Time to Reflect
I’m just getting caught up from being away for a week on vacation. That in itself is an interesting statement. How many of us have so much work and responsibility at our jobs that a week away on vacation means working extra when you return? That doesn’t even take into consideration the e-mails that got read and responded to while I was away. It drives my wife crazy and several times she threatened serious damage and/or destruction of my smartphone if I didn’t stop looking at my e-mail. In any event I was encouraged at work to start taking some vacation and I did. During the week away I was able to get some time to just sit and reflect on our business and all that is going on right now. I’ve been in this crazy business since 1972 when I started in the mailroom of Royal Globe Insurance Company at the age of 18. Alright so know you know my real age and I am sure there are a number of people reading this column who weren’t even born in 1972. In any event when I look at the insurance world we work in today the pace is so hectic and the business so demanding it’s a wonder we are able to achieve all that we do.
Independent agents and brokers are being expected to do more work and take on more responsibility for less commission. In order to handle the workload and properly run their business, agents and brokers have to invest more and more in technology. A pricey solution with no end in sight as hardware and software is changing at the speed of light.
There is a significant shift going on with independent agency owners and their staffs caused by the high percentage of baby boomers currently working in the industry and the limited number of young people coming in. We are scrambling to find ways to attract new young talent. The only saving grace, if you could call it that, was the significant blow many boomers took recently to their retirement accounts. That coupled with improved medical care allowing folks to live significantly longer has provided a temporary reprieve. A number of highly qualified, knowledgeable and experienced people in our industry are choosing to work longer either at their current job or on a full time or part time basis through providers like WAHVE. That is only temporary and we need to find a permanent solution soon. In the last decade we have seen a number of long standing insurance company partners either go out of business or become the subject of a merger or acquisition. The same trend has occurred in the agency ranks. Based on the continued reduction of agents both in the independent and captive agency ranks it would make sense that consumers might feel there were less options for them to choose from. That couldn’t be farther from the truth.
The current trend is to encourage consumers to buy directly from a carrier or a national on-line agency or brokerage. Using the internet as a platform for purchasing insurance and tying it to a large call center for handling service a number of carriers have decided to deal directly with potential customers. Once the private domain of carriers like Geico, USAA and other direct response companies this has now become an outlet for many insurance companies who previously worked only through agents and brokers.
In addition to the existing insurance companies, regional and national on-line insurance agencies and brokerage have opened up to take advantage of this trend. There are popping up everywhere and their advertisements are as well. The scary thing is consumers have no way of knowing if they are dealing with a legitimate business or someone running a scam. Recently we identified a company on the internet selling professional liability to agents that was not licensed or a real company. Their address turned out to be a storage unit and the insurance department in that state is pursuing them. If they were able to scam agents and brokers how hard do you think it would be to do the same to the public? We have also seen some totally new direct response companies jump into the marketplace, some even from outside the U.S.. My point is that competition is fierce in the personal insurance arena and it’s starting to spill over into the small to medium size commercial market. This is not a good trend and I’ll tell you why.
A by-product of this fierce competition and the move to deal directly with consumers is the commoditization of insurance protection. An extremely important product that protects the people and assets of a family or business is in many instances being sold like a household cleaning product. In investigating what these carriers offer consumers many times there is very little personalization of the coverage to meet their needs. Matter of fact I am of the opinion that in some cases carriers are more interested in controlling the amount they are at risk and being competitive than they are concerned with recommending the consumer purchase coverage adequate to meet their needs. This is a sad state of affairs and affront to the professional insurance agent or broker.
The insurance industry is also experiencing increasing regulation. Battles are being waged as to whether our industry should be regulated by the federal government or by individual states. Mandatory healthcare legislation has turned the healthcare insurance industry upside down as it tries to comply with the law. Guess who is threatened by the recent healthcare legislation? That’s right agents and brokers who are already experiencing reduced commissions and may be knocked completely out of their role as advisors and advocates if the MLR (medical loss ratio) is not adjusted to take agent’s and broker’s commissions out of the 20% non-medical expense currently allowed in the legislation.
But I have to say the award for most unnecessary and unrequested regulation goes to Reg. 194 Producer Compensation Disclosure. Developed in response to the “supposed” criminal acts of several employees of mega insurance agencies and insurance companies this regulation needs to be rescinded. I say “supposed” because it appears most, if not all the participants had their convictions reversed and several of them I believe are currently taking action against their former employer. Nothing anyone can say or do will ever convince me that this regulation is needed and as a previous retail insurance agent I am offended by what I consider to be an attack on the honesty and reputation of all independent agents and brokers. Consumers never asked for this protection and complying with it wastes time and money.
These are by no means all the issues independent agents and brokers face today. There are many more. But as I reflected on all these issues and the many more that are out there I still couldn’t help feeling that there is no better profession than being an independent agent or broker. As independent businesses, agents and brokers embody the true entrepreneurial spirit. They’re actively involved in both civic and charitable activities in their community. They provide a very necessary and important protection that puts people’s lives back together and keeps our economy going.
With all the issues facing them others might leave and find new horizons to pursue. Not agents and brokers. They are committed to the profession and the clients they serve. They have seen adversity before and worked their way through it and they will again. They are problem solvers not only for their clients but also for the businesses they operate.
Having been an agent previously I understand how they feel and that is why I truly enjoy working with them and helping them. I have made many friends amongst the agency ranks and I truly appreciate and cherish those friendships. Recently I was speaking with a relatively new producer who asked me if I would ever consider going back to being an agent and without hesitation I said yes. Honestly he looked a little surprised. I explained that in my opinion there is no more noble and important a profession than what agents and brokers do. I explained that it was very easy for me to forget all the issues and problems I experienced when I was an agent but I will never forget the respect, appreciation and satisfaction I received from the clients I had the pleasure to work for. Those memories will live with me forever.
