Stefan Dubowski
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Big on Small Business | Canadian Insurance

Big on Small Business

Atkinson & Terry's Steve Sache believes that with the right business structure, his brokerage is poised to succeed with SMBs

Perhaps it’s fitting that a brokerage targeting small and mid-sized businesses (SMB) would have such humble beginnings: Now with 18 locations around the Greater Vancouver Area, Atkinson & Terry Insurance Brokers started operating out of a converted chicken coop in 1971.

In fact, the company began as two separate brokerages in the late 1960s, one operated by Don Terry, the other by Brent Atkinson. They formed a partnership in ‘71, set up an office in Delta, BC – the chicken coop – and never looked back. Don Sache joined the partnership in 1973. Since then the brokerage has been building a customer base for personal and commercial insurance.

This is a family business. The original partners still play leadership roles. The second generation – Steve Sache, son of Don Sache; and Steve Terry, son of Don Terry – handles the business. The younger Sache helms day-to-day operations, including products and market relations; the younger Terry is head of HR and recruitment.

In the last few years, the firm has put more of an emphasis on commercial insurance, paying particular attention to the many SMBs in the Fraser Valley. Judging from Industry Canada’s figures, it’s a smart move: The government says 98% of the country’s companies qualify as SMBs, and small businesses employ 48% of the labour force.

According to Steve Sache, the SMB space is challenging, in that premiums – and margins – tend to be low at the beginning. But companies grow, and their insurance needs increase over time. In an interview, he explained how Atkinson & Terry has changed its business structure to capitalize on commercial, the challenges the company met as it changed, and how the firm is turning issues into opportunities to shine, even in an uncertain economic climate. 

Retail Presence

A decision made many years ago helped plant the seeds of SMB success. When the Insurance Corporation of British Columbia (ICBC) was established in 1973, Atkinson & Terry decided to open retail locations in highly visible areas – street-level storefronts, at a time when many other brokerages resided in more traditional office settings.

“A lot of people thought that the sky was falling, that this was going to be the end of the independent broker,” Sache says of ICBC’s inception. “Our founders saw it as a real opportunity… Insurance would be more of a retail-based product, and they were absolutely right.”

Thanks in part to its highly visible locations, Atkinson & Terry attracted plenty of customer attention. And before long, the company found that customers seeking commercial coverage were coming in to the accessible retail branches to discuss insurance products.

Around 2006, Atkinson & Terry decided to put more of an emphasis on the potentially lucrative commercial segment. A change in the business structure would play an important role in helping the company succeed. Recognizing a need to streamline its operations for improved efficiency – and the ancillary benefit of lower operating costs – the firm moved its commercial business processing, including lead review and follow-up, out of the individual retail locations and into the Delta HQ.

“It brought in a higher level of service standards, and it was easier to manage,” Sache says. “And it gave us a much higher level of service consistently. At a small office, if you have one person who’s strong in commercial insurance and they’re away for whatever reason, it’s a bit of a problem for service and for clients. Here, we have a team of commercial people, and that’s all they work with.”

A potential pitfall: resistance among branch staff. Atkinson & Terry had to walk a fine line between efficiency and employee expectations.

“We really had to be careful to get buy-in from all our staff,” Sache says. “We developed a strong referral system for compensation for our frontline employees, and it’s been embraced really well. We get a strong flow of business leads every day from our 18 locations in the field.” 

Challenges for SMBs

Those leads would amount to nothing if Atkinson & Terry lacked understanding of the risks that small-business clients face. Sache says SMB issues usually relate to working capital. Start-ups often lack substantial financial backing, so they don’t have the resources to absorb insurable loss. Atkinson & Terry works with customers to ensure clients understand the risks.

“That’s the beauty of some of these small-business products,” Sache says, pointing out that carriers over the last few years have developed products that speak specifically to small businesses. “They’re fairly cost-effective and they offer high limits of liability and a broad scope of coverage. And in many cases, depending on the type of business operation, they include very high limits of business interruption.”

