The Woodlands Financial Group Has a Focus on Growth

Richard “Gordy” Bunch, president and CEO of The Woodlands Financial Group, readily concedes that starting a personal lines-focused insurance business in Texas in 2001 – while the state was in the throes of the “mold crisis” – may not have been the best of plans. Nevertheless, it has worked out well for him and the company he founded.

The Woodlands, Texas-based TWFG in 2012 had premium sales of more than $267 million, representing a 28 percent growth over the previous year, and the firm is targeting another 25 percent growth spurt in 2013.

Like many others, Bunch came to the insurance industry in a roundabout way. After a stint in the Coast Guard, he became an insurance agent at Texas Farm Bureau and eventually moved to Galveston-based American National Insurance Co. as a general agent.

He was then recruited by Prudential, where they were consolidating “the various sales organizations into one PRU, one Prudential model, where you would take securities, financial planning, and multi-line agencies and have one managerial hierarchy,” Bunch said.

“That was pretty intriguing to me and was something that I believed in. … While at Prudential, I got a lot of great corporate executive training. I was able to test some of my own theories on their dime. When they decided to go public in 2000, I chose to exit and create my own environment here at TWFG, which is The Woodlands Financial Group.”

Multiple businesses comprise TWFG, including a retail insurance services branch, a managing general agency, a premium finance unit and a software company. Currently the retail insurance side of the company, TWFG Insurance Services, generates around 75 percent of the company’s premium volume, mostly in personal lines.

TWFG Insurance Services “is one entity, one agency, with 300 locations in 20 states,” Bunch said. The company has experienced much of its growth in the retail sector through what Bunch calls its “retail captive insurance agency model.”

Through that model, TWFG brings in new agents, many of whom formerly worked as agents for captive distribution insurance companies like Allstate or State Farm.

“We put them through an orientation program that talks about how to build an independent agency – most of these folks are doing it from scratch, some of them might have some legacy business that we acquire when they’re coming in – on how to market and differentiate yourself in the independent model,” Bunch said.

“A lot of the prior captive agents were heavily relying on the advertising of the Allstate, State Farm, Farmers, Nationwide companies, and so we had to give them a broader training on how to market as an independent, and then also train them on the different systems that you have to use as an independent,” he said.

“Our retail branch model is what I call an ‘agency in a box.’ We pretty much put the walls up for them and show them how to be an independent agent, provide them the access to the companies that they need to be successful, creating economies of scale [with] a group E&O program.”

TWFG has its own agency management system, Evolution Management, which also helps “control costs for these folks as they re-launch their careers,” Bunch said.

On the MGA side, TWFG General Agency has “3,000 independent agents under contract in 38 states [who] we wholesale, broker and underwrite for, and those folks would operate on their own name. They’d have their own separate E&O.”

Balancing the Portfolio

While TWFG began as a primarily personal lines agency, the company is focused on balancing its portfolio to include more commercial lines, as well as more financial products and services.

“Our plan as a company is to have a third of our revenue in personal lines, a third from commercial lines, and a third from financial services,” Bunch said.

Early on in his insurance career cross-selling needs analysis was an important part of his sales strategy, Bunch said. Cross-selling for every client was a focus “and it wasn’t uncommon for us to have five to seven policies in a household.

“That’s really what we want to be in the marketplace, is a differentiator that attracts all the lines of business with any of the relationships we have with a client, whether that originates with a personal lines policy or a commercial lines policy or a health policy, we don’t care. We want to round out the account,” he said.

Learning Independence

“Part of the motivation for what I’ve built here was to provide an opportunity to folks that didn’t exist for myself, and to create agreements and contracts that would’ve been something that I would’ve entered into myself had these opportunities existed when I was coming up and through the insurance business,” Bunch said.

“There’s really not a good way to become an independent agent. There wasn’t anything out there. Even though the associations are there, they don’t have a ‘how do you become an independent agent’ school, and, actually, a model to create successful independent agents,” he said.

Not only does the TWFG model support agents who are leaving captive systems and help them re-launch their careers as independents, it also serves the independent agencies that already exist, Bunch said.

“There’s a great risk to independent agencies out there for business continuation. Most of these folks do not have a buy/sell agreement in place, key man life insurance, or any type of transition plan for their agencies. In our retail model all that is built into our contract so a lot of folks that are in the independent channel are choosing to move into that retail model,” he said.

Bunch said much of TWFG’s growth can be attributed to its “consistent recruiting and developing of agents and relationships that are building a strong bench for us. I was just reviewing our year-end results and 100 percent of our top 40 offices grew. We’re not just getting growth from the new guys we’re bringing in. We’re getting growth from our existing agents that in separate environments may have plateaued, but in our environment, are continuing to thrive and grow.”

Aimed at boosting its sales on the commercial lines side, TWFG has a “commercial development plan where we are now educating or reeducating our existing sales force with the basics of commercial lines. We’re partnering with carriers in their training centers to make more commercial lines training available, focusing in on niche classes that we have volume and scale and marketability for, and then taking that class into the next level, which would then be your middle-market training and then your large risk management training,” Bunch said.

TWFG also has a mentorship program for agents with less than three-to-five years of actual insurance sales or management experience.

“We do have an employee development program, where we hire people with little or no experience and train them from the ground floor up, have them develop books of business, and then offer the opportunity to get themselves out of our office and go open another location,” Bunch said.

Editor’s note: Listen to the podcast interview with Gordy Bunch at https://www.insurancejournal.tv/videos/9052/.

Topics Texas Agencies Training Development