YOUNG AGENTS CONFERENCE PRESIDENT’S PANEL
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Industry leaders discuss technology, legislation, other key issues
ORLANDO, Oct. 9—Several prominent insurance industry leaders discussed current industry trends, including technology, credit scoring, homeowners’ insurance and crucial regulatory legislation, during an informative panel discussion at the Independent Insurance Agents & Brokers of America Young Agents Sales & Leadership Conference, being held in conjunction with the Big “I” Convention.
The leaders, who joined Big “I” President Louise “BeBe” Canter, CPCU, ARM, shared their thoughts during a one-hour panel.
Much of the discussion was spent on the advances in technology and what they mean to independent agents and the companies they work with.
“I think one of the most important things is a young agent has to be savvy about technology,” said Mike LaRocco, president and chief operating officer of Safeco Personal Insurance. “The opportunity that technology has presented … to market your products, to sell your products … is like we’ve never seen before.”
Dan Carmichael, president and CEO of the Ohio Casualty Group, said one of the key needs is to increase technological capabilities that will allow agencies to interface with companies quickly and efficiently.
“Our focus is on making life easier for you. You are our only distribution system,” Carmichael said. “In our new strategy for the last four years, we’ve been focusing on how we can make it easier for you. On the technology side, we want to make it possible for you to do something that we’ve been talking about in the industry for three decades: to use your (automation) system to get to us, to do business with your customers while they’re on the line, be able to upload that to us, converse with our system. That’s what we think will make it possible for you to go out and capture more of the market.”
Another top issue of particular appropriateness given the event’s Florida location, and the recent flurry of hurricanes that hit the state, was homeowners’ insurance. Panel experts bluntly stated they believed homeowners in high-risk areas should expect to shoulder a higher share of the responsibility for the risks involved when they take out coverage.
“Whether you’re solving the coastal problem or property in general, we’ve got these types of exposures that we have mismanaged as an industry,” LaRocco said. “What we’re trying to do at Safeco … is making certain that we have the level of rate to cover the risk. We don’t want to run away from it; we love the property line. People that choose to live in coastal areas or higher exposure are going to have to pay the price for that. You cannot spread that risk across the country.”
Ohio Casualty’s Carmichael agreed that it was desirable to maintain property lines, but that there were limits.
“It’s tough in a state like Florida, we had losses in the first hurricane that were 50 miles inland,” Carmichael said. “Where do you draw the line? But the homeowners’ product has really gotten out of control. We can do more there, but it’s going to be difficult in states like Florida, that are almost all coastal.”
Still, Carmichael noted that the industry, despite taking a financial hit, had more capacity this year than it did when it faced similar circumstances in 1992. He noted this year’s hurricanes thus far had taxed only 6 percent of the industry surplus, as opposed to 10 percent in 1992 after Hurricane Andrew struck Florida.
Doug Wendt, president of Encompass and Deerbrook Insurance, also saw some positives, despite the circumstances. He noted that the likelihood of a state being hit with multiple disasters, as was Florida, is not high, and that more normal activity could be better absorbed by the insurance industry than the extraordinary circumstances in Florida’s case this year.
“I think that there were some good signs in Florida,” Wendt said. “If it had been limited to that first (hurricane), the pool did work fairly effectively.”
On the credit scoring issue, the company leaders generally agreed that this was a useful tool, and that public resistance to it could only be alleviated by greater consumer education and the willingness to work with individuals in trying circumstances.
“Credit scoring is fairly sensitive,” said Bob Williams, president of the Independent Channel, Progressive Insurance. “We’ve attempted to select a process where if there are unusual circumstances for individuals, they can appeal to us … because you get issues—identity theft, family change, injury or other things—that you really do want to take into account and be somewhat sympathetic on. We’ve worked hard with legislators and agent groups to try to alter the use so we can continue it, but there’s still a lot of people that don’t like credit use.”
“It comes back to communication, communication, communication,” Canter said. “If companies can do one thing to help agents, it’s help us educate the public on what credit scoring is, why it’s used, how it’s used. If there’s one thing we need to do, it’s get the information out there (to consumers), whether it’s through publications, through news, so it’s something that the public understands. When there’s so little understanding … it puts you in a very difficult position.”
On the issue of federal-versus-state regulation, which is now under discussion in Congress, Canter predicted the Big “I” position of targeted federal reforms, but no federal regulator and no optional federal charter, ultimately would prevail. The Big “I” strongly supports the discussion draft of the State Modernization and Regulatory Transparency (SMART) Act, put forth recently by House Financial Services Chairman Mike Oxley (R-Ohio) and Insurance Subcommittee Chairman Richard Baker (R-La.).
“This is an area that’s obviously something we’ve been focusing on as an association last three years very, very heavily,” Canter said. “We do have several of the carriers who are very strongly in favor of federal regulation. What we as the Big ‘I’ have done is taken a middle-of-the-road approach.”
Canter noted that the ability to solve issues on a state level tends to be less imposing for the typical agent or consumer than dealing with a federal bureaucracy.
“If you move that whole apparatus to Washington, D.C., you’re looking at a whole different industry,” Canter said. “We’re very, very hopeful that what we put forward will be approved by Congress.”
The company executives generally supported the Big “I” approach.
“The design that Oxley’s committee has put in place is essentially what you guys have recommended,” Carmichael said. “We think it’s a good thing. We do need to get rid of a lot of the bureaucracy that exists in state regulation. In Ohio, you can’t use any staples. In Kentucky, which is a large market for us, you have to staple the payment to the form. In this state you need a pink form, and in this state there are certain forms a state needs to have over and above what you need.”
Progressive’s Williams agreed. “It’s variance that adds no value and costs consumer money,” Williams said. “The best way to get there is the approach that the IIABA has taken.”
In looking to the future, Safeco’s LaRocco melded a pitch for technological savvy with an age-old concept for independent agents: the ability to provide customers customized choices for their insurance needs. He urged a greater emphasis on marketing this advantage.
“As we look to the future, it’s very clear that technology is going to play a key role,” LaRocco said. “Consumers do want the choice; they do want what you have. We as an industry haven’t done a good job of marketing toward that idea. Consumers are in a better position if they go to someone who gives them advice and gives them a choice. We have to make sure we make people understand why that is so important.”
The Young Agents Sales & Leadership Conference is taking place during the Big “I” Convention—the Association’s showcase meeting taking place in Orlando through Oct. 12. The Sales & Leadership Conference features sessions designed exclusively for young agents including sales training and skills sessions. The event precedes the Big “I” Convention—the showcase of the Big “I” meeting that features one of the largest exhibit halls in the insurance industry; several prominent guest speakers; a compelling company CEO panel; a wide variety of innovative continuing-education (CE) classes; numerous networking opportunities; and many other exciting events.
Founded in 1896, the Big “I” 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.