Exploiting the Internet for Entrepreneurs
Featured Business - Taylor Gembridge Inc.
Paul Barnard owns, and manages Taylor Gembridge Inc. In fact he is Taylor Gembridge Inc. because he has no staff. He works from his home near Philadelphia, and more often from airport lounges and hotel rooms.
Paul got into the insurance business at the age of 16, as an office boy. Not to give any clues to his age, this was a very long time ago, back in the days when they wrote will quills on velum and had runners carry mail between offices. (Come to think of it they still do in some parts of London.)
But Paul isn't your typical insurance agent. For thirty years now he's specialized in commercial insurance for the electronics based industries.
Typically, his clients start out buying their insurance from the large companies who balance their risk across all types of business. They just get the average pricing the insurance industry relies on to spread both income and risk. Electronics businesses are severely disadvantaged by this, because they have high revenues, and premium is calculated accordingly, whereas they have very low risks, and premium isn't. In the hedge fund business they call this "mis-pricing".
Paul spotted this and negotiated special premium calculations with a small number of insurers. Then he formed industry groups, membership of which entitled his clients to the lower premiums. Clients got a lot more cover, for a lot less premium, membership of an industry group and fantastic service.
More years ago than either of us cares to remember Paul moved to the USA and subsequently worked with the Control Systems Integrator Association to set up a membership scheme based on the same model. He does the marketing and customer service and works with a broker who does the "inside" work, predominantly interfacing with the insurers.
The association benefits from incoming members wanting to benefit from the improved insurance terms, and individual members benefit from more cover, lower rates and outstanding service.
The advantages of Paul's strategy are easy to understand - readily identifiable market, proposition based on both cost reduction and service improvement, high individual sales value that repeats, and he's an expert in the field, knowing more about the subject than probably anybody in the world.
This disadvantages aren't hard to understand either. His client base is all over the USA, when a client wants to see him he has to be there. His market is limited to members of the association so when he wants to sell the insurance he needs to sell the membership as well. The opportunity to sell only comes along once per year for each prospect. Perhaps the biggest disadvantage is he's not playing on a level field.
Over the years the insurance business has grown by selling through local agents. The agents are usually the brother in law, the golfing partner, or a near neighbour. The prospect frequently offers his existing insurer the opportunity to compete with Paul's offer, and quite often they do, just to save the business - it'll go back next renewal.
The disadvantage that's no so obvious is the difficulty in scaling the business. This is a very specialised subject in a very specialised market. There's no chance for Paul to increase his capacity through hiring, because the skills don't exist.
The footnote is nobody has any sympathy for him, because he makes it look so easy.
Paul got into the insurance business at the age of 16, as an office boy. Not to give any clues to his age, this was a very long time ago, back in the days when they wrote will quills on velum and had runners carry mail between offices. (Come to think of it they still do in some parts of London.)
But Paul isn't your typical insurance agent. For thirty years now he's specialized in commercial insurance for the electronics based industries.
Typically, his clients start out buying their insurance from the large companies who balance their risk across all types of business. They just get the average pricing the insurance industry relies on to spread both income and risk. Electronics businesses are severely disadvantaged by this, because they have high revenues, and premium is calculated accordingly, whereas they have very low risks, and premium isn't. In the hedge fund business they call this "mis-pricing".
Paul spotted this and negotiated special premium calculations with a small number of insurers. Then he formed industry groups, membership of which entitled his clients to the lower premiums. Clients got a lot more cover, for a lot less premium, membership of an industry group and fantastic service.
More years ago than either of us cares to remember Paul moved to the USA and subsequently worked with the Control Systems Integrator Association to set up a membership scheme based on the same model. He does the marketing and customer service and works with a broker who does the "inside" work, predominantly interfacing with the insurers.
The association benefits from incoming members wanting to benefit from the improved insurance terms, and individual members benefit from more cover, lower rates and outstanding service.
The advantages of Paul's strategy are easy to understand - readily identifiable market, proposition based on both cost reduction and service improvement, high individual sales value that repeats, and he's an expert in the field, knowing more about the subject than probably anybody in the world.
This disadvantages aren't hard to understand either. His client base is all over the USA, when a client wants to see him he has to be there. His market is limited to members of the association so when he wants to sell the insurance he needs to sell the membership as well. The opportunity to sell only comes along once per year for each prospect. Perhaps the biggest disadvantage is he's not playing on a level field.
Over the years the insurance business has grown by selling through local agents. The agents are usually the brother in law, the golfing partner, or a near neighbour. The prospect frequently offers his existing insurer the opportunity to compete with Paul's offer, and quite often they do, just to save the business - it'll go back next renewal.
The disadvantage that's no so obvious is the difficulty in scaling the business. This is a very specialised subject in a very specialised market. There's no chance for Paul to increase his capacity through hiring, because the skills don't exist.
The footnote is nobody has any sympathy for him, because he makes it look so easy.
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