Lew Kachulis, the President of Synergy Comp Insurance, grew his company’s revenue from $11.5 million in 2014 to $18.5 million in 2017, a 61% increase, and to over $23 million in 2018.
Synergy Comp Insurance is a monoline workers’ compensation carrier that helps companies create safer work environments.
In this interview with Eversprint‘s Malcolm Lui, Lew shares how he and his team accelerated their high value sales by:
- Lowering the total direct and indirect cost of workers’ compensation by helping businesses improve their safety and claims handling.
- Building a network of independent insurance agents who appreciate the long term total cost savings of their product.
- Expanding into new states to grow their market.
Malcolm Lui: Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Lew Kachulis, the President of Synergy Comp Insurance Company, a monoline workers' compensation carrier that helps companies create safer work environments. Welcome to the call Lew.
Lew Kachulis: Thank you
Malcolm Lui: Lew, you grew your company's revenue from $11.5 million in 2014 to $18.5 million in 2017, a 61% increase, and in 2018 you hit over $23 million. Before we talk about you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?
Lew Kachulis: Sir. If you think about our company what truly differentiates us in the marketplace is we create safer work environments for employers so that their employees can leave work the same way that they entered work that day. And we tend to work with companies that have experience poor loss experience meaning that they've had many accidents injuries in their workplace. So we tend to work with employers that have experience and have very dangerous workplaces. What we essentially do is we have our employees in their operations on a monthly basis if not more but at least on a monthly basis delivering a business plan for safety and the way we're paid essentially is by transferring the risk the employer's risk for these workplace injuries in the form of an insurance policy. So worker's compensation insurance policy but truly what differentiates us is that we are a safety company
Malcolm Lui: So you're different in that you're you sell insurance you sell workers comp insurance but you also have on top of this an additional service to help the companies minimize the claims so that their premiums don't go up. Right. Is that the key difference.
Lew Kachulis: Well we use independent salespeople so we're not actually selling the insurance we're providing the coverage. So we we are in the risk business meaning that if what our average insurance policy is about two hundred and sixty thousand dollars our average policyholder and if their losses exceed that then we lose money if their losses are under that then that's where we can make money
Malcolm Lui: Can you explain a bit more about how that how those numbers work out when you say 260 K is at the premium that they're paying
Lew Kachulis: Yes that is the premium that they're paying
Malcolm Lui: Okay. And can you share how you make or lose money relative to that premium
Lew Kachulis: Yes so. So if they have workplace injuries and accidents and a particular employer and let's just say that employers average average is comparable their premium to our average of two hundred sixty thousand and let's say they have a million dollars in losses in any one given year then we've essentially lost 750000 if they have a hundred thousand dollars in losses. We have to put our expenses over and above that it's not as if we make one hundred and fifty thousand but we can make money on on that business so we're truly in the risk business. So it's not just growing revenues. It's it's easy in our business to grow revenues you just underpriced risk. However what's much more difficult is to grow profitably and fortunately we have been able to grow profitably
Malcolm Lui: Right now. You said you go through independent third parties to sell the insurance right. So if
Lew Kachulis: Yes.
Malcolm Lui: They have a claim filed against them doesn't the insurance pay for it. Not necessarily you
Lew Kachulis: Well we are the insurance company so yes we pay it.
Malcolm Lui: Okc
Lew Kachulis: So we
Malcolm Lui: Are
Lew Kachulis: Weise are yes we are the company and our product are our policies are sold by Independent Insurance Agents
Malcolm Lui: Ok. I see. So if an insurance agent sells your product not only do they get coverage of worker's comp but your team also works with that company who bought the policy to ensure that they have a safe work environment and incentive for you of course is that you want to minimize claims losses so that when you make more money at the same time the company wants that too because they don't want a higher premium going forward
Lew Kachulis: Yes. So so the independent insurance agent or broker they receive a commission from us when they sell our policy to one of their clients and that that company then pays the premium to us we collect the premium and then we pay all of their losses. So they've transferred their risk for workplace accidents on to us. We are the insurance carrier. Another way of looking at it is if you think of a manufacturer and a distributor rep the independent agent is the distributor rep we are the manufacturer except we're not manufacturing a product we're a service. And what we're providing is risk transfer. So we are the insurance company
Malcolm Lui: Right. But how you differ from the other insurance carriers that provide workers comp is that you will work with the companies to make them a safer place. Right. So that reduces the likelihood that they will have a loss and file a claim.