Working with SMBs can be rewarding. “I can think of a couple of accounts that we’ve written that, when they started out, they would have qualified as small or medium business,” Sache says. “They were young entrepreneurs with an idea and a plan with best efforts. Next thing you know, 15 years later, they’re a market leader in their industry, and they’re a large client.”

“For our small-business team, that is one of the real benefits of not having high minimum premiums and not having large account targets all the time.” 

Industry Issues

Atkinson & Terry has built its business on the business of building. “A lot of our business in our region is in the construction area,” Sache says, noting that a mix of foreign investors, Canadians seeking the West-Coast lifestyle, and large-scale events such as the Olympics helped feed the need for residential and commercial construction for a number of years. “We’ve had such a rapid boom since – well, basically since the company has been open.”

That so many of the firm’s clients work in construction means Atkinson and Terry is vulnerable to changes in the real estate arena. With the global economy lurching between recession and recovery, many of the brokerage’s customers are struggling.

“We’re starting to see some more construction projects come online and the economy seems to be slowly picking up speed, but I would say it’s still fairly quiet,” Sache says.

Despite the difficult economy, Atkinson & Terry has not had to lay off any staff members – something many companies have had to consider. Still, finding new revenue sources is imperative.

“The next steps over the next few years are more people in the field,” Sache says. “We’ve added some people in the last while in the firm to do that job, and we’re going to continue to focus on that area in the future, to get more feet on the ground.”

Despite the commercial push, two thirds of Atkinson & Terry’s property and casualty revenue still comes from personal lines ($33 million in total P&C). In addition, the firm has a large auto volume as one of BC’s largest independent Autoplan providers.

“I would like to see more balance,” Sache says. “I would also like to continue to grow some of the niche-product lines, from marine to travel.” He points out that not many of the brokerage’s competitors offer those services, and he’s convinced that the company’s centralized setup would afford efficiencies in the niche-product lines inasmuch as it has helped the commercial business.

As for challenges facing the entire industry, Sache says one of the biggest has to do with balancing customer service and automation. On one hand, brokers generate business and keep clients by offering personalized service. On the other, however, is the drive towards technology, which could distance the broker from the customer.

“There’s a lot less one-on-one discussion; you don’t get the same connection,” Sache says, adding that he’s worried that the tech trend may well impact brokers’ ability to forge strong relationships with clients.

“And then, unfortunately, the only time you’re actually picking up the phone to deal with people is when there’s a problem. We become in charge of putting out fires as opposed to building relationships. I think we have to be aware of that and make sure we put the extra time in to be able to build our relationships and to take a moment to get out to see customers on a one-to-one basis.” 

Personal Success

So how did Sache get to where he is today? By starting early and working hard. He joined Atkinson & Terry right out of high school in the late 1980s, beginning in the mail room and working his way up through the business, holding various positions such as autoplan representative, personal lines representative, and eventually branch manager. In 1999, Sache became a partner in the firm.

He carries on the Atkinson & Terry tradition of community involvement, notes Tony Hayes, Canada director of national sales and distribution, Royal & SunAlliance (RSA). While the brokerage continues to foster strong ties with the municipalities in which it has branches (coaching youth sports, for instance), Sache has also been a member of the young brokers association, and he has participated in events held by the Insurance Brokers Association of B.C. (IBABC).

“Steve is someone you’d go to to get a pulse beat of what’s happening,” Hayes says.

Whatever became of the chicken coop that Atkinson & Terry initially started in? Sache says it was torn down many years ago. But no surprise, the brokerage counts the carpet store that occupies the space now as one of its customers.


Advice for Young Brokers

Sache says it’s important to maintain relationships. The people you meet today could be important allies in the future. “It’s a long race, and the relationships you build early on will pay dividends down the road.”

Working with SMBs is a good way to begin a career, because it exposes the broker to many different kinds of industries, he says. “It’s a great place to get your feet wet in some training and to meet some good people, and determine whether or not commercial insurance is for you.”


Copyright 2011 Rogers Publishing Ltd. This article first appeared in the October 2011 edition of Canadian Insurance Top Broker magazine.