencies five different ways to make money on a book of business.
--:-- Matt Masiello: A traditional independent agency can make money through commission and profit sharing. Profit sharing or contingencies can be an all-or-nothing thing based on loss experience. We provide a tool for our agencies to generate revenue up to five different ways on that same book of business. The fact is, in 2019, 2020, you can't run an independent agency on just the commission anymore. So how can we get more dollars with partner carriers that are good carriers for the agencies and good carriers for the clients, and in exchange for that, get more dollars into the agency's hands so they can invest into their business and their families? The quid pro quo is do business with those carriers too. It's cliché, but the money piece is a big deal. We've got local and regional incentives, but because of our national size, we have a layer of national incentives that don't really exist anywhere else that we push back down.
--:-- Ryan Hanley: The next question that came up here is the relationship between SIAA and the master agencies. I've done some work for Henry Powers before at VIAA. I think his sister still works for him and they run a good master agency in St. Louis. How does that relationship work? I think some people don't understand: "I'm a member of say VIA, or I would become one. How does that relate to the larger organization and where you're sitting?"
--:-- Matt Masiello: The SIAA master agencies are independently owned and operated businesses. We've had long-term relationships with these folks. Most of the master agencies are well over 15 years now, several of them approaching 25 years as SIAA approaches its 25th anniversary. There are 48 SIAA master agencies. We get together twice a year and then periodically in between those times for various meetings. When SIAA is with the SIAA master agencies, it's a friendship as well because there's only 48 of them.
--:-- Matt Masiello: They're independent business owners operating the SIAA model in that territory. We started this discussion with collaboration and learning from other people's experiences. The master agencies learn from our experiences. The master agencies actually share their experiences amongst each other as well. We all operate in exclusive territory, so we don't compete. We collaborate. A ton of collaboration. A lot of the benefits and services, the more institutional things, we've started at SIAA and pushed down to the master agencies, but then they've made them better and executed with them in the field.
--:-- Matt Masiello: The biggest benefit to us is that it's great we're this big national organization, but an agent in St. Louis doesn't care about Matt Masiello in Portsmouth, New Hampshire. He cares about Henry and his family supporting that agency in St. Louis. The execution of the master agencies, the fact that these master agencies are local, they live and work in those states and those territories, and they've got all their cards on the table on how they're trying to invest and help these agencies.
--:-- Ryan Hanley: Nothing against my Midwestern friends, but Portsmouth, New Hampshire blows St. Louis away. It's one of my favorite towns. My family always stops there on our way to go to Ogunquit, Maine every year. On our way through, I always make my wife stop there. I just love that town. I look forward to seeing you there this summer. Now I can say hello when we roll through.
--:-- Ryan Hanley: I want to be respectful of your time. I think the number one question, since I've started Rogue and started talking about it about two months ago, I've had a lot of other agents who are in a similar place. They started a year or two years ago, or they're very close to launching, or they're in the early stages of launching. Every single one of them, almost to a T, has said, "Should I join a cluster, an aggregator, someone like an SIAA, or even a Keystone?" These groups are all talking to them.
--:-- Ryan Hanley: I would love to know what is the decision tree they should have in their head for "I'm going to try to do this on my own" versus "I'm going to consider one of these groups." And then maybe the next level of that would be, "Why SIAA of the group option?"
--:-- Matt Masiello: Market access providers are here to stay. What gets missed in some of this discussion is, believe it or not, the carriers are now relying on market access providers. We now work with the carriers much more from a distribution standpoint than a market access provider. So they're real, they're here to stay.
--:-- Matt Masiello: The Big "I" Agency Universe Study from 2018 had some great slides on market access providers. It listed the top reasons why somebody joins a market access provider: access to standard markets, lower premium volume thresholds, the ability to compete. Lower volume thresholds give you the greater ability to compete because you can represent more carriers. Compensation was on there, a little further down. What I'll tell you is compensation is only important if you have access to competitive carriers. If you can't write the business, it doesn't matter.
--:-- Matt Masiello: Within that study, it also talked about around 50% of personal lines and small commercial lines with smaller independent agencies is with market access providers. So it's real. It's out there. As far as who to join, we just tell everybody, take your time. We like it when folks are looking at other organizations because other organizations are really different. I'll go back to that Big "I" questionnaire. I think it's a great document. When our folks go in, we actually have already written and answered the questions in writing, and we'll put it in front of the agent and say, "Here's how we would answer these questions."
--:-- Matt Masiello: Agencies also can't just be thinking about today. They've got to be looking down the path that they're going to be following and understand that they've got to align themselves with somebody that doesn't just help them write business, but helps them continue down that pathway to be successful. The struggle is real. There's a lot of choices out there. In 1983, there was maybe two organizations doing this. In 1993, when I came on board, there was probably less than half a dozen. Now there's hundreds around the country doing this. They've got to have the right fit. I think relationships are important. They've got to feel good about the people. They've got to have a good feel for these folks and enter into these things slowly.
--:-- Matt Masiello: At the SIAA level, for us and for our master agencies, we're looking for the right folks. We're looking for the folks that want to jump in with both feet and build an independent agency. Writing business is the most significant part of that, but doing business with the right carriers, running the business the right way, targeting the right business, building a business that's got a good foundation and is sustainable for the long term. That's why we have long-term relationships with our master agencies and our members.
--:-- Matt Masiello: I'll end where I began on this topic when you brought up SIAA. We are a different model. We're based on the growth of the independent agency, not just writing business. There's a whole bunch of cogs and spokes that fit into that thing for growing an independent agency over five, ten, fifteen years.
--:-- Ryan Hanley: I'm only going to kind of parrot your point. I think it is important that people take time and talk. Don't just jump at the first thing that's thrown in front of you. Take time, sit down, interview, get a feel. These are people that you're going to be doing business with for a long time, and you want it to feel good. That was a big part of the conversation when I was talking to Holly Heron from Assure Alliance. She just kept saying, "These people are like family to us." You have to make sure you fit in there. But if you do, it seems like a wonderful solution.
--:-- Ryan Hanley: Matt, I appreciate the very first time I met you, I could tell, even though I had never met you before, that you were one of the strongest advocates for this channel. I appreciate everything you do and the role that your organization plays. I just appreciate you giving us 40 plus minutes of your time to share your thoughts on the industry and to let people learn more about SIAA.
--:-- Matt Masiello: I appreciate the opportunity. I always love catching up with you, and I'm really excited to actually follow your journey as you do this. I think it's one of the more fascinating agencies that's being started right now. The fact that you're putting it all out there is great. You've got a great venue and a great voice in this. In the future, a lot of people will be learning from your experiences. The fact that you take the time to share all this is great. I'm just happy to be a small part of it.
--:-- Ryan Hanley: Thank you so much, man. I wish you all the best. Have a good one.
--:-- Matt Masiello: Thank you.
--:-- [End of interview. Promotional content follows.]
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