Lew Kachulis: Right. Yes. And and I would say it's it's and I could even go back and give you the history of our company. It's not that we set out to start a worker's compensation company. We were originally have retail insurance agency broker an independent agent that I just spoke of. And what we were finding is that in the marketplace there was a void in the marketplace in terms of quality safety programs. And then we also found that there was a void for claim service. We felt that there could be a better way of handling or adjusting adjudicating claims once someone was injured. So what we did was we started with our safety programs that we were working with many different insurance companies and we did a study after a period of time and the study showed that between we were decreasing the number or frequency of workplace injuries by 33 percent and then dollar payouts by 34 percent. Well when we got into the claim adjudication business we were working with larger employers primarily community based health systems. And when we compared their reduction in dollar payouts when we were handling the claims and the safety all of a sudden that number went up to over 62 percent reduction. So we said Wouldn't it be nice to deliver this high value service model to what we consider the mid-market mid-market being defined as employers that are paying at a minimum of one hundred thousand dollars all the way up to two million dollars in premium. And so and those employers our target market would be employers that have had or experienced higher than average loss experience compared to their industry and that they need to help. And then we have a heavy emphasis on our safety programs and our claim programs can be defined this way. Our goal is to provide the best quality of service service or best quality health care to return that injured employee to their pre injury state as quickly as possible. And when you put those two philosophies together and execute it the way we execute it. What we've seen is a 62 percent decrease in an employer's workplace injuries.
Malcolm Lui: Nice.
Lew Kachulis: Now
Malcolm Lui: All right.
Lew Kachulis: Our value
Malcolm Lui: Yep
Lew Kachulis: Our value proposition is that our average policyholder in this is dating back from 12 years from the day that we started receives a thirty three percent reduction in its called their experience modification factor which is a factor applied to their premium but actually a 37 percent reduction in their overall premiums so when
Malcolm Lui: Nice
Lew Kachulis: They're with us for a period of four years they're essentially receiving almost a 40 percent reduction. And I like to say what other line item on their balance sheet or income statement has gone down by 40 percent
Malcolm Lui: Right now in the States you operate is worker's comp a requirement for businesses workers comp insurance
Lew Kachulis: It is. It is. So we actively pursue business in the states of Pennsylvania New Jersey Michigan and Maryland
Malcolm Lui: Right. So being able to keep your workers comp insurance is as critical right. Because if your premiums do the losses double for whatever reason you're right if he can't pay he can't do business
Lew Kachulis: Right. Right.
Malcolm Lui: Now what you share with me dovetail dovetails into my next question. Now you you grew your business from eleven point five million in 2014 to over twenty three million in 2018. Can you share with the three biggest drivers were of that sales growth over the past four years
Lew Kachulis: Well I think it's somewhat reputation. So another words if you're familiar with net promoter score we survey our policyholders on an annual basis and Net Promoter Score is as simple survey saying and you've probably taken one if you're not familiar with that terminology it's out of a scale of 1 to 10 how likely would you be to refer to a synergy comp insurance company to a friend or a colleague and nines intends with 10 being the highest Nines and Tens are considered promoters 1 through 6 is would be considered detractors in anyone responding with a 7 or 8 or somewhat neutral. So net promoter score is calculated by taking the percentage of nines and tens and subtracting the percentages of 1 3 sixes and anything over 50 is considered excellent and wear it in 82. So we have our policyholders. We've driven down their costs. They are pleased with the level of service and by the way when I say costs when we talk premiums that's actually a smaller portion of their total overall costs. So for example for every premium dollar loss dollar that we're driving down those are direct costs but indirect costs. In other words with their adding to their profitability is typically anywhere from four to 52 times with a decrease in their workplace injury costs are. So for example if they're a airline and mechanics are injured and because the mechanics are injured it starts grounding planes. It's 52 times that hits their bottom line or their profitability. However we say let's just think about four times so we're able to drop an employer's claim costs down by two hundred and fifty thousand dollars. We're actually saving a million dollars or adding a million dollars to their profitability.
Malcolm Lui: Right. Because
Lew Kachulis: Those
Malcolm Lui: You look
Lew Kachulis: Costs
Malcolm Lui: At other opportunity
Lew Kachulis: Could be
Malcolm Lui: Cost
Lew Kachulis: Yes. Yes and just as an example when someone becomes injured. Typically what happens productivity if it's in a manufacturing environment could slow down could even halt if it's a serious accident. It's transportation to a medical facility. It's completing a number of forms. It's paying for overtime pay when an employee is off of work. It's lost productivity while that person's off of work if they're off for an extended period of time. The cost of rehiring onboarding and training a new employee to get up to speed to have a comparable productivity level for the employee who is skilled and experienced for before they had their injury.
