he local insurance Hustle in a Slump

WHILE the big insurance companies have been buffeted by the weak economy and investment losses, the industry's front line, the insurance agencies, havegenerally been riding out the adversity.

"This is a great business, because people always need insurance," said Janet Jones, president of the Elkins Jones Insurance Agency in Los Angeles. "It's just a question of who they buy it from."

"As the economy gets worse," she added, "people need to feel they can hold on to their business, their home, their cars."

Still, the small agencies have had to scramble a bit to keep up with all the changes in their business. Glenn A. Smith, owner and district manager of a Farmers Insurance Group agency in Long Beach, Calif.., Said his agency, which manages insurance for about $ 50 million a year in premiums, recently lost a client to Travelers Companies. Travelers, which writes about $ 24 billion a year in premiums, was reaching down, he said, to compete with small local agencies to pick up business.

Other major insurance and financial service companies, including MetLife and Prudential, and large international agency firms, like Marsh and Aon, have also become newly aggressive in competing for business as their investments falter. "Companies that would not look at an account that promised less than $ 1 million in premiums before, are now reaching out for smaller prospects because they want the income," Ms. Jones said. Such competition can lead to lower insurance costs for small-business owners today, but portends higher costs in the future as insurers try to recoup losses.

Ms. Jones said the financial problems at the American International Group had also opened up competition for AIG's high-end clients - people who have several houses and artwork and jewelry valuable enough to warrant separate insurance. "

Insurance agencies reflect all the pressures. "We are a cross-section of the economy," said Kenneth L. Kessler, president of Kessler Advisors, an independent agency in Santa Monica, Calif.. In the current crisis, Mr. Kessler said he knew that the business of his manufacturing company clients was off as much as 50 percent, while food companies were more stable. "We help them all," he said, "by revisiting their coverage."

Mr. Kessler said he was well aware of competitive forays by national insurers and agencies, but remained confident. "We are a major regional agency and we've been here since 1956, when my father founded the company," he said. "In our local area, we have an advantage and can take care of ourselves, I believe." Kessler writes Advisors insurance for more than $ 100 million in premiums annually and has $ 13.5 million in revenue and 80 employees, he said.

Ms. Jones said her agency, Elkins Jones, has also been revisiting clients. "We will sit down with a small-business client, for example, and reduce the cost by raising a deductible here or taking off a schedule the policy for a temporary period," she said.

And Mr. Smith, too, is a proponent of such revisits. "If we talk with a business owner about employee health or workers' comp coverage," he said, "we may notice that we do not have coverage of the company's cars and trucks and offer to include auto insurance in an overall policy .

Elkins Jones was founded in the 1930s by George Elkins as an adjunct to a growing real estate business. Ms. Jones came into the company in 1980 and bought the agency in 1991, after Mr. Elkins died. She has built it into a practice that writes $ 50 million annually in premiums, taking in revenue of $ 6 million a year, and has 40 employees.

About half the agency's employees are in sales, bringing in new accounts, and half are underwriters, writing up policies which are then financed by insurance companies.

The role of the industry's staff, now numbering about 550,000, has grown as insurance companies have merged into larger groups and reduced the number of their employees.

That has given an opening to the agencies. "We provide a service," Ms. Jones said. "We are there on the spot if a business has a fire or some other trouble. And we keep them protected through all the changes in legal liabilities. "She cited Employment Practices Liability Insurance as a growing necessity for business because it covers wrongful dismissal lawsuits, which increase in times of layoffs, as well as sexual harassment and other claims. Insurance Agent jobs are expected to grow 13 percent a year through 2016, according to the Bureau of Labor Statistics.

Insurance agencies take in 10 to 15 percent of the premiums, depending on the complexity of the risks covered. And the business is adapting to changing demographics and technology.

America's growing Hispanic population represents a significant growth market, said Andre Urena, who founded the Latin American Agents Association 10 years ago. "We have 637 insurance agencies as members," he said.

"Immigrants from Latin America first encounter when they need insurance coverage for a car or a truck," Mr. Urena said. "And from that start, they find they need insurance for their families' health and for their homes, and so it is a growing business."

Mr. Urena's group keeps members informed of changes in industry practices and legislation. The Latin American Agents Association expects about 3000 people from the insurance industry at its convention in Long Beach at the end of May.

Mr. Urena, a veteran of 20 years in the business, owned Oasis Insurance Agency, and sold it a decade ago to Confie Seguros, a consolidator of small agencies that has sold insurance groups to Goldman Sachs and the Blackstone Group.

Other agencies like Elkins Jones and Mr. Smith's affiliate Farmers are also reaching out to the Hispanic market. And Ms. Jones is expanding to the Internet. "We have an online company named CalHome in Central California," she said. "It uses an online application and can write up standard property insurance." (The New York Times)