Local insurers grew from shoe leather to sophisticated sales teams

By Michael Bradley
Special to Delaware Business Times

In 1940, Harry Zutz didn’t have much money. He had earned a degree from the University of Delaware, and because his bad left leg prevented him from joining the service to fight in World War II, Zutz was looking for a profession that wouldn’t require too much investment.

With just a desk, a phone and some sturdy shoes in which he could make sales calls, Zutz started an insurance agency that specialized in property, casualty and commercial coverage. For 66 years, until Hilb, Rogal & Hobbs bought it, the Zutz Agency chased big clients and landed plenty of them.

According to Larry Zutz, who ran the company his father founded from 1989-2006, it became the largest independent agency in Delaware. Its client roster included Revlon, Seagram’s and Jericho Inc., which had more than 3,000 restaurants across the southern U.S. Now part of the Willis Group, Zutz Insurance remains a factor, albeit under a different name.

“We have learned that nothing will happen in this business without relationships, even to this day,” Larry Zutz said. “Do you know the people you should be talking to, and do you bring something to the table? That has been a key to our success, along with my late father’s amazing personality.”

Harry Zutz worked until he died, in 2008, one week short of his 91st birthday. His legacy is large, and his time spent building his agency came when the Delaware insurance landscape featured three major players: J.A. Montgomery, Insurance & Financial Services and Zutz. Only IFS remains an independent firm, a fact that speaks to the difficulties of businesses’ surviving across the decades. The local insurance industry has also splintered somewhat into smaller concerns, even as national players have bought into the market. The larger companies, known by some as “roll-ups,” are capable of spending large amounts of money to gobble up smaller companies.

“Any small or midsized firm has to make the decision whether it wants to sell or to merge,” said Rick LaPenta, president and CEO of IFS.

One corporation that has bought out a local concern is Toronto-based TD Bank, which in 2007 purchased New Jersey’s Commerce Bank. Eleven years before that, Commerce had acquired J.A. Montgomery. For Bob Hackett, that ended a 22-year stint at the company, which started in 1909 as a New York real estate and insurance concern under the name of Gilpin, Van Trump and Montgomery.

When the company split in the 1920s, Montgomery emerged as an insurance concern, with the DuPont Companies among its clients. When Hackett finished his studies at the University of Miami in 1974, he started at J.A. Montgomery as a salesman. He rose to account executive and in 1988 took over as president. By ’96, the ownership group, which by then had grown in size to include several different family entities, took a meeting with Commerce president Vernon Hill, who was looking to establish a Delaware beachhead.

“[J.A. Montgomery] had no major intentions of selling,” Hackett said. But sell they did, and J.A. Montgomery was absorbed, with Hackett moving over to run the operations throughout the 11-year Commerce residence. When TD purchased Commerce, Hackett “retired” and now works with Arthur Hall, which has offices in Delaware, Pennsylvania and New Jersey. J.A. Montgomery lives on as a subsidiary of Conner Strong & Buckelew, which is headquartered in Marlton, New Jersey.

“We had a lot of stockholders who were older and had been involved in the company for many years,” Hackett said. “We knew that we would need to invest a lot of money moving forward in order to remain strong, and it was good to find a company that was capable of helping us do a lot of things we needed to do.

“On top of that, it was a very good deal for the stockholders.”

Hackett looks at the current insurance climate as “ever-changing” and sees the Delaware share as a collection of small to mid-sized companies, with a few larger concerns involved. He considers workers’ compensation and health insurance as the consistently strong sectors and understands that every “five or six years” there is a tightening and softening of the market.

“Since Delaware is a small state, we don’t have a large number of firms involved, because there aren’t a large number of policies to be written,” Hackett said.

While Zutz and J.A. Montgomery have been fodder for acquisition, Insurance & Financial Services rolls on. The company’s roots date to the 1940s, but Carl Kumpf started the modern iteration was started in 1994. Its early work centered on the construction area and property management, and while IFS continues to have a presence in those areas, it focuses also on social services, nonprofits and professional liability. Its primary territory is Delaware and southeastern Pennsylvania.

LaPenta has been with IFS since ’94 and looks at the future in terms of growing current coverage lines but also with an eye on emerging areas of importance.

“The future is in cyber liability,” he said. “We’ll also work with the University of Delaware in their life sciences efforts. I think bioscience will spin off a number of firms that will
need insurance services.

As LaPenta surveys the insurance climate in Delaware, he understands the circumstances that led Zutz and J.A. Montgomery to merge or to sell. He reports that IFS has no plans for either in the next decade, largely because it has focused on adding some younger people to the management team. He is optimistic about the current environment and looks forward to big things to come.

“I look at Delaware and its history and see the new directions we’re going,” he said. “These are exciting times.”

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