Malcolm Lui: Right
Lew Kachulis: So that's where for example Oceana would say about eight times for a manufacturing concern. So for every claim dollar. So even though we're driving down direct costs meaning their insurance premiums are actually far greater costs are being driven down by those those indirect costs
Malcolm Lui: Right. Got it now. So to recap the driver really I know you start off talking about the net promoter score and your reputation. But from what you described with me that the number one driver of that drove your revenue growth is really lowering being able to successfully lower the total costs of a company's workers compensation insurance claims right up
Lew Kachulis: Yes
Malcolm Lui: A decent
Lew Kachulis: Here. You're absolutely right. And typically it's not in any one given year. So our value proposition is that we may not be the lowest in any one given year. However over a five year period will be lower than than anyone else because we're providing a solution creating a safe work environment reducing the number and dollars of workplace injuries. And thereby we're able to reduce long term and employers What they're what they're paying for their workers compensation insurance premium
Malcolm Lui: Right. And you would measure that despite looking at the trend of their claims over five years comparing it to the industry average. And from that you can extrapolate but the
Lew Kachulis: Yes.
Malcolm Lui: Opportunity lost that was avoided from at all. So right
Lew Kachulis: We
Malcolm Lui: Now
Lew Kachulis: Actually measure it on a monthly basis and report monthly to our policyholders. We report to their CEO on a monthly basis
Malcolm Lui: What do you report what what are in your reports that you share of the CEO
Lew Kachulis: So. So we call it a CEO dashboard so we compare the three year average prior to them becoming our policyholder. And then every month are with us. And then we also are showing them where their workplace accidents are occurring within their their company. And again if we assume in manufacturing there might have multiple shifts multiple departments and we keep a 12 month rolling 12 month average so that we can. I'm going to say attack the cost drivers in other words where in their facilities are they having the unsafe environment so that we can attack that and correct it so that they quit having those those workplace injuries and accidents
Malcolm Lui: And someone on your team who is reviewing these reports. Once a month as well to try to identify the problem areas early on
Lew Kachulis: Yes. Yes we have safety professionals in their facilities a minimum of once a month
Malcolm Lui: And see. What's driver number two of your sales growth.
Lew Kachulis: Well I would say the independent insurance agent. So when independent insurance agents start to work with us and they are interested in providing value to their customers and their clients they they become very supportive of our program.
Malcolm Lui: Can you elaborate a little bit more on that
Lew Kachulis: Yes. So. So if you think about it these are when I say independent insurance agents they represent many different companies of which synergy comp is just one. And so when they see the differentiation in terms of creating safer work environments how we adjudicate or process claims then they they tend to prefer us talk to the competition. And I'll just give you an example through a story we had one independent agent that said to his client very powerful statement. He said I can get you a lower price this year but I know what you need. And this is the only company that's going to solve your problem and your issue. So if you want a lower price you can do so with another insurance agent because I will not do that because this is what you need so
Malcolm Lui: Right
Lew Kachulis: That I thought that was very powerful
Malcolm Lui: Yes it is. So I mean it's kind of a longer game right. Yes. You know a shop around a fire fine. Find a carrier it is looking to go into a market and an underpriced the risk. Like you said but in the longer run if you want. If a company wants to lower their overall worker's comp costs direct and indirect right they need to have been delivering food the safety of their operations. And this is something then your company can help them do that.
Lew Kachulis: You're absolutely right. So I'll give you another example real life example. We had a long term customer who we worked with and he's in a galvanizing operation and he said I'm going to shop my insurance this year worker's compensation. And he came in with a proposal that was fifty thousand dollars lower
Malcolm Lui: Mm hmm.
Lew Kachulis: Than where we were. So it was one hundred ninety thousand we were at 240. And I thought oh my goodness we're at risk of losing this long term customer. That's that's a significant differential. He took one look at the competitive proposal and said that's not enough to move from Synergy com. Now the reason he said that not that he wanted to pay an extra fifty thousand. We reduced his costs by over 50 percent in his case in his company's case. So he didn't want to risk going from essentially two hundred and fifty back up to over five hundred thousand dollars to take a fifty thousand dollar temporary lower lowering his costs for one year temporarily
Malcolm Lui: Right. Because if you look at a total cost basis it's not attractive because imagine they switch to carriers he would realize that you know he won't be receiving monthly reports he won't have a member of your team on site reviewing the safety issues if any and working to improve. And it would just be a simple policy
Lew Kachulis: Exactly and then the risk is after a few years he's paying back up to where he was when we started with him over half a million.
