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Young Agents Conference President's Panel Looks at Market Challenges, Opportunities

Industry Leaders Address Issues Affecting Present, Future of Independent Agency System



LAS VEGAS, Sept. 21 - While challenges persist in the property and casualty insurance arena, industry leaders expressed enthusiasm about the market and a commitment to bring tools and expertise needed to help young agents to thrive now and in the future.

The leaders shared their thoughts as part of a breakfast panel during the Independent Insurance Agents & Brokers of America’s (IIABA) 28th Annual Young Agents Sales & Leadership Conference, held in conjunction with the association’s Convention & InfoXchange.

Panelists spoke in unison about the value of partnerships between agents and the companies they represent. Addressing the issue of what carriers must do to make it easier for agents to do business with them, IIABA President W. Cloyce Anders said, “We need to look for a feeling of true partnership.

“We need to look at how we can do business in an efficient manner,” added Anders, who is president of VFIS of North Carolina and Anders, Ireland & Marshall, Inc., both based in Raleigh. “A relationship with a company should not be one where the company just throws a low price at you.” Many times, relationships based on price are the worst ones an agent can have, because the carrier probably will not be around, he added. “You need to be able to feel they will be a solid, stable marketplace,” he said.

Mike Davidson, vice president and senior officer of MetLife Auto & Home’s independent agent organization, echoed Anders. “I sincerely believe partnership is the most important thing you can do.” Davidson, who himself has been an independent agent, said his firm seeks to partner with agencies that have vision for the future and are willing to take full advantage of technology. Davidson also looks for agencies that practice diversity, both in terms of products—personal lines, commercial lines and financial services—and people. Davidson cited dramatic growth in African-American, Hispanic and Asian markets, and challenged young agents to build that information into their recruitment and sales plans.

Panelists also addressed the state of the market. Mhayse Samalya, president of The Hanover Group, said he believes the industry will experience further consolidation. “There will be winners, and there will be losers,” he said. “There will continue to be pressure on insurance companies to manage the business, to deliver profits.”

Tom Van Berkel, CEO of Main Street America Group, said that despite pressures opportunities exist for profit in commercial markets for companies that practice pricing discipline and deploy technology effectively.  “We target the small commercial lines segment,” he said, noting that his firm worked, before the recent hard market, to ensure rates were adequate. He believes this helped agents who represent his company to avoid large pricing swings others faced.  “Also, we are trying to put technology functionality at the agent’s desktop,” Van Berkel said. “We recognize the need, in both commercial lines and personal, to be invisible in the transaction process, to get out of the way and let the transaction be between the agent and the agent’s customer.”

One of the key personal lines market challenges discussed was homeowners insurance. “Homeowners has been a tough product for many years,” MetLife’s Davidson said. “This is, in large part, because we’ve added so much to the product, so much to the coverage, and have had inadequate rates.” Davidson said his company has worked aggressively to address the issue of insurance-to-value, which he described as a major problem. “Insurance-to-value is extremely important, and something companies have to do. They need to work with their agents, to work with their customers, and educate them.” MSA’s Van Berkel agreed. “We need to make sure we understand the exposure and rate,” he said. “For too long we’ve under priced the business.”

Davidson noted that every time his company has worked with agents on insurance-to-value, their retention has increased. “It’s because agents contacted the customer, and discussed their coverage and educated them,” he said. 

Asked about what companies are doing with technology to support agents, and in particular, about a move from proprietary Web sites to broader interface through agency management systems, response was mixed. Davidson said, “We need a common platform that an agent can go into. We want to make it easy to do business with us, and every company should. And it’s not having five proprietary systems, where you have to go into each one and re-enter all of the information.”

Van Berkel said his firm’s strategy was to give agents choice. “Our goal is put functionality at the agent’s desktop,” he said. “We’ll give agents the chance to go directly to our Web site, or work through some of the agency management systems. There are a number of ways you can transact business with us.

Samalya supported the notion of single entry, but expressed apprehension about turning insurance products into commodities. “We are committed to single entry for agencies, and there are a lot of ways to get there,” he said. “We are working with AMS and Applied (Systems) to get agents to our propriety system.” Samalya expressed unease with industry solutions that require all companies to ask the same questions, something he says could push agents to pick the lowest price and lead to what he calls the ‘dumbing down’ of the industry.

Anders did not share the concern. “We have that comparison capability ability right now, since we have rating systems in the office,” he said. “You have to leave it to the agents to not look for the lowest price. This is where the partnerships and relationships with the companies come in. You look at the companies that you can count on being there. I really think agents look more at that than the lowest price. Even CSRs have certain companies that they prefer to work with.”

Anders added that responsibility now lies with agents to make the best use of available technology. “As carriers are moving in the direction of single entry, what are we as agents doing?” he asked. “We’re finding that now we’re having to say to agents, ‘The companies are ready, now you need to get ready.’  It’s a wonderful opportunity for the entire industry for the companies to look for the efficiencies, but the agencies have to be ready to do it in their own offices. We’ve been asking for this for years.”

Separately, Anders noted that IIABA, through its InVEST program, is bringing the industry to high school and community college students. Also, in his state, agents are working with community colleges to discuss career opportunities. He said, “It’s a great occupation, it’s a tremendous opportunity.”

Anders urged young agents to give new employees the same—or better—opportunities than they themselves had. “At the end of the day, it’s nice to be able to sell your agency to someone from within,” he said. “It’s a better way to go.”

The Young Agents Sales & Leadership Conference precedes IIABA’s Convention & InfoXchange—the Big “I” showcase meeting taking place in Las Vegas from Sept. 21-24. The event features a compelling company CEO roundtable; several prominent guest speakers and panelists; a variety of innovative continuing-education (CE) classes and other cutting-edge workshops; the largest exhibit hall in the insurance industry; numerous networking opportunities; and many other exciting events.

Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address:  www.independentagent.com.

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