There’s so much value in remaining independent

Mergers and acquisitions have dramatically changed the landscape of the insurance brokerage sector in the past decade.

But even amid increased competition from larger firms, one agency still finds value in remaining independent. Commercial Insurance Associates (CIA), a US top 100 property and casualty insurance brokerage, recently completed a recapitalization scheme to preserve its independent status.

Under the recapitalization, 12 producers were brought into CIA’s member-owner ranks. Their equity stake gives CIA a platform for future growth and flexibility to pursue its ambitious goals, according to Will Denbo (pictured), president and a second-generation leader at the Brentwood, Tennessee-headquartered firm.

“We realized that we had been growing at a compounded rate of 29.5% over five years and that the external valuations had become significantly higher,” Denbo said.

“We knew that if we didn’t do something, we wouldn’t be able to buy out our partners and would ultimately have to sell, just like other large independent shops. We didn’t want that.”

‘Like birthing an elephant’

To recapitalize the firm, Denbo and his brother, Scott, CEO of CIA, decided to buy down producer compensation from 50/50 to 40/40 and converted the 10% buy-down into equity for the new member-owners.

“Honestly, going through this process was like birthing an elephant,” Denbo shared.

The move has allowed CIA the freedom to stay true to its entrepreneurial spirit and creative approach. At 40 and 46 years old, respectively, Will and Scott Denbo still have “a lot of headspace” ahead of them.

Over the past 16 years, the two have worked together to build CIA into a formidable brokerage that commands over $400 million in insurance premium.

“As William Wallace says, ‘Freedom is everything’,” said Will Denbo. “Independence is crucial to us. We’re young, motivated, and driven.”

With its new springboard, CIA aims to become a $100-million revenue firm in the next three to five years. The agency is looking to expand into employee benefits and life insurance while continuing to focus on its core areas like trucking and waste recycling. It currently has offices in Nashville and Chattanooga, Tennessee; Greenville, SC; Baltimore; and a satellite office in Houston.

What are independent agencies’ most significant challenges for the future?

Despite the challenges of staying independent in an industry marked by consolidation, Denbo sees the glass half full.

“As all these aggregators continue to buy these other independent firms, the successful producers don’t want to be a bird in a gilded cage,” he pointed out.

He said that by providing an alternative to the corporate environment, CIA attracts top talent looking for freedom and the ability to truly care for their customers.

“There’s so much value in remaining independent, especially when attracting and retaining top-performing producers and employees,” Denbo added.

Central to CIA’s success has been its focus on recruitment and talent development. Denbo emphasized a “grassroots” effort to attract talent through a six-week internship and mentorship programs. This effort will be crucial for the brokerage as it looks to expand its expertise.

“We want to find producers that are focused, but we’re not picky about what their vertical is,” Denbo noted. “You would likely agree that this industry is misunderstood by the outside world. Many people who go to risk management schools end up on the claims side or working for companies like Liberty Mutual or Travelers. They often don’t understand or consider the brokering side.

“Finding young talent is our biggest challenge moving forward, and we’re putting significant effort into addressing it.”

What’s next for CIA?

Succession planning is equally a priority for CIA. As producers retire, their shares will be redeemed, and new talent will be brought in.

The Denbo brothers plan to continue leading the company for many years and are confident the agency’s continued independence will attract entrepreneurial and creative individuals like them.

“We want to keep doing exactly what we’re doing,” said Denbo. “Ultimately, it comes down to one word: entrepreneur. Everyone likes to feel part of something special. In the corporate world—be it Marsh, Aon, Gallagher, or Brown and Brown—people are often put in a box within a top-down management structure.

“Our approach is to build a place where people are excited to come to work, take care of their customers, and feel appreciated. My brother and I believe in paying it forward, a philosophy shared by our dad. Impacting others’ lives positively is the greatest luxury.”

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