Malcolm Lui: All right. OK so to drive number to the independent sure is agents who once they fully understand the value that you provide. Right. They buy into it. And they recommend it. And
Lew Kachulis: Yes
Malcolm Lui: Then you kind of talk maybe this might be the third driver of the
Lew Kachulis: So. So that the third driver is are we're expanding geographically. So for example we started down Pennsylvania only now we're in Michigan Maryland and now New Jersey. And our plan is to just continue to expand geographically until we cover or blanket the United States
Malcolm Lui: Alright so to expand geographic geographically what do you need to do other than being license for the state
Lew Kachulis: Yes we are regulated industry so we do have to apply for licensure in the state that we're looking to expand into. And that's through the insurance department in that state
Malcolm Lui: Ok. Do you need to have boots on the ground. You need to open an office and have a physical presence
Lew Kachulis: It depends on the state. But typically we would have local representation in terms of our safety professionals. They would be local and then our claims adjusters would also be local
Malcolm Lui: Ok. So these are be employees of your company based
Lew Kachulis: Correct.
Malcolm Lui: Locally. OK.
Lew Kachulis: Yeah.
Malcolm Lui: So
Lew Kachulis: Yeah.
Malcolm Lui: You and you wouldn't like outsource it to a third party firm then who has a local presence
Lew Kachulis: Correct. Not not for claims. Technically our safety professionals are a third party but they're very closely related and they they essentially do most all of their work just for us
Malcolm Lui: Right. OK. So right. So and then your claims I guess depending on the nature of the state write your claims people might need to travel a bit throughout the state depending on how big the market is. I imagine.
Lew Kachulis: Yeah. That's correct.
Malcolm Lui: Ok great. All right. So just to recap the three drivers to make sure I have it straight. One your product service lowers the total cost of worker's comp both premium and the opportunity costs of that due to a loss. Second one is once the Independent Insurance Agents understand your product they become big fans of it and promote it when they when they are of the type who look after their clients on a longer term perspective. And the third one is your geographic expansion and you're literally opening up new markets. One state at a time
Lew Kachulis: That's correct.
Malcolm Lui: Okay fantastic. Now can you share a little bit about your 2019 plans. What's your. What are your plans what you see as the biggest opportunity for you
Lew Kachulis: So we are. We are going to a rating agency so that rates for financial stability. That's called A.M. Best and they are. I'm going to say the gold standard in the insurance business we are rated for financial stability right now by another rating agency called Demo tech and we have achieved the demo tech's highest rating for financial stability which is a double prime unsurpassed. However by going to AM Best in achieving an A minus or better rating will help us in our our expansion plans and our growth plans.
Malcolm Lui: So the way it works are these rating agencies you pay them to give you a rating
Lew Kachulis: That's correct. Yeah
Malcolm Lui: Okay
Lew Kachulis: We do pay them
Malcolm Lui: And then once you pay them and they give a rating do you have a if you're if you're rating isn't at the level you wish that rating would be kept private you have to give you that choice is that how it works
Lew Kachulis: Yeah you're absolutely right. So if we go to a impasse and we don't agree with our rating because it is somewhat subjective and then we could decide that we're not going to accept their rating and we just go on our own way
Malcolm Lui: Right. But I imagine if it's if you're a little bit short I'm sure he and best gives you some details as to why you're rated a B plus and 70 minus and then you can make adjustments right to get you to that level that you wish.
Lew Kachulis: Yeah it sounds like you've been through the process. Yeah.
Malcolm Lui: No
Lew Kachulis: Typically
Malcolm Lui: No no. I mean
Lew Kachulis: No.
Malcolm Lui: I'm more familiar with the credit rating for bonds and stuff.
Lew Kachulis: Sir.
Malcolm Lui: My previous
Lew Kachulis: No topic.
Malcolm Lui: Work
Lew Kachulis: Typically they might tell us as they say they don't want to run our business but they might they might tell us why if we did achieve a lower rating why that why that was or happens to be. And then we have a chance to appeal it and possibly to even make some changes in our operations to achieve a higher rating
Malcolm Lui: Right. What kind of things that does at best. Look at them for sure they look at your financials right because they know they're
Lew Kachulis: Yes.
Malcolm Lui: Going to want to make sure
Lew Kachulis: Yeah.
Malcolm Lui: That you pay out the claims with your balance sheet and how you manage the risk. Are there other things they look
Lew Kachulis: Yeah.
Malcolm Lui: At
Lew Kachulis: Absolutely so that's first and foremost. They have a financial rating they call it a car score which is really just a balance sheet rating. And I know we read very strong on on that aspect. They also look at and emphasize quite a bit our business model. And is it differentiated from the marketplace and where we see ourselves going into the future. They weight heavily CRM enterprise risk management plan. And so we have a we tend to have a very robust enterprise risk management plan. Otherwise we look at internally what are all the risks internally and externally that could affect our business and what strategies do we have in place to mitigate that risk so that we could be an ongoing concern long term
Malcolm Lui: Right. Yeah. You don't want your insurance company going going bust just because they weren't expecting an event that occurred
Lew Kachulis: Exactly
Malcolm Lui: Some random event. Okay.
