Growing through the recession: Tulsa-based insurance agency expands

Not even the encroaching recession proved able to stop Bainswest.

The Tulsa-based umbrella for property and casualty agencies across Oklahoma and Arkansas anticipates 5-percent growth in 2009, owner Tim Driskill said Monday.

While that's far below the 28.7-percent jump enjoyed in 2008 premiums to $197.19 million, or last year's 20-percent revenue boost to $28.78 million, Bainswest has managed to maintain positive momentum in a recession that derailed many independent insurance agencies across the nation, as demonstrated by reports from the Independent Insurance Agents and Brokers of America and the trade publication Insurance Journal.

Projected 2009 premiums of $210 million could raise Driskill's firm a few notches among Insurance Journal's top 100 privately held property/casualty agencies nationwide. Bainswest's premium tally ranked 58th for 2008, marking the third year the parent of Tulsa's Joe West Insurance Agency made the list. Bainswest placed 47th by revenue.

"For a small market, that's pretty good," Driskill said.

His firm marks one of three Oklahoma agencies in the top 100. Oklahoma City-based Insurica ranked 21st with 2008 property and casualty premiums at $367.46 million, while Tulsa-based CFR placed 71st with 2008 premiums of $156 million.
Driskill calls Bainswest a "group cluster" of agencies he's acquired over the last three decades, many centered around Oklahoma's second-largest metropolitan area. Although they continue to operate under their original names, targeting commercial customers, their combination under Bainswest provided size and operating synergies that improve their competitive strengths.

"When I took over Joe West, our premiums were under $5 million," Driskill said. "Today our commissions are over $5 million. So it's been a good, steady growth period from 1986 until now."

Besides Joe West Insurance, which Driskill operates in downtown Tulsa's Beacon Building, the Oklahoma State University graduate has acquired two other agencies in Tulsa as well as independents in Broken Arrow, Vinita, Grove, Sapulpa, Sand Springs, Blackwell, Ponca City, Lindsey, Ardmore, Oklahoma City, and the Arkansas communities of Siloam Springs, Springdale, Mountain Home and Harrison. A Bainswest agency also opened an office in Fayetteville, Ark.

That gives Bainswest a work force topping 200.

While the recession could open further acquisition opportunities, Driskill has none in the pipeline. Two key factors - high insurer capacity, which increases competitive factors and lowers agency commissions, and tightened customer bottom lines - present stout hurdles for growth.

"It's not unusual to see a 5- to 10-percent deduction in the renewal of a customer," he said. "I don't think anyone's forecasting that to change until 2011, 2012."

Driskill attributed Bainswest's 2009 expansion to new business driven by referral and product options many independent brokerages overlook.

Accounts receivable insurance presents a strong growth area, he said, especially in today's recessionary environment. While many P&C policies may cover damaged or lost records due to a fire or other event, Driskill said the Bainswest agencies offer true bad-debt insurance policies through the European firm Euhler Hermes.

"In Europe, 70 percent of firms buy bad-debt insurance," he said. "In the U.S., only 5 percent buy it. That's because they don't know it exists.

"In an economy like this, you see a lot of interest in it when you talk about it," he said. "Many banks now require their customers to carry this insurance."

Bainswest also seeks potential growth in equipment maintenance contract replacement insurance, for everything from computers and copiers to escalators and heating and air systems. Since traditional extended-warranty contracts involve a tremendous markup, one his program may reduce while still generating profit, Driskill sees this product as a way for clients to save money while boosting his bottom line.

For state and city governments struggling to meet budget projections, Driskill suggested this could prove a godsend - although since many agencies and purchasing departments do not track such spending, delivering those savings presents special challenges. Just getting a study of state resources required legislative approval, said Driskill, who has pursued this for five years.

Driskill said a program implemented with the Oklahoma Tax Commission recorded just under 20 percent in savings. He is working to expand this to the Department of Human Services and other arms of the state.

"We think we can save the state of Oklahoma a minimum of $10 million a year with that program," said Driskill. "At the time the state is hurting for money, we think it has merit."

The company also draws strong revenue streams from the aviation and public school sectors.

Bainswest offers life insurance and other employee benefits through four-year-old subsidiary Bainswest Benefits, which recorded $68.26 million in premiums last year. Driskill expects it to end 2009 around $70 million.