Coast to Coast

Barry Lorenzetti has built a winning team across the country through BFL Canada's private ownership model

In his book, BFL The First 20 Years, BFL Canada founder and CEO Barry Lorenzetti begins his story not at the beginning in 1987, but in 1996 on the eve of the company’s signature triumph: winning the Hockey Canada account. BFL was aiming to handle the general liability and accidental death and dismemberment insurance covering over 500,000 amateur hockey players from coast to coast. Lorenzetti’s descriptions of the negotiations and strategy meetings possess the drama of a game seven in overtime, and with good reason.

“Winning the Hockey Canada account put us on the map, really,” says Lorenzetti. It helped establish BFL as a truly national brokerage with a large national account and served as a catalyst for winning similar business.

In the time since the company scored that OT winner, BFL has grown to become Canada’s largest privately-owned brokerage, with over 350 employees in eight offices from Vancouver to Halifax, writing over $400 million in premium. That’s all pretty impressive, but Lorenzetti’s ambitions for the company go much further.

“We haven’t accomplished anything yet. We just started. We want to be the biggest in Canada,” he says. Lorenzetti’s dream is for BFL to maintain its Canadian ownership while providing corporate Canada with an alternative to the publicly-traded global firms. “I hope they’re going to recognize there most definitely is a third national player.”

The Private Model

In discussions about how BFL differentiates itself in the Canadian marketplace, Lorenzetti comes back again and again to the company’s private ownership model and the culture it creates. A native of Montreal, Lorenzetti’s first experience with a privately-held Canadian firm came in the Quebec office of Tomenson Saunders Whitehead (TSW) in the early ’80s.

A major draw for Lorenzetti and other young executives was a culture that encouraged ambition and the opportunity to work on the accounts for prestigious Canadian corporations such as Domtar, Massey Ferguson and Conrad Black’s Argus Corp. Lorenzetti rose quickly to the position of executive vice president. But after TSW was purchased by English firm Sedgewick, he soon found himself on the wrong side of the firm’s politics and out of a job.

After “moping for a few months,” Lorenzetti took control of his destiny and formed BFL with two other colleagues. His vision was to create a privately held company with Canadian ownership that would appeal to Canadian businesses. At the same time, he wanted to ensure that the ownership model would foster an entrepreneurial culture that would drive the firm’s success.

“What was important for me was to put together a formula that would encourage individuals to come to us. We had to be different than Marsh and Aon.”

He created a system that allowed staff to become equity partners in BFL by meeting certain growth targets, and thus have more of a vested interest in producing new business and ensuring their clients are well serviced.

“Those that have the drive and entrepreneurial spirit that want to work in an environment like ours, it’s automatic that they’re going to be confident,” he explains. “That confidence is exuded in the way they’re going to service their clients. It’s a carryover. Because if they hold onto those clients, they will benefit as prospective shareholders,” and go forward and look at new business opportunities in turn. BFL boasts a 97% client retention rate as proof of the entrepreneurially driven service of its employees.

Lorenzetti explains further that the private ownership model keeps the firm nimble at the local level by giving employees in BFL’s offices across the country the opportunity to own up to 30% of the local operating company, with the potential to transfer those shares into the national holding company, First Lion Holdings Inc.

“By having that local management (own) up to 30%, you really get the flare. They’re operating it as if it’s their own company,” he says. “The individuals that want to stay at the public companies look at it as security, which I think is ill-founded today. After 24 years, our business model and culture continues to attract young professionals. They see very clearly the opportunities within a private versus public firm. This is a more demanding generation and our business model meets their needs.”

In addition to the financial rewards, the employee ownership model at BFL means that shareholders have a meaningful say in the direction of the company. John Wright, BFL’s executive vice president for Western Canada, is himself a former employee of a public firm who joined the company in 2004.

“The head offices of the global public firms, where all the major decisions are made, are outside Canada. BFL is 100% owned by Canadian employees who understand the Canadian environment and make all major decisions,” says Wright. “It can be frustrating for Canadians working for the public firms in a leadership role as head office of the public firm often views Canada as a branch office.”

Wright points to a recent series of “think tanks” Lorenzetti organized with BFL’s divisional leaders as well as non-management staff as evidence of the company’s inclusive culture and management style.

“That’s very refreshing where you have a CEO travelling across the country, wanting to spend time with a lot of the younger people in the organization to get their input into where they think BFL should be going in the next five or 10 years,” says Wright.

Growth Strategy

From the beginning, Lorenzetti decided that the best way to grow the firm quickly was to specialize in a handful of niches as a path to becoming better known. He refers to this as the “Blue Ocean” strategy of becoming established in a field where there are virtually no competitors, citing the example of another Quebec-based business success, Cirque du Soleil.

“As Jim Collins said in his book Good to Great, it was the hedgehog approach. Not being a fox and running after all the business, but being more of a hedgehog and focusing on the business that made a lot of sense.”

One of the niches BFL decided to focus on was amateur sports and sporting associations, which ultimately led to the Hockey Canada account. In keeping with another tenet of author Jim Collins, Lorenzetti also knew that achieving success in specialized niches like this one required putting the right people with the right knowledge in the job. To that end, he lured sports specialist Jim Stirling away from Sedgewick, whose experience in this area was critical to putting the puck in the net for Hockey Canada.

“(Stirling) said to me at that time that had he still been with Sedgewick there’s no way they would have landed this account. He said it was because of the involvement from the president level down (at BFL), that everybody got involved at different levels to bring this piece of business in.”

BFL helped Hockey Canada save over $2 million a year in premium; money that can be put right back into coaching and training for children playing Canada’s national sport, notes Lorenzetti.

“The reason I put that example in the book was I wanted all my prospective employees and major clients to understand what our culture is and what it means to have BFL as your broker.”

Fifteen years later, the account is still a centerpiece for the company and a showcase for its by-Canadians-for-Canadians value system. BFL awards 13 scholarships of $1,000 each annually through Hockey Canada and Lorenzetti himself is now on the executive committee of the board of the Hockey Canada Foundation.

“I have two passions within the Foundation itself. One is our Dreams Come True program where we help kids and families that don’t have the means to enlist in hockey and go to hockey schools, buying equipment for them.”

The second passion he mentions is raising money to build new rinks and facilities, noting that 65% of the rinks in Canada are over 40 years old.

“We collaborated with the Montreal Canadiens Children’s Foundation in December where we donated over $400 thousand so they could build a third rink in the Montreal Community, which is within walking distance from where I grew up and played on a manmade rink,” he says, recounting what an emotional experience it was to give the opening address on behalf of the Foundation.

Major League Competition

As BFL has continued to grow and open offices throughout the country, it has staked its place in more traditional areas of commercial insurance, such as transportation, construction, manufacturing and a host of others. Competition in these fields is obviously more intense as BFL goes head-to-head with the global firms. Even in the specialized niches, new firms have sprung up attempting to emulate BFL’s success.

But once again, Lorenzetti comes back to BFL’s ownership model and business culture as the key difference maker contributing to the company’s success.

“We’re pretty unique in the sense that we see a lot of RFPs out there. We kind of pick and choose the ones that we get involved with,” he says, explaining that BFL won’t hesitate to walk away from an RFP if it becomes apparent that the prospective client is shopping its business for the sake of getting concessions from its existing broker. “We don’t like to be used,” he says.

“If it’s a question of our people against their people and not the brand, because they’ve been around for 100 years longer than us, we win.”

Lorenzetti acknowledges that acquiring new middle-market business has become more difficult in the soft market conditions of the past few years.

“Why are we still able to pull the rabbit out of the hat? For the simple reason that we still have a tremendous relationship with the insurance markets,” he says. Lorenzetti credits Jacques Dufresne, BFL’s Eastern Canada executive vice president, with an excellent job in maintaining those relationships and consistently developing new programs with the major insurers that drive the company’s core business forward.

“The vast majority of companies in Canada have less than 20 employees,” explains Dufresne, “and the way to do business with them is to do it through programs, so we definitely want to go further in this area.”

Dufresne cites programs for taxi fleets, retail store owners and franchisees, trucking owner operators and a range of programs for various professionals as some of the BFL’s recent successes.

Next Steps

Despite BFL’s dominant position in the Canadian marketplace, Lorenzetti’s sentiments about just getting started clearly inform the company’s business plan for the next few years.

“We don’t have the market share in the niches that we want and we feel that there are lots opportunities to continue to grow our market share in the niches we choose to be in,” says John Wright. “Our target market is mid market and niche business. But we’re starting to get our share of risk management accounts as well.”

Becoming a viable alternative to the global, publicly-traded firms for large, risk-managed accounts means developing the resources and reach of a global player. BFL has made progress recently in that area as well. In 2008, BFL formed a relationship Kansas City, Missouri-based Lockton, the largest private brokerage in the world, with over USD $1 billion in gross revenues in 2010.

“That’s opened up numerous doors with Lockton handling the international businesses of some major risk managed accounts that we have now become involved with,” and providing BFL with representation in over 100 countries through Lockton, says Lorenzetti.

Lorenzetti also stresses that the alignment with Lockton was carefully chosen because of the value system and culture shared by the two companies. BFL’s financial results speak strongly to the success of that culture.

“Our revenues grew 11% in 2010 over 2009,” says Lorenzetti. “I’d certainly challenge that of any other public house in Canada. That’s significant for today’s market.”


Advice for Young Brokers

“My advice would be to make sure that you balance your life. I would suggest to you that it is the most difficult challenge, even moreso than building your own company.”


Transportation Expertise at BFL

One specialty where BFL has had great success over the years is transportation and trucking. It’s also an excellent example of the importance of putting people with the right knowledge and skill set in the right positions. Sherry Orr, BFL’s national practice leader for transportation based in Calgary, is a veteran of the industry herself, having run her father’s trucking company for over 20 years. Orr says that level of knowledge and passion is required in an industry where the clients are increasingly sophisticated.

“They’re not the kind of people that you think of (from) back in the ’70s like ‘B.J. and the Bear,'” says Orr, referring to the ’80s TV show featuring a trucker and his pet chimp. She points out that her level of knowledge helps underwriters understand the business better as well.

“Often times I’ve sat at a lunch meeting with pen and paper and drawn trailer configurations to try to explain to an underwriter who maybe does not know what a long combination vehicle is or what a super B train is.”

As the trucking industry becomes more competitive, owners are taking a closer look at their insurance costs. While owners and drivers are used to having a handle on things like fuel and equipment costs, “insurance just seems to be that one unknown factor that people are starting to get more educated about,” says Orr.

Jacques Dufresne, BFL’s executive vice president for Eastern Canada, points out that premiums can blow up a trucking company’s balance sheet in a hurry. Larger claims can cost up to $10 million. “If you injure someone or kill someone in the States and you’re at fault, it can be very expensive,” he says. To counter these risks, BFL focuses on loss prevention strategies. Orr also points out that her staff is heavily involved with the industry, volunteering at association functions such as the Professional Truck Driving Championships.

“One thing that I love about the industry is that you will never ever replace a truck. Technology will change but the fact of the matter is we’ll still need someone to drive that truck to get goods from point A to point B,” says Orr.


Copyright 2011 Rogers Publishing Ltd. This article first appeared in the April 2011 edition of Canadian Insurance Top Broker magazine.

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