Lew Kachulis: Or possibly growing too quickly taking on too much risk. Well they were growing. They didn't have the right reinsurance contracts in it just as you and your listeners buy their auto insurance and they have a deductible. We do as well being the insurance company. Our deductibles five hundred thousand in any one occurrence. Now we have over and above that 60 million dollars of reinsurance so that if we did have a 10 or 20 million dollar loss that it's not going to adversely affect our company or change
Malcolm Lui: Right
Lew Kachulis: The way we have to operate our company
Malcolm Lui: Right now when do you expect to get your Abbess reading
Lew Kachulis: Will present late March. And so hopefully within four to six weeks after we present we'll we'll know what our rating is
Malcolm Lui: Break and say certain about May. Perhaps when you have your reading and say all goes well and you have a minus a better rating. What would you do next with the rating. How will you let the world know about it.
Lew Kachulis: Yeah. So. So we'll we will put it on our Web site will will. We will notify our sales force which is the the independent agency system that has done business with us. And I think it will help us grow. It will give them also a comfort level on the type of company that we are
Malcolm Lui: So this is a really quite a big driver them and when people consider which carrier to go with they will know a corporate that has that meet your criteria when they're evaluating your your your policy. They will look at and best.
Lew Kachulis: Yes yes there there. We have gotten around it though and what I mean by that is we have partnered with a company that has an A minus rating with asbestos so that if any of our policyholders for whatever reason say they need an A and best rating we can provide it to them. It just costs us more and we transfer that cost to the policyholder. So what it's going to do for some policyholders is it's going to lower their costs and lower our costs.
Malcolm Lui: Right. Right. Okay good. How about from a sales perspective. What are your marketing plans on that front. To get your independent insurance agents more engaged with your product and be more keen and more willing to present your company's product as an option to their clients.
Lew Kachulis: So so we grew in 2018 by 34 percent and that's all organic growth. We haven't had any acquisition. So all of our growth is organic growth and we've had actually a couple years of growth a back to back in the thirties and being a service model. It's actually ideally I would like to see our growth in a linear fashion right at 15 percent. In other words we're doubling our revenues every five years. We're actually planning on scaling back our growth to 10 percent so that we can look internally improve our internal operations make sure that we are providing the high level of service that we have been providing that we consistently provide that into the future. I've actually seen some companies grow too quickly in our industry in outgrow their service model and and essentially see their company implode. So we're we're very mindful of that and we want to make sure that we grow responsibly. So probably unlike a lot of the 85000 who are trying to grow as much as possible we're actually going to temper our growth for 2010 19.
Malcolm Lui: So just one year temporary do you foresee it taking more than a year to re-examine and fine tune your systems and processes
Lew Kachulis: I would say one year one year and then we'll look to grow probably at a faster rate. I say probably though because so much of our growth is somewhat determined on the marketplace. In our business unlike probably any other business or most businesses at the end of the year manufacturing businesses other types of service businesses they can tell you exactly how their year went We don't know how our year just went in terms of profitability for probably another eight to 10 years because we'll be paying claims that have occurred this past year possibly five 10 years out. So that's why I say we truly don't know it's how those claims develop over time or how much we actually have to pay over time until all those claims are closed then we'll have a really good idea of how our year actually ended. So because there's a long tail we call it a tail meaning that there are payments to be made into the future because there is that long tail our competitors will on occasion underpriced risk. If we get into an environment where our competitors are underpricing risk because they like the cash flows today and not really realizing the long term payouts in that they will be unprofitable by underpricing that risk. We we. There might be times this is our business cycle. There might be times when we're actually decreasing our revenues. But as long as we're responsible over the long term we'd like to see ourselves growing that 15 percent on an annualized compounded basis so that in the long term we're doubling our our revenues every five years. But the growth will not be linear because of because of the cycles that we have in our business
Malcolm Lui: Right now in terms of going back though. I know you said you're looking to not grow so aggressively. So how we do there and you have independent insurance agents who are big fans of your product and service and you know they're going to be motivated to to show them show their clients your your offering but if you don't wanna grow too aggressively what are you going to do are you gonna raise your premium prices to make yourself a little bit less attractive. Yeah. How
Lew Kachulis: Well.
Malcolm Lui: We
Lew Kachulis: So.
