Understanding Middle Market - Part 1

08/18/23 • 25 min

In this episode of The Power Producers Podcast, David Carothers and co-host Kyle Houck discuss the complexities of the middle-market insurance business.

Episode Highlights:

Kyle believes that when determining if a company is middle market, revenue is a more important factor than the number of employees. (2:41)
David mentions that segmentation of the middle market is important, as there are different levels within it and agents need to consider their carrier mix and risk tolerance when prospecting. (6:27)
Kyle discusses the importance of accurately representing your business to your insurance carrier to avoid potential coverage issues. (11:28)
David explains that understanding the risk profile and insurance needs of middle market companies is crucial, as their coverage requirements can be significant and complex, requiring educated decision-making and potentially assuming some of the risks themselves. (12:19)
David discusses the challenges of operating a middle market company versus a small commercial one, using a plumbing company as an example. (14:19)

Tweetable Quotes:

“I could have 100 employees, but our revenue is low because of our industry. And so I wouldn't consider that middle market. I could have 10 employees, and we could do 5, 10 million in revenue. And I would consider that middle market, you know, so for me it's revenue.” - Kyle Houck
“It's important to know if you're going to go into the middle market, or you want to even look to see what the opportunities are there understanding what the industries are that live in the middle market there, then you've got to overlay that with your carrier mix, because that'll tell you whether or not you even have the ability to write coverage for these people. ” - David Carothers

Resources Mentioned:

In this episode of The Power Producers Podcast, David Carothers and co-host Kyle Houck discuss the complexities of the middle-market insurance business.

Episode Highlights:

Kyle believes that when determining if a company is middle market, revenue is a more important factor than the number of employees. (2:41)
David mentions that segmentation of the middle market is important, as there are different levels within it and agents need to consider their carrier mix and risk tolerance when prospecting. (6:27)
Kyle discusses the importance of accurately representing your business to your insurance carrier to avoid potential coverage issues. (11:28)
David explains that understanding the risk profile and insurance needs of middle market companies is crucial, as their coverage requirements can be significant and complex, requiring educated decision-making and potentially assuming some of the risks themselves. (12:19)
David discusses the challenges of operating a middle market company versus a small commercial one, using a plumbing company as an example. (14:19)

Tweetable Quotes:

“I could have 100 employees, but our revenue is low because of our industry. And so I wouldn't consider that middle market. I could have 10 employees, and we could do 5, 10 million in revenue. And I would consider that middle market, you know, so for me it's revenue.” - Kyle Houck
“It's important to know if you're going to go into the middle market, or you want to even look to see what the opportunities are there understanding what the industries are that live in the middle market there, then you've got to overlay that with your carrier mix, because that'll tell you whether or not you even have the ability to write coverage for these people. ” - David Carothers

Resources Mentioned:

Previous Episode

Gaining A Life Perspective with Jeffrey Seidel

In this episode of The Power Producers Podcast, David Carothers interviews Jeffrey Seidel, Owner of Northshire Insurance. Jeffrey shares what led him to be the first person in his town to open an independent insurance agency focusing on excellent customer service and how the agency uses technology to stand out.

Episode Highlights:

Jeffrey shares his journey and how he got introduced to the insurance industry. (4:17)
David discusses the challenges of starting his own agency, the importance of work-life balance, and the value of investing time in his children. (13:19)
Jeffrey mentions that he sold everything, including his house, and realized that he needed to focus on personal growth rather than material possessions due to his humble upbringing. (22:38)
Jeffrey shares his commitment to helping others and being present for his son, even if it means making sacrifices in his career and moving to a different location. (26:16)
Jeffrey discusses his journey of overcoming challenges and finding hope in building his insurance agency, inspired by other agents and driven by the desire for a simpler life. (33:22)
Jeffrey explains the value of peer-to-peer mentorship and the importance of attending events to connect with like-minded individuals in the industry. (55:04)

Tweetable Quotes:

“I explained to some of the clients that the fact that I'm coming in now gives me an advantage because I'm coming in with the technology and all the new learnings...it’s priceless compared to antiquated agencies that are still struggling with using a computer.” - Jeffrey Seidel
“I'm growing, and I'm getting to meet and talk to and develop that rapport with every single one of those clients that I do that, and they're the ones that help grow the agency.” - Jeffrey Seidel

Resources Mentioned:

Next Episode

Captivating Risk Transfer with Jarid Beck

In this episode of The Power Producers Podcast, David Carothers interviews Jarid Beck, Co-Founder of Risk Management Advisors. Jarid discusses his expertise in the captive space, and how agents can introduce captives as a solution to their prospects and clients in the middle market arena.

Episode Highlights:

Jarid mentions that Risk Management Advisors’ specialty is helping individual business owners restructure their insurance coverage through single-parent captives, particularly focusing on workers' compensation, general liability, auto, property, and excess lines of coverage. (7:00)
Jarid explains that setting up a captive insurance company requires a long-term strategy, confidence in losses performing well, and understanding that it may not be cheaper in the first year but can reduce overall costs of risk over time. (11:45)
Jarid discusses the key mistakes to avoid when setting up a captive insurance company are taking on too much too quickly and under capitalization, so it's important to take a phased approach and ensure adequate funding from the start. (20:00)
Jarid mentions that the process of setting up a captive insurance company has become faster and more efficient, with approval times ranging from 5 to 8 weeks, depending on the complexity of the goals and objectives. (29:35)
Jarid mentions that Captives can be used as a cost-saving tool and brokers should be discussing these options with their clients to avoid losing business to competitors. (39:32)

Tweetable Quotes:

“Our primary specialty is single parent captives or pure captives, which is a captive that is really set up to write the insurance or serve the interests of one company or their family of companies.” - Jarid Beck
“The whole point of captive is to optimize premium spend, but it's also to develop partnerships. Everybody's interests are aligned, right? Everybody wants the losses low, the underwriting profits high, and it becomes less about price and more about quality. That's what we strive for with a lot of our clients” - Jarid Beck

Resources Mentioned: