Q&A WITH DAVE RIVELL & JOSH HEEBNER

Element Risk Management Partners Josh Heebner and Dave Rivell opened their agency in West Chester, PA in 2011. Since then, they’ve acquired 12 agencies, expanding their footprint across Pennsylvania and into Maryland and Virginia.

Q. We understand that you two met on a job interview – for the same position! How did that play out?

Josh Heebner: Dave didn’t get the job, but I did.

Dave Rivell: Yeah right, he wishes!

Josh (laughing): We met on an interview in Chicago. The insurance company, FirstComp, had one job available, but they liked both of us, so they created two jobs…. We grew [the business] rapidly. It was a lot of fun, and it’s where we got to know a lot of the small agencies that we deal with today in Pennsylvania.

Dave: They flew us into O’Hare. All of the interviews were inside the airport. After the interviews, we ended up sitting next to each other in a bar waiting for our flight. We got to talking, and the more questions we asked each other, we realized we had just interviewed for the same job!

Josh: That was 16 years ago.

Dave: For both of us, it was our first job in the industry. Josh was selling bricks. I was selling software to the government. Neither of us knew anything about insurance. A brick salesman and a government contractor walk into a bar…. It sounds like an old joke!

Q. Eventually you both left the carrier side to work together as producers. What prompted that change, and what was the transition like?

Josh: At that point, I was working in middle management for the same insurance company. I was living in New England, and it was time to move back home. I knew I always wanted to join the agency side. So when Dave and I got together, I had done the carrier thing, gotten to know agencies, and thought, ‘This is what I want to do.’

Dave: After I left FirstComp, I worked in the premium finance industry. So once again, I got to see agencies all across the map – some high-performing agencies, some that had been around forever and had that nostalgia to them. These smaller business were really attractive to me, and I saw that you could have that local feel and still grow a very professional firm, and I had a ton of respect for those agencies. The more I got to know those people and look up to them, the more confident I was that insurance was the right industry for me.

Q. When you branched off to form Element Risk Management, what did you get right? And what do you wish you had done differently?

Josh: What did we do right? We took the risk. We kept our heads down and did what we had to do that day to stay in business. It took us a couple months to even pay ourselves a salary, which was daunting. As far as the things I wish we would have done differently, I wish we would have taken more seriously the business side of things. In insurance, accounting can get out of whack pretty quickly. Not surrounding ourselves with trusted advisors that could have helped us was a mistake.

Dave: The thing we got right was that we committed to a vision from the beginning. Everything we took on, we asked, ‘Is it scalable?’ So with the phone system, on day one we had three people in a tiny little office. But the phone system we chose can grow to accommodate 500 people across a super-regional firm.

Something we got wrong was hiring. Our hiring process today has changed so much from the beginning. When you’re barely able to pay yourself, you’re open to any producer willing to come on board. I wish we had done a better job of vetting at the beginning. These days, I’m so proud of the quality of our team and the culture we have established. Our first question now is whether someone is a culture fit for both where we are today and where the company is going. I just wish we had the same vision for our team as we did for our business when we started.

Q. You’ve grown rapidly through acquisition. How do you approach the process?

Dave: We’re keeping the heart and soul of the independent and local agency channel while still growing into a large company. We’re building a network of agencies that work together as a team. Accordingly, we’re looking at someone who cares about their team and their business as a legacy. That’s our seller.

I say that we’re someone’s third best option – our sellers wish they had a family member to pass it along to or, secondarily, an internal team that could take over. For agencies where that’s just not an option, they have that kind of love of their business, their community, and their clients and want to keep their team together and honor the agency’s legacy. And that’s where we come in.

That’s our approach: We want to stay in the community. We want to look and feel like what I affectionately call a ‘Mom and Pop Agency.’ What allows us to do that is technology. We leverage technology to operate as one even though we’re each in our own community.

Q. What’s your outlook for the M&A market? How has it been impacted (or how to you anticipate it will be impacted) by the pandemic?

Josh: Generally speaking, the pandemic will prove to be another historical marker for insurance agencies to show investors that the insurance agency and brokerage industry is worth investing in. When you look at data from Marsh, venture capital firms really got interested in insurance agencies back in ’08. Before that, acquisition by folks outside the industry was minimal. Once everyone looked at the agency data coming out of the Great Recession, they saw that, in bad times, agencies may get more profitable – hard markets come in, premiums rise, and with it commissions. I think the pandemic will be another historical marker for those exterior firms to double down on this industry. So I suspect agency values may continue to creep up as a result. For generalist agencies, value probably went up.

Dave: People run to safety in uncertain times. Pandemic aside, it’s a safe industry with recurring revenue. And when you look at the demographics of agency owners, if anything, for owners, their value continues to go up due to simple supply and demand. Right now there are far more people looking to buy than those who are looking to sell.

Q. As a tech-forward agency, what have been your most worthwhile technology investments?

Josh: There’s a couple we could point to. From a hardware perspective, our entire organization runs on Microsoft Surface. It’s great for our staff to travel between offices, to work from different locations or from home. Surface enables video conferencing, which has been huge, especially in the past year. It also allows anyone to work from any work station at any time. Being a Microsoft Surface environment, and by an extension an Office 365 environment, has been hugely beneficial for us. We started using Teams two years ago, prior to the pandemic.

We run our phones through the computers. We run our agency management system via the internet. Everything we do and every technology decision we make goes back to, ‘Can I be somewhere else and will it still work?’ Everything we have is that way, and it has been a huge asset for us.

Dave: Since day one, we’ve used the analogy that I keep gas in the tank, and Josh makes sure the engine runs well. So for me, it’s Rocket Referrals. It’s meant to get you Google reviews, but it lets us know how our clients feel about our team members. The vast majority is very positive, and we send out an email to the entire company every Friday with highlights. It has been very helpful from a culture-building standpoint. It also tells you when something’s awry, and sometimes it’s not related to us but still lets us know what’s going on. It’s been a very powerful tech tool. We’ve done a lot better with black-and-white data points, instead of gut feelings on things.

Q. Your original office is in the heart of West Chester, PA. Tell us about the town and what makes it great!

Dave: I love West Chester. People support each other, businesses rally together. It’s come a long way. A lot of developers work together with the Borough to preserve architectural integrity. It’s a beautiful town, and the people are awesome.

Josh: West Chester typifies the type of town that we have offices in across Pennsylvania and Virginia. Not always, but typically we’re in county seats, typically we’re in town. Pennsylvania has all of these wonderful towns with really great people. That’s what draws agencies to our business model – that they can operate in Hanover or East Berlin or Biglerville thanks to technology. You’ve got really great people there who can be part of something bigger but still maintain a presence in that town. So West Chester typifies what we’re going for.