Malcolm Lui: Like
Lew Kachulis: So our premiums are the way we charge is is based on a loss projection. So if anything we're consistent what's not consistent is the rest of the marketplace.
Malcolm Lui: Okay
Lew Kachulis: So an independent agent because I represent a number of different companies they might we might be presented but then someone might be 30 percent lower than we are. And that business owner would say well I'm going to go with the with a program that's 30 percent lower. So. So that's why that's what typically happens. We are currently in a very competitive marketplace as it relates to worker's compensation insurance. And that's that's that's one of the main reasons why we're projecting to only grow by 10 percent
Malcolm Lui: You have a drawing at a 30 percent in the past few years right it sounds like
Lew Kachulis: Yes.
Malcolm Lui: Because
Lew Kachulis: Yeah
Malcolm Lui: Your offer is so compelling when people dig a little bit deeper and go yeah. Yeah. That they're not you're not 30 percent cheaper versus this other guy for this year. But you know if you're able to take a longer term view right. Your total costs could be 30 percent cheaper.
Lew Kachulis: Well your amp. You're absolutely right. As I like to say higher level CEOs that are there and at our presentation and understand the value that we bring are willing to pay more for our product and service than than the competitors then they know a lot of our competitors. Sometimes it does depend once that differential that Delta reaches 20 to 25 plus percent right around 20 25 percent where it will end up with about half of them
Malcolm Lui: Yeah
Lew Kachulis: Half of our policyholders will renew when it gets much over that point. And the other half will not and they'll seek a lower premium so somewhat interesting and if you happen to go on our Web site and you looked at one of our testimonials by Tim Scheib he describes he was with us. He had significant reductions in his claims his premium was going down he went for a lower cost option and as he says he he thought they were better than what they were. Their claims spiked up for two years. They came back to us and stayed with us for a period of time. So actually until he retired. So that's just an example that happens oftentimes where someone might be motivated to take a lower price. They do take that lower price. They see adverse I'm going to say trends in terms of their their employee injuries and then they come back to us
Malcolm Lui: Right. Simply because they don't have someone from the outside coming in and reviewing the safety claims safety numbers and making adjustments on a monthly basis potentially. Right.
Lew Kachulis: Yeah it's more than that though it's not just that one person on the safety I think of a three legged stool if someone's going to have a really high functioning program and one leg of the stool is is at the top management of the company the CEO level and their buy in or support of safety and safety programs. Then the second leg of the stool would be the safety programs someone to deliver those safety programs effectively. The third leg of the stool is the claim adjudication and the communication between all three meaning safety in claims. And if you take any leg out and oftentimes that set that claim piece in other words how those claims or workplace injuries and accidents how they're process delivering that quality of care getting the employee back to their brain injury state as quickly as possible if that piece is in there even if you have a highly motivated CEO and you have very good safety programs there's still a good chance that they're not going to have a high functioning program
Malcolm Lui: Right.
Lew Kachulis: You really
Malcolm Lui: Kiki
Lew Kachulis: Need all three components
Malcolm Lui: Can
Lew Kachulis: And
Malcolm Lui: You share
Lew Kachulis: We
Malcolm Lui: A bit.
Lew Kachulis: Bring to the end we bring two of the three of those components
Malcolm Lui: He shared a bit more about what your team does on the claim side to help get employees back on the job more quickly
Lew Kachulis: Yes and it starts with case load. So the average in our industry I would say a fairly low caseload would be about one hundred and fifty claims so that an adjuster would be handling
Malcolm Lui: Is that
Lew Kachulis: Our
Malcolm Lui: Per
Lew Kachulis: Claims
Malcolm Lui: Month
Lew Kachulis: Adjusters
Malcolm Lui: Or per year
Lew Kachulis: That know neither that they just would have opened at any one time because
Malcolm Lui: Like
Lew Kachulis: They're getting new claims in their closing claims.
Malcolm Lui: Ok
Lew Kachulis: So there they're just how many open claims that they're handling and our adjusters are handling fewer than 50 and so that they have the time to work with the injured employee and when I say work to explain the state statute explain exactly what's covered how it's covered provide speed of care so that someone's not waiting a week to get into a physician's office we want to make sure that they're getting the care that they need very quickly. We also want to make sure that the care that's being provided or from are from high quality with great outcomes providers doctors hospitals and and then we want to make sure that they get back into a transitional position in within their employer as quickly as possible because the ACMA American Medical Association the orthopedic associations have done studies and what their studies show that when an injured employee comes back to their employer and starts working that they heal more quickly. So whatever those medical restrictions are we create a position for that employee so that they can come back to work as quickly as possible because they heal more quickly and that's what the studies show
Malcolm Lui: Right now. Now earlier you mentioned how your claims seem to help to ensure that the person filing the claim the person is injured who have great providers of health care. Now you're paying for the claim rate. You're paying for the health care. So
Lew Kachulis: Correct. Yes.
Malcolm Lui: You know in a way not to say you do this but I could imagine there could be in for an insurance company to be motivated to go with the low cost provider. You know what's your thinking on that
Lew Kachulis: Yeah. Well that's I think doing a tremendous disservice to the injure an employee and to the employer which is their their policy holder. We just our philosophy is if it's one of our values is to do what is right just and fair. So I always say to all of our employees that if you can go through this litmus test with whatever decision because there are a lot of judgment decisions that if you can answer is it right. Is it just. Is it fair then you're able to do anything you're empowered in your position to make any decision. So we want to make sure that employees get the absolute best care. And if you think about it some would argue well yes you're going to pay more for health care and in some cases I'm sure we do. But if you look at it this way if we're paying more for quality outcomes we might even be paying less. There's no way for me to prove that one way or another but I'd like to think that long term we would actually pay less because we're providing such quality outcomes which which are better than just paying a lower cost per service.
Malcolm Lui: Right. Yeah you totally see that right. I mean if you can shorten the recovery time by a week or by a month. Right. Just from that alone. Just because you're giving someone who's a better access to better care better physicians you know what's going on better physical therapy. Right. And they need it all
Lew Kachulis: Correct.
Malcolm Lui: In the long run. I think with Pan on as well.
Lew Kachulis: Yes. That's our philosophy.
Malcolm Lui: Now can you go back a little bit about your your your expansion across the state.
Lew Kachulis: Sure.
Malcolm Lui: So can you
Lew Kachulis: Mm hmm
Malcolm Lui: Can you recap again how many states you're in now as if three states four states
Lew Kachulis: So for states. So
Malcolm Lui: Ok
Lew Kachulis: Pennsylvania's where we started and where most of our businesses and new Jersey Michigan and Maryland
Malcolm Lui: Ok. Do you have a target as to when you're going to be in all 50 states
Lew Kachulis: I do. I denied at this point
Malcolm Lui: Ok. So do you have a target for how many new states you like to add on a regular basis. I mean like you want to add one state per year three states per year or anything like that
Lew Kachulis: So. So ideally here's the way I would answer that ideally if we can satisfy our growth objectives in the states that we're currently in. Then it makes more sense for us to grow in those states because our business is local. In other words each state has different statute and has different nuances so it's somewhat difficult to learn a new state and to be a high quality provider in that new state. So it's not just for example licensing obtaining the licenses in all the states. There is a learning curve. And so ideally if we could grow in our four states and satisfy our growth goals in the next say three years we won't be that motivated to expand into additional states. However once we feel that there might be a saturation point and I see saturation because we're truly a niche market again we won't write anything under one hundred thousand in premium. We like companies that have had poor loss experience as long as their CEO c suite level as long as they're willing to support our safety programs and we like businesses that most of their employees are working within four walls. In other words not a contractor moving from job site to job site or say a trucking operation where they're most of their employees are on the road traveling in different areas. We feel that we can control the safety environment much more so if it's within confined within four walls. So that's essentially a target market. If we can satisfy our growth in the states that we're in with our target market then then we will probably. Well we will we'll grow or expand states more slowly and say if we if we can't then we'll we'll look to grow or add on additional states.
Malcolm Lui: Right. How long ago did you add on a new state
Lew Kachulis: So. So we went in the fourth quarter to become licensed in New Jersey. So
Malcolm Lui: Like
Lew Kachulis: The the business that we're writing outside of Pennsylvania right now is written on that partnership insurance company that I spoke of earlier. That's that's a rated
Malcolm Lui: Ok so you added new jersey in the fourth quarter. How do you get independent agents signed up to be to be able to sell your product.
Lew Kachulis: So we have a position that they would refer to as a marketing field underwriter. And essentially what that position does is it calls on independent insurance agencies explains how we're different explains about our company educate them about who we are and then looks for an account or two to begin a relationship to work on and then that's that's typically how we'll start with an independent agent
Malcolm Lui: And when you say work on an account or two by account you mean the company that the independent agency is working with. Or do you refer to the independent agency
Lew Kachulis: Yes
Malcolm Lui: As an account
Lew Kachulis: Yes. No I would I would say a company when I say an account a company that they're working with it fits our niche and that we can provide the insurance coverage and safety programs for
Malcolm Lui: Right. So how's that coming along so far in New Jersey. You just started reaching out to the
Lew Kachulis: Yet.
Malcolm Lui: Insurance
Lew Kachulis: Actually it's coming along really well in New Jersey we're seeing quite a bit of demand in New Jersey for what we're providing
Malcolm Lui: In a sense as to how far along you are but until you will be in a saturation point in New Jersey.
Lew Kachulis: Wow that's a really good question. I do not know when that when that point will be. I wish I had a firm answer for a question like that but but I do not it's a lot of it is canvassing the state in terms of talking to the Independent Insurance Agents getting a flow business from them. So we when we're working within a state for a period of years then we get a better feel to answer that question.
Malcolm Lui: Right. Okay great. Three final questions for you. Say say you have a billboard on one of the busy fast moving turnpike in the New Jersey area for example. What
Lew Kachulis: Mm hmm.
Malcolm Lui: Would be the synergy comp billboard message in mind you people only have about on average six seconds to see your billboard message. So what is your six second message.
Lew Kachulis: Yeah I'm a six second message would be all about safety. So provide a better workplace for your employees which are injury free.
Malcolm Lui: All right. Injury free workplace and lots of questions. Who are your ideal clients like and I guess it could be two categories here either independent insurance agencies or the companies that they should perhaps speak to their agent about who who should reach out to the agent but learning more about your company. So who are those people and what's the best way for them to contact you or the independent insurance agent who can sell your policy.
Lew Kachulis: So first let's talk about independent agents. It's those independent agents who truly care about their customer and want a better model and want a safer work environment for their their clients or their customers. And those are highly educated the more educated the independent agent is the more that they tend to be drawn to our program. That's first and then in terms of the actual companies who become our policy holders those would be CEOs CFO those who truly understand not only the direct benefits or in terms of reducing their insurance costs over time but also the indirect cost savings. As I like to refer to him as high level leaders those high level leaders are drawn to our program and they're the ones who stay with our program.
Malcolm Lui: Can you share the verticals that are good fit for your product
Lew Kachulis: Yes manufacturing health care social service. We've actually written quite a bit in non-profits nonprofit social services also. We do some agriculture some food service even some school systems education environments colleges universities.
Malcolm Lui: Interesting that you said non-profits I would add to my mind when I think of a non-profit. I don't really imagine a place where a lot of injuries occur.
Lew Kachulis: So some give you an example. Our largest customer came out of self-insurance and we quoted them a price which were lower than their annualized claims. Their claims were costing on an annualized basis and they came to me and they said how can you do this. And by the way they had a number of group homes. So some nursing homes. This was a large nonprofit faith based nonprofit so they had nursing homes. They had some shelters for let's say women or homeless men and some some also mental challenges. And so here was my response when we analyze their workplace injuries every time they had a workplace injury it was costing them over twelve thousand dollars. When we compare that to our average cost at 30 roughly thirty eight hundred dollars that's the reason that delta that differential is the reason why we're able to provide a fully insured program in place of their self-insured program. That's actually less expensive than what their actual claims costs were in the year. So they've been with us now for three years and we've been driving down their premiums each year. Not only was it less than year one but it's been less than year to year three
Malcolm Lui: Right. Okay so even though they're a non-profit they still can incur claims and you can find improvements still to make it work.
Lew Kachulis: Yes.
Malcolm Lui: Okay.
Lew Kachulis: Oh yeah
Malcolm Lui: And what's the best way for the for your ideal independent agents and your ideal companies to contact you and your team.
Lew Kachulis: So our Web site synergy insurance dot com and there's a contact area on the Web site and that's that would be the easiest and the best way to contact
Malcolm Lui: Should that and companies contact you directly as well. Or is there like perhaps
Lew Kachulis: Yes.
Malcolm Lui: A they should
Lew Kachulis: Yeah.
Malcolm Lui: Get you
Lew Kachulis: They that they can we. We do not write business directly. So what we would do is is work with an independent agent in their locale to to to work with them to provide the solution for them
Malcolm Lui: Right. Fantastic. Thanks for joining us today Lou and sharing how
Lew Kachulis: Thank
Malcolm Lui: You accelerated
Lew Kachulis: You
Malcolm Lui: Your company's high value sales
Lew Kachulis: Well thank you very much it's been a pleasure.
Malcolm Lui: xx We've been speaking with Lew Kachulis, the President of Synergy Comp Insurance Company, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com. xxx
The above audio transcript of "Computer generated transcript - Synergy Comp Insurance Company Interview" was transcribed by the best audio transcription service called Sonix. If you have to convert audio to text in 2019, then you should try Sonix. Transcribing audio files is painful. Sonix makes it fast, easy, and affordable. I love using Sonix to transcribe